When it comes to brands on Facebook, the past few years reflect hype and a competitive race to acquire the most Fan connections. But brand marketers are sobering up and asking hard, valid questions about the ROI of social marketing.
Perhaps no question is asked more often than “What is the value of a Facebook brand Fan?”
To answer this question, I co-authored a new report for Syncapse titled, “The Value of a Facebook Fan 2013.” It is based on a model that calculates the value of Facebook Fan connections through a holistic understanding of core drivers of enterprise shareholder value. It demonstrates that Facebook brand Fans — compared to non-Fans within a brand’s user base — are significantly more valuable. This is not the only study to tackle this issue, but it’s probably the most rigorous.
Below is a summary of our work and a link to the free report.
A Model For Calculating The Value of Facebook Fan Connections
We developed a Fan valuation model that factors in six key drivers of enterprise value. We then applied this model in a survey administered to 2,000 U.S. users and customers of key consumer brands, comparing both Fans and non-Fans of the respective brands.
- Spending: product spending within the past 12 months.
- Loyalty: loyalty and purchase intent in the future.
- Advocacy: the propensity to recommend the brand to other potential customers.
- Media Value: the media and messaging value inherent with Fan membership.
- Acquisition Value: the propensity for Fans to organically lure more Fans.
- Brand Affinity: the emotional draw felt by brands, or brand affinity.
We determined the average value of brand Fans in key consumer categories has increased 28% to $174 since 2010. This effect is amplified considering the number of Fan memberships for most brands in our study has doubled, tripled or more — often into the tens of millions. We believe this growth is due in part to the expanding adoption of Facebook and Fan memberships among more valuable customer segments in consumer goods categories over past years.
What are the underlying behaviors and motivations of brand Fans versus non-Fans within a brand’s user base. Here are some highlights and mandates from our research.
Fans Are More Receptive
Facebook brand Fans tend to be more receptive to those brands. They are: 80% more likely than non-Fans to be brand users; spend 43% more in respective categories versus non-Fans, despite not having a higher income; are 18% more satisfied with their brands than are non-Fan users; and are 11% more likely to continue using the brands than are non-Fan users. These insights underscore the importance of converting existing users to Fans because it allows brands to reinforce messaging, amplify the experience and extend a halo of positivity.
Fans Are More Engaged
Facebook brand Fans also are more engaged. They are much more active in social media, with two-thirds of brand Fans also being a Fan of more than 10 brand pages at any given time. Conversely, almost two thirds of brand users that are non-Fans have Fanned 10 or less brand pages. Three-quarters of Fans are likely to share good brand experiences and share promotions and discounts with their Facebook friends. Because brand Fans tend to be users and evangelists, marketers should prioritize this segment. Appreciate and nurture them, as they desire assets and experiences in which to talk about your brand and share their opinions.
Fans Spend and Advocate More
Fans spend more and advocate more than non-fans. Among the brands in our study, Fans spend approximately $116 more per year than non-Fans. On average, 85% of Facebook Fans are likely to recommend the brand compared to 60% of non-Fans. For many brands, 20% of customers represent 80% of revenues, and that 20% segment often indexes highly within a brand’s Fan membership. Therefore, marketers should identify who are their customers among Fans and score them. The better you can isolate these customer segments, the more relevant your messaging can be to drive loyalty and introduce the best offers to spend more.
Social Marketing Outlook
If nothing else, our research on Fan value validates the importance of Facebook Fans as a self-selected, sizeable customer segment. Consequently, Facebook Fans and social media intelligence should now be at (or near) the center of your marketing strategy. Smarter marketing – including planning, execution and measurement – lies in social marketing and analytics expertise, tools and infrastructure, and new models that embrace Fan insight. Social intelligence should be applied across all marketing, not just within online social channels.
Yet within social channels, connecting with these super consumers comes at a cost: investment and coordination across your brand’s paid, owned and earned media. While the investment and effort is significant, the benefit is that the leading social channels are proving themselves as viable media platforms for scale, able to precisely target and message to the right consumers, at the right time, and at the right frequency.
What is the value of your brand Fans? What are you doing about that value?
My crowd surfer graphic above includes photo from Mavis.