There is a fascinating current conversation in the blogosphere about the value to a company or nonprofit of people who like Facebook pages. If it cost $5 in time and advertising, say, to get each new Like, and then those people buy a product worth $15, is the value of that person $10? You can slot in donations for product worth and get the same idea.
I became intrigued with this notion yesterday and started to do a blog crawl to get a sense of what folks are thinking about in this regard. I started with this post, Proof That Facebook Fans are Worth More to Brands. What I found intriguing was the link to Augie Ray’s post that outlines how the cause and effect for Likes is a chicken and egg problem. He writes, “Cause and effect: Which came first, the chicken or the egg? Do Facebook fans spend more, or do people who spend more become fans?”
Seems logical to me that you wouldn’t Like a company or brand unless you already had a positive experience with them (unless your brother is the company founder and says you have to Like his page or you can’t come to Sunday dinner.)
I then took a peek at what the always-smart Frank Barry had to say about Facebook Likes and nonprofits. Frank’s post has a ton of good information including these gems:
- A Facebook fan’s value is not the same as the cost of that fan’s acquisition.
- A Facebook fan’s value is relative to his or her purchasing habits (and/or influence on others’ purchasing habits).
- Each Facebook fan’s value is unique.
- A Facebook fan’s value is likely to be elastic.
- A Facebook fan’s value varies from brand to brand.
Frank linked to Olivier Blanchard’s outstanding post on the value of Facebook Likes. And there I saw something that really struck home for me. Olivier writes that there is an Indirect Value for Likes:
Indirect value: If a fan seems to be influencing other people in his or her network to become transacting customers (or increase their buy rate or yield), then you can factor that value in as well for those specific time-frames. Because measurement tools are not yet sophisticated enough to a) properly measure influence and b) accurately tie it to specific transactions, I wouldn’t agonize over this point a whole lot. As long as you understand the value of word-of-mouth, positive recommendations and the relative influence that community members exert on each other, you will hold some valuable insights into your business ecosystem. Don’t lose sleep trying to calculate them just yet. Too soon.
There was something missing to the posts I had read so far, really the heart of the matter for me. It’s not the value of an individual on a social network that’s important, it’s the value of the network.
The notion of creating a direct equation of how much it cost to get one person to Like a Facebook page and how much that person bought or gave as a result might satisfy the bean counters, but misses the larger point of why social media are so much more powerful than broadcast media. If you’re just looking for one, or ten, or one hundred thousand stand alone customers or donors, then there is no extra value in using social media. You could have just sent out a direct mail piece for that. The value in using social media is that every person, every Like, comes with their own network that can be activated in an instant, and at no additional cost, for the organization. And that value, the value of having an army of your most ardent fans, affects far more than the development department.
Social media is more than a department or a function, it s a way of engaging with the world, it includes communications, advocacy, sales, fundraising. In fact, it’s hard to think of a function other than internal bookkeeping that isn’t affected by social media. The job of any organization is to widen and deepen the network of supporters, whether they are customers, donors or volunteers. The most efficient and effective way to do that right now is through online social networks. Online we can see the network, have conversations with participants in the network. These are the people who are going to tell their friends and family about the great work you do, share a video and help make it go viral, call you on it when you make a mistake, will you to do better in the future.
And what’s the value of that kind of network? Well, what’s the value of your entire enterprise?