What is The Lifetime Value of A Facebook Fan?

Before anything else, here are 2 important disclaimers: First, you won’t find the answer to that question in this article, because nobody, including this author, knows the answer. Second, the real answer is probably “It depends” – on the industry, the product, the service, and most important what a company is actually saying and doing with their Facebook fans. Nonetheless, the issues around the value of a Facebook fan are clearly worth exploring as Facebook now has 200 million plus users interacting with one another and with their favorite companies and organizations.

Nobody Knows The Answer

I posted the question to a recent Help a Reporter Out (HARO) query to over 75,000 people. Just one month ago, when I posted a question about companies using Twitter, I got over 250 responses in a week. This time? 3 responses. When I googled it, I similarly came up pretty empty. It’s just too new to even analyze data on the value of a Facebook fan, not to mention lifetime value. But what one HARO respondent did mention surely rings true for marketers:

The Lifetime Value of a Happy Customer

While this value surely differs across companies, organizations, and industries, we all know, intuitively at least, that there is tremendous lifetime value in happy customers. This value reveals itself in many ways, including repeat purchases, purchases-with-increased-costs, and every single word-of-mouth interaction that the customers has with his/her friends and family in which the customer speaks highly of the product, service, cause, etc. Clara Shih, author of The Facebook Era, presents an interesting new model for Customer Lifetime Value here:

Word of Mouth is Where Facebook Fandom Value Really Comes In
Presumably (and there’s no way to verify this yet, I admit), almost every if not every Facebook fan a company or organization has, is either a happy customer or an aspirational customer. Either way, they provide value to the company or organization they’re fans of in many ways: The Facebook fan’s fanship is publicly displayed, to an average of 120 “friends”, (some have many more friends of course) and all of his/her interactions with the Fan Page are publicly displayed via the News Feed to their friends. Each fan also provides a public link to the page, which is indexable by Google and therefore has great natural search implications. Moreover, a company or organization can reach its fans through non-invasive status updates, which will invariably lead to new engagement and potentially new purchases.

Collective Value of Many Fans
Above are a few ways each fan is of value. But collectively, many fans provide additional value for a company or organization. Imagine posting a description of a potential new product and having hundreds or thousands of fans sound off on the product, before it goes into development. Or testing out a new slogan. Or ad campaign. Or discount offer. Imagine the possibilities of launching promotions, cause-based initiatives, contests and more to a community of hundreds, thousands or even millions of engaged, active fans, at little or no cost to the company.

Inutitively, We Know Many Facebook Fans Are A Good Thing
We all know that it was better for Barack Obama to have 4 million Facebook fans than John Mccain’s 1 million, and it’s better for Coca Cola to have 3 million fans than Pepsi’s 50,000. It’s better for a Joe’s Restaurant to have 500 fans when John’s Restaurant across the street has 100. Across every industry, we intuitively know that it’s a good thing to have a lot of Facebook fans, even if we can’t yet valuate those fans. I sure love that theKbuzz has 2,400 fans and many long-established marketing firms have far fewer fans.

I don’t know what the lifetime value of a Facebook fan is. I don’t think any of us will know this answer for years. But clearly there are many reasons to start valuing Facebook fans. What reasons do you have that I’ve missed?

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