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Your Facebook fans are worth exactly $1.07. No, they’re worth $3.60. Or maybe they’re worth $136.38. Unless they’re worthless.
What’s going on here? Who’s right? According to a group of panelists at the South by Southwest Interactive Festival, all those estimates are (potentially) correct. The value of a fan can vary wildly from one company to the next — but they’re not worth anything at all to a company that isn’t willing to make the effort to engage their fans, the panel noted.
There might not be a universal value for all Facebook fans, but there are four factors that all brands should consider when they’re trying to determine the value of their fans, according to Josh Constine of Inside Facebook.
Customer’s potential profit: Is your product or service a big-ticket item? Or is it an inexpensive good that you’re hoping customers will buy all the time? High-ticket items often have higher profit margins, he noted, so loyal fans of those types of products can be more valuable. On the flip-side, businesses should also ask themselves how much money each fan can save them. What is the cost of providing customer service or doing customer research via Facebook, compared with using other channels?
Customer’s influence potential: Influential followers are ones who can win over new fans and advocate for your brand. Influence is a controversial word in the social media marketing space, and the entire panel stressed that influence is not purely about friend counts. A person’s expertise, the amount of content he produces and his connections within a given community are essential parts of understanding how influential a given fan is. Influencers are important, but focusing too much on engaging certain fans can be counterproductive because it takes your focus away from developing appealing content. “Why ignore the other 95% [of your fans]? Be authentic, and you’ll end up getting the influencers anyway,” said Paul Ollinger, Facebook’s director of client outreach.
Customer acquisition costs: How are you drawing your fans in? Are you using prizes, discounts or content? What did those things cost you? Cross-pollinating between social channels and other forms of digital advertising can lower your customer acquisition cost, said Jascha Kaykas-Wolff of Involver. The cheapest fans to acquire are the “superfans” who will seek out your brand just because they love what you do, noted Michael Scissons, president of Syncapse. He added as a caveat that those fans are already customers, so their potential for growth is limited. New customers may cost more, but they have more growth potential. If you’re using an agency or a consultant to manage your Facebook presence, be wary of anyone who asks to be paid based on the number of fans acquired, the panel added. Traditional fee-for-service or CPM billing is much more common among reputable agencies.
Customer brand affinity: Not all fans are equally engaged — some will be better brand advocates than others, Constine said. Fans that are more engaged have shown a correlation with increased spending, but a causal link has not been established, said Melissa Parrish, an analyst with Forrester Research. It’s difficult to say if engaged fans spend more, or if big spenders are just more likely to engage, she added.
How are you measuring the value of your Facebook fans?