Posts tagged Facebook
How to measure social media
Sep 7th
There is much talk in marketing circles about how to measure the impact of social media. Some measurements are hard, such as actual campaign response and conversion rate measures. Others are a bit softer, such as measuring campaign reaction frequency and tone (e.g., positive, neutral, negative). While both are valid measures, I do think we have been missing a broader, yet critical component of our measures—the overall financial impact of word-of-mouth (WOM) spread.
It occurred to me today that I may already have a way to measure WOM influence and the impact of social media.
Years ago, I came up with a simple equation to measure what I called, the “Residual Value of a Customer.” In other words, this is a calculation to determine value of an average customers’ impact on your business relative to their individual influence on other customers. Keep in mind that this was before the internet and social media tools, so the sphere of influence of an individual customer was generally much less—maybe 7-10 people total. However, I think the logic still applies today.
The Residual Value of a Customer takes into account the annual sales to a customer, the expected tenure as a customer, and the estimated number of people influenced. For example, if “Customer A” spends $150 a year with a company and the average tenure is three years, then “Customer A’s” value to the organization is $450. However, if “Customer A” recommends the product/service to just one other customer who follows the same spending/tenure patterns (as the average), “Customer A” now has a residual value of $1,350.
Let’s take this thinking a step further. Recent research has suggested that the average Facebook user, for example, has 120 friends. The average user may interact meaningfully with between 10 and 20 Facebook Friends within a 30-day period. Using the calculations above, let’s say “Customer A” influences 20 friends within a 30-day period. “Customer A” now has a residual value of $27,000, as do each of those 20 friends who adhere to the average customer measures. In this first circle or ripple of influence the residual value of these 21 customers is now more than one-half million dollars over the next three years, assuming the averages spending and purchasing life remains consistent.
These are significant numbers, and all brought about by one customer sharing experiences with a circle of friends.
I have used this model a number of times to demonstrate the power of WOM marketing programs to senior management. It is simple to understand, and proven using average customer sales and tenure numbers. In the majority of the cases, I’ve been successful in gaining support from senior management for at least testing WOM or now, social media, programs. I have also used the Residual Value of a Customer to demonstrate the opportunity cost for not engaging in WOM.
In the spirit of sharing, I’ve created an online version of the model for you to use here: Residual Value of a Customer Calculator. Feel free to use this model and share with others.
I’d appreciate your feedback.
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Why we need social media
Jul 8th
Digital interaction is an interesting thing, isn’t it? Through Twitter, we have meaningful conversations with people we only know only online. Our Facebook accounts reconnect us with friendships we previously thought were lost to time. We carry our friends with us wherever we go and thrive on the capability for instant interactions. Some of us are reliving our past, while others of us are making business connections. In the process, many of us have broadened our definition of a “friend” to include those people we have just met and we share the most unremarkable parts of our lives as if these friends were “long lost,” rather than “newly made.”
We humans are social animals, of course. Most of us like engage with others so that we can have an understanding of where we fit into the fabric of our culture. Yet we Americans, in particular, are finding ourselves growing disconnected from those around us. We overwhelm ourselves with extracurricular activities to occupy our time, we work too much and relax too little, and we focus on getting “things” done, rather than experience doing “things.” Overall, we have lost the personal connections to the people in America who make our “stuff,” grow our food, or frankly, those who live next door. It is almost as if our individual desires for personal independence and self-reliance have eclipsed our need for social interaction. They have not, of course. Our requirements of social interactions are just different now from before.
Today, we try to balance our individual desires with our need for social interaction by leveraging digital technologies into the mix to help us maintain our personal connections in the lulls of our daily living. We all do it, but some of us do it better. It seems to me that each generation appears to connect and build relationships differently using technology. For example, I have observed that Millennials use social media as a way of extending their daily interactions with their friends. With their mobility restricted by expansive neighborhoods and overprotective parents while growing, they had no choice but to explore new online social technologies as a way to maintain their friendships. As a result, communicating by text, Facebook or MySpace is the same as a phone call or a face-to-face conversation. Social media, and the digital technologies that supports it, are fully integrated into the life of most Millennials.
Observations of Generation X show me that they rely heaviest on cell phones for social interaction, I suspect because most were in college when mobile phones became affordable for and adopted by the masses. Texting and social media tools appear to be time-consumers that this Generation has not yet fully embraced. Instead, they are practical about the use of social media, engaging with those pieces that benefit them most (such as using Twitter to build business relationships), disengaging when there is little personal gain.
Baby Boomers appear to function best using face-to-face, phone and email communications, but are rapidly adopting Facebook. I think, they can “see” their friends and feel engaged in those lives as if they lived next door. This closeness is important to Boomers, especially as they age, because it seems to provide Boomers true “social” opportunities in the context of their primary interests: connecting with old friends, sharing political news and views, discussing religion and exploring hobbies.
Each generation has found a way to make social media technologies relevant to their own lives, to give us opportunities to connect with others regularly, as we allow our culture to put increasing demands on our time. The ability for us to bend and mold social media tools to our individual needs, values, and expectations is what makes it work so well in building and re-building our valued connections.
We need social media tools to help us maintain our ability to be human in the face of the demands made on us by our culture, our peers, and ourselves. These tools are now such an essential part of how we function as individuals and who we are together as a community, that living without social media and supporting technologies is unthinkable.
It is clear to me that social media allows us to maintain some degree of sanity in our lives. Without these tools, we would give up what little socialization we do enjoy; and I am not so sure that would be good for our minds, or our souls.
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Social Media: This, too, will change.
May 29th
I have always been an early adopter of technology. I like change and I get a bit of an adrenaline rush working with and figuring out new tools and toys. Unfortunately, there are a good number of my friends and family who do not understand some of the newer social media enablers. Twitter cannot be explained to most of them and some flat-out refuse to use Facebook. Others, I am sad to say, carry a cell phone, but cannot manage to “Text.” These are the same people who could not believe I would carry a BlackBerry® and answer emails after working hours, yet they now do the same. Times, and people, do change.
The use of these electronic tools for conversation isn’t as really the time-waster they insist it is. Frankly, I prefer to think of these tools as “time-enablers” instead of a “time-wasters.” Having a BlackBerry®, for example, allows me to take my work with me wherever I go. Whether it’s soccer games, band or chorus concerts, or business trips, I can easily bridge the time between work, play and life most of the time. This means I probably work more hours than the average person does, but I work differently. I like the freedom. After all, it’s all “life,” isn’t it?
Facebook allows me to keep up with my kids and friends while traveling on business or otherwise away from the PC. Twitter opens the doors to ideas and conversations that I would never have if I only talked to the people in my every-day business dealings. For those of us with intense curiosity and a burning desire to continue to learn new things, Twitter is the source of unbelievable amounts of useful information, shared by people with similar passions—even for a skimmer of tweets like me.
In a 2003 blog entry, “The trouble with cell phones,” I shared that my friend Roger might have been on to something when he suggested, “…cell phones have replaced cigarettes as a nervous habit. People pull out their cell phones, call others when they feel bored or need to kill 5 minutes or so, and didn’t plan ahead with some reading material.” Today, this has been replaced with texting, email, Facebook and Twitter. Tomorrow, it will be something else. As someone commented recently, given the choice people would rather be doing something than doing nothing. Mobile technologies allow us to do something all of the time—productive or not.
Technology has obviously evolved since 2003 when cell phones were the primary source of mobile conversations. While we still use cell phones, we use them differently. We talk little and text often. Technology and our use of will constantly evolve and morph into the next generation of tools. Think about it: the “shared applications,” mainframe-thinking of the 70’s evolved into tools like Google Apps and cloud computing discussions; AOL’s IM chat communities of the 90’s and classmates.com have evolved into today’s Facebook; and ASP program models of the 2000’s have evolved into the Software as a Service (SaaS) program models of today. The technology changed, sure. But, it was the users of the technology who drove those changes.
Knowing all of these things, it’s hard for me to imagine that a few short years from now what we call “Social Media” and the technology that supports it, will not have undergone a major transformation for the better. It will do so because of the users. Users of these tools already desire a more streamlined ways to improve communications with others. I have to believe that users will demand better integration of these tools to make their lives easier through increased mobility. This will allow the conversations to continue and the relationships to build all day, every day. Will this mean stronger, better relationships? Maybe. Only time will tell.
I am certain of two things, though. One: Everything about technology and social media interaction will continue to evolve. For those of us who are early adopters, we gain great insights into how that evolution may occur. Two: My friends, who don’t understand Twitter today, won’t understand the next step in the evolution either. Unfortunately, they will find themselves farther and farther behind; not just with technology, but also in their social interactions with others as many of their friends more readily adopt the changing way we communicate as a culture.
By know, we all should realize that, “this, too, will change.” Technology evolves. Communication methods evolve. Yet, people do not really evolve as much as they adapt. Either they drive such change by adopting, engaging, and sharing or they simply adapt to such change reluctantly in fear of being passed by.
Which will you do?
Thanks to @heathervescent with whom I had a Twitter conversation about emerging technology, which was the spark for this blog post.
BlackBerry® is a registered trademark of Research In Motion Limited.
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The “Great” Facebook Blackout
Dec 31st
Dave
December 15, 2008, over a million members of Facebook.com planned to stop using the website for a day. It seemed many users were unhappy with the new layout, account deletions, and interaction limitations of the network. They believed that by staging a blackout, Facebook management would listen. It didn’t work.
There are more than 40 million users in the United States alone. The Blackout folks didn’t even register a hiccup. In fact, Alexa.com did not show a sudden drop in pages views on December 15, or a sudden increase in page views on December 16.
The core generation using Facebook understands that the masses can move the direction of a company. They understand that the customer (in this case a Facebook user) can control and guide the brand. The problem here seems to be that the users think they “own” the brand that Facebook has developed. It’s a subtle, but important difference for both Facebook management and its users to consider.
We understand that Facebook management wants to build a website that attracts the masses, build user stickiness, and tastefully monetize the website through advertising. Management’s goal is likely to make money for investors (0r at least cover the cost of operating the service.) We also understand that users just want to interact with each others using the website and tolerate the advertising in exchange for free user of the tools.
Facebook management does seem to listen to requests and input from users, but I doubt the Blackout garnered much of their attention. Although, if the Blackout participants had numbered 10 or 20 million it might have raised an eyebrow or two. Facebook, like many Web 2.0 services, is designed for “the many” and not “the few.” It’s a very small number who are complaining about the changes Facebook management is making.
I suspect “the few” just don’t like any change in their lives.
Yet, in our online and offline worlds, change in our lives is the only thing on which we can depend. So, you (Facebook user or not) really have just three choices:
1. Drive change
2. Accept change
3. Freeze from fear of change
What will you chose in 2009? I hope you don’t choose the third option.
Happy New Year!
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