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The Economist Intelligence Unit recently released a report about how the value of customers is being measured. There are some important implications for businesses, and you can download the full report if you want to dig a bit deeper.
One of my favorite quotes from the report was the following:
…measures of customer value that focus solely on transaction activity capture only a fraction of an individual’s behaviour and potential value.
It’s so true. While we always need to tie metrics and measures of social media back to our business goals (and often the bottom line), there is so much more value to the new social customer than the $29.99 they just spent on your website.
Georgia State University’s Centre for Excellence in Brand and Customer Management (phew, that’s a mouthful), suggests there are four key areas of consumer value:
- Monetary value
- Referral value
- Influence value
- Knowledge value
Of these, the most valuable to your organization in the long run may be knowledge value. Your consumers can engage on your behalf or refer their friends for discounts, but isn’t it more valuable to learn how to improve your product offerings?
Perhaps I’ve not been around long enough, but I would suspect that learning how to create products that are more what your consumers want would be more valuable than giving anyone who refers a friend 10% off their next purchase.
Similarly, influence value is not only a hot topic these days, but it’s also increasingly valuable. If you can find those consumers who love your brand and can influence their communities on your behalf, you’ve struck gold!
Again, finding influencers who are willing to be your partner (ideally for free) are much more valuable due to their authenticity as well as due to their connections. I’d take an honest-to-goodness review over a referral offer any day of the week.
Of course, the two values that are the most useful and inherently valuable (for lack of a better term) are the most difficult to measure and quantify accurately.
Do you show knowledge value based on specific ideas or inspirations? How to compare one idea to another? If I give you 10 mediocre ideas, is that the same as one dynamite idea?
Many others have given better explanations of the issues with measuring influence. It’s so subjective and contextual. How do you compare your consumers’ influence value to one another?
And how do you tie all of this back to your business objectives and your bottom line?
I wish I had the answer, but for now unfortunately I think I just have more questions. The Economist study is a good thought-starter, and I’d love to hear where your thoughts are heading.