Have you ever wondered what the ROI is on Facebook likes or Twitter follows in comparison to the mobile SMS opt-ins of a loyalty program?

As a marketer, it’s important to understand how critical it is for business entities to know the monetary value of a Facebook fan, Twitter follower or SMS opt-in. These values help to substantiate marketing efforts, demonstrate ROI, and optimize allocation of your marketing spend.

Actual value could vary based on a number of statistics, according to PCmag.com. These metrics can reveal quite a bit about how active the company is on their social media platforms and how much a user actually interacts with the brand.

Many social media platforms have implemented initiatives to increase the engagement between advertisers, brands and their users. Twitter understood this back in 2012, when the intent was to allow advertisers to build experiences into brand pages like contests, e-commerce, and sweepstakes. Facebook also understands the value of customer engagement, providing businesses with the ability to customize their brands with custom landing pages, fan contests and paid ads that are placed in user timelines.

In the marketing role, it’s your job to demonstrate the importance of establishing meaningful goals that will allow you to collect and analyze social media and site metrics to uncover the real value of your organization’s social media relationships.

How can you determine the value of Facebook likes or Twitter followers?

PCmag.com breaks down the science behind determining these values. According to their calculations, a like on Facebook is about $8.00, while a new Twitter follower equates to about $2.00. The question is, does this add value to your business? If these people became actual customers, would their presence make an impact?

Harvard Business School Publishing released the CLVC, or Customer Lifetime Valuation Calculator, which is a tool designed to discover a value for fans and followers as they move through the marketing funnel. Social media is used to track and provide the information for these metrics.

You’ll need specific averages and numbers to get the data you need for accurate calculations, which include how many purchases each customer makes per year and their spending totals, how much your cost averages are, your overhead per customer transaction, and how much the actual costs are to get that customer to buy. Calculations will fluctuate based on industry and business type, but the concept is the same.

Calculating the value of an SMS loyalty list opt-in includes a number of variables that must be included. These figures vary based on the diversity of the offers, the promotion behind them and any value the customer perceives they obtain.

For example, an online retailer has an average spending total of $200 per purchase. Overhead and cost of goods are at forty percent. The online customer on average complete about two purchases per year. With these figures, the estimated value of the new customer will multiply the total spending, times the percentage, and the purchases per year, which would look like this: ($200 x 0.4 x 2). This would give you a total of $160, which equals the estimated value of every new customer.

Subtract the average marketing and customer acquisition costs from the time needed to get the sale. If the average acquisition costs is $55, the value for the first year is $105. Only marketing retention expenses are added in following years, which are usually about $25 per customer, will be about $322.50 for 2.5 years.

Here’s an example of how you can calculate the annual and lifetime value of an SMS subscriber:

First, you need to find out how many SMS subscribers you have under your program. Next, you must figure out your net sales over your designated period of time. You can get this number by obtaining

The number of redemption codes used by subscribers at the point-of-sale. It is important to assign a designated timeframe in which you want to calculate your metrics. Once you have this information, you can begin the calculations of your subscribers.

For Annual Value, the formula is B/A. In this example, let’s determine your active subscribers to be 2000, which will be your (A). Your sales garnered from the loyalty list will be (B). In this instance, let’s use a 12-month period, which will equate to $725K. Using the formula B/A, we have $725/2000, which equates to $363 per subscriber over a 12-month period. Therefore, your Annual Value is $363.

The Lifetime Value calculation is AV*C. You will need to determine the average time your customers remain loyal. Average rates are between 1 to 5 percent, so a 2.5 year average life is standard. Applying the formula AV*C, you will have $363(Annual Value) x 2.5 (average life) = $906. Therefore, your Lifetime Value will be $906.

How can these metrics be used to assist my organization?

These calculations clearly distinguish mobile opt-in loyalty lists as the most advantageous customer acquisition method, with a 64% higher value and ROI than Twitter or Facebook. By encouraging personal relationships with subscribers, loyalty programs can experience enhanced growth and retention rates that last far beyond the average 2.5 years. This can assist in powering your mobile marketing to continually grow your mobile opt-in loyalty lists while scaling your top line business revenue growth for success and a higher percentage of industry market share.

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