A former client at Microsoft use to say that a single engaged customer is 30x more valuable than an unengaged customer.
A sales person can tell you the value of their customer, an advertiser can tell you the cost per impression, but most companies don’t measure the value of an advocate that actively engages and has a relationship beyond a transactional one with the company.
While there is no perfect formula, establishing a baseline in your organization enables you to begin comparing campaigns and helping allocate resources to the right programs. You may not be able to apply monetary value, but you can establish a number that allows you to compare one engagement against the next or one campaign against another. None of these methods are precise, but all help bring clarity to your efforts:
One of the simplest methods is the formula Reach x Impact = Value. This works really well when focused on a few key influencers. Reach is basically circulation and propensity to share your topics and impact is the level of influence this person or outlet has on driving behavior. The key here is to change the focus from things like how many blog posts you received, and instead focus on how much traffic did that blog post generate.
Periodically set predetermined values based on probability. Another exercise to establish rough values is work backwards from a known value for a conversion goal and using simple probability tricks, estimate the value of an engagement. For example, determine that a person completing a transaction (ie a customer) on your Website is worth 10,000 points. Working from your Web metrics, you know that 1% of visitors become customers. So, every customer you can drive to the site is worth 100 points. You also know that on average for every post you make on Facebook and Twitter 4% of fans click-through to the site giving each individual engagement a value of 4 points. Let’s assume you have 100 followers on both. On Twitter, 10% of your followers re-tweet, and each of them has an average following of 100 people, but only 1% do on Facebook. So that single Twitter follower may have a value of 40, where the Facebook fan reading your post is worth 4 points.
A key metric to determine is follow on activity. The easiest way to do this is through user tracking. What you’re trying to determine is whether being a Twitter follower, a Facebook fan, or subscribing to a blog or receiving a newsletter drives long-term behavioral change. There are a number of ways to set up controls to do this, and you’ll need to work closely with a good web metrics analyst, but basically you are looking to capture the 30-day impact of an engaged user. Through controls (or statistical analysis) isolate and identify the average monthly activity of an engaged customer based on campaign or medium. The goal is to determine that an individual who receives a weekly newsletter and is a Facebook fan, visits the Website X times a month, where as a Facebook fan who doesn’t receive the newsletter only visits the site N times a month.
Don’t forget to include the value of a link when setting metrics. A post with a link is significantly more valuable than a post without. It might be great that Alyssa Milano Tweeted about you, but if there is no link in her Tweet, it won’t generate additional engagement.