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Comments Off on How Much Is A Customer Worth?

How Much Is A Customer Worth?

We’ve talked a lot about return on marketing investment in this blog.  It’s critical to business profitability.   But there are gaps in the formula for calculating this that many businesses have simply not closed.  For example, when you giveaway an item as an incentive to close a sale, or gain a subscriber to you email list, there is obviously some cost to you.  If it’s only a downloadable file, that cost is minimal, but still there is some number that needs to be factored in to determine its impact on your profit.

We’re going to list five steps here to help you calculate the lifetime value of a subscriber to your email list.

  1. How many subscribers do you have?
    • When you total your list, do not include those that have previously bounced or unsubscribed
  2. Get an estimate on sales generated in the past year
    • Examine clickthrough direct sales (this is usually the default figure used and likely will be very underestimated)
    • Use promotion codes to track sales not directly generated
    • Overall sales increases, including those from forwarded emails, sharing in social networks, and other less obvious ways
  3. Set Your Time Frame
    • Is your business seasonal, or does it make sense for you to calculate this annually?
  4. Calculate the value of the subscriber (V)
    Here’s an example from one of our online retailer sites:

    • Active email subscribers: 4,500 (X)
    • Sales attributed to direct clicks in email over past year: $275,000 (Y)
    • Apply the equation V=Y/X
    • Value of the subscriber = $61 per yearTo estimate the lifetime value of your subscriber, examine the average time between the first and most recent purchases in your database. We’ll assume that 1/3 buy from you just once, another 1/3 buy for two years, and the others for three years.
      • 1,500 subscribers x $61 = $91,500
      • 1,500 subscribers x $122 = $183,000
      • 1,500 subscribers x $183 = $$274,500
      • Total value is $384,300
      • Divide this by the number of subscribers (4500)
      • Estimated value per subscriber is $85.40 per subscriber
  5. Results Analysis
    We have to admit there are a lot of weaknesses to this method. It only calculates direct clicks, not peripheral action sales, it only views three years, etc.  But it does give us a rough idea of the lifetime value of that subscription.  So you can see that a promotion campaign costing $100 per subscriber is too expensive to  make sense, but $10 per subscriber would be much more likely to net a positive result. 

    All online merchants have unique circumstances, with differing characteristics to their databases. This system is meant to serve as a guideline to help you start down the path of ROI analysis and profitability.

Over the life span of your relationship with your customer, you may do many thousands of dollars worth of business.  In a future post we will discuss calculating this lifetime value so that you have a better sense of what you should be willing to spend to attract and keep that customer.

Comments Off on Google Introduces the +1 Button – What It Means to Your Business

Google Introduces the +1 Button – What It Means to Your Business

We’re in a new time for marketing. In case you hadn’t noticed, it doesn’t matter how much you have to spend on advertising anymore. It doesn’t work the way it used to.  The only thing that really matters (over the long-term) is what your customers think about you. They are your advertising, and they can help or hinder your sales.

That Facebook “like” button has become more than relevant. It’s important, not only to users of Facebook, but to search engines which are now factoring “likes” and “retweets” into their algorithms.

Bing landed a partnership with Facebook, which uses Bing for its on-site search function, so the upstart company can incorporate Facebook activity into its search results. A search for a local restaurant, for example, would reveal not only information about the restaurant, but also recommendations from friends based on their Facebook profiles.

Not to be outdone, Google is answering with the “+1 button,” which is akin to a Facebook “like.” The button will be on search results as well as individual web pages, which allows users to make recommendations across the web. To build a social network around the search results, Google is requiring users to create a profile before taking part in the fun.

Similar in some ways to Facebook’s “Like” button, the Google +1 enables visitors to your web site to see who recommends you or your products. According to them, “The +1 button is shorthand for ‘this is pretty cool’ or ‘you should check this out.’

Click +1 to publicly give something your stamp of approval. Your +1’s can help friends, contacts, and others on the web find the best stuff when they search.”

See +1’s

Sometimes it’s easier to find exactly what you’re looking for when someone you know already found it. Get recommendations for the things that interest you, right when you want them, in your search results.

The next time you’re trying to remember that bed and breakfast your buddy was raving about, or find a great charity to support, a +1 could help you out. Just make sure you’re signed in to your Google Account.

Show +1’s

In order to +1 things, you first need a public Google profile. This helps people see who recommended that tasty recipe or great campsite. When you create a profile, it’s visible to anyone and connections with your email address can easily find it.

Your +1’s are stored in a new tab on your Google profile. You can show your +1’s tab to the world, or keep it private and just use it to personally manage the ever-expanding record of things you love around the web.

So whether we like it or not,  facilitating transparent conversations with your customers on review sites and social networks is becoming essential. How is your company doing in this new arena?

Get started with the +1 here.

Comments Off on New Media, Old Media: What Are Your Readers Looking For?

New Media, Old Media: What Are Your Readers Looking For?

By Sally Falkow, social media coach & president of PRESSfeed

The Pew Project for Excellence in Journalism has a new report out about the news content in old media and new media, and how blogs and social media news agendas relate to, or differ from, traditional media sources. The findings are very interesting.

What used to be a one-way broadcast of news has become an increasingly social medium. Half of Americans rely on friends and people they know for news. 44 percent of online users get news from a social site.

News Patterns
Although most original reporting still comes from traditional news sources, technology—like blogs and social networks—have opened the floodgates of discussion and opinion about the news. People are influencing the impact of the news in ways that were impossible before.

The Pew study looked at the types of news stories consumers share and discuss the most, and the issues they have less interest in.

Not surprisingly, they discovered that each social community has its own culture, personality, and function. The study analyzed a year of data–top news stories discussed and linked to on blogs and social media pages; seven months’ worth on Twitter; and a year of the most viewed, news-related videos on YouTube.

Emerging News Trends

  • The stories that gain traction in social media are substantially different from those that lead in the mainstream media. Gosh! Could this be a clue as to why mainstream media circulation and viewership is declining? Are they perhaps not tuned in to our tastes and interests?
  • There are also big differences between what gets noticed and shared in blogs, Twitter, and YouTube. Just as with other media channels, each of the social media channels has its own community and their interests differ.
  • News consumers don’t stay long on any website–make your news brief and appealing to the particular audience of that platform.
  • Blogs shared the same lead story with traditional media in just 13 out of the 49 weeks studied.
  • Stories that gain traction in social media do so quickly, often within hours of initial reports, and leave quickly as well.
  • Blogs are still heavily reliant on mainstream sources for their content.
  • Twitter, on the other hand, is not. A majority of Twitter news is linked to online sources.
  • News videos on YouTube that got the most views and sharing had a strong visual appeal.

Read the full article on the MelissaData Blog…

Comments Off on Social Media? No Way. Social Middleware? Oh, Yes!

Social Media? No Way. Social Middleware? Oh, Yes!

Introduction by Robert Gelman

As we’ve watched the Social Media virus spread faster and wider than Swine Flu, this blog has focused primarily on the nagging questions of Return on Investment.  This is central to our mission. But the  issues around liability and corporate proprietary information are also vital and may in fact put your company in far greater risk than the loss of a few hours a month spent on Facebook.

In an effort to address this subject area, we’ll be bringing some local and global expertise to these pages over the next few weeks. The first article I’d like to call to your attention addresses a new area of software designed to help the enterprise manage its Social Media presence in a way that limits liability and exposure of confidential information. Written for IT primarily, Alex Williams’ article gives you a sense of the types of things that are of concern and how they can be managed.

More on this area in upcoming posts, including a guest article by Beth Brascugli De Lima of HRM Consulting, in Calaveras County.

Social Media? No Way. Social Middleware? Oh, Yes!

by Alex Williams at ReadWrite Enterprise

Socialware-Logo.jpgIn the word of IT, social buzz words can be a real way to kill any interest in adopting applications that give the enterprise access to the consumer web.

You have to speak their language. Social media? No way. Social middleware? Oh, yeah – now we are talking!

Socialware talks in language that IT can understand. The company is offering social middleware products that help companies integrate social networks with a level of control that makes them comfortable that the access is compliant with government regulations and IT policies.

In may ways, companies have set up their own iron curtains to keep social interaction to a minimum.

It’s also fair to say that many companies are eager to let their employees engage with the social web. But they want the risk managed, especially when it comes to interacting with social networks.

Socialware believes the missing component for the enterprise is a bridge layer that helps companies connect its people, processes and systems with the open, social web.

Socialware offers feature access control to social networks. An admin panel allows the IT manager to block access to different features on social networks such as Faccebook, LinekdIn and Twitter.

Socialware Admin Console.png

For example, users may access LinkedIn but there may be features that the employee is not permitted to access. The feature is flagged with a message that tells the user they do not have permission to use it.


Socialware provides the security layers and controls that give corporate IT the comfort that the risk in exposing social networks can be managed with rules that reflect the policies of the organization.

Socialware is funded by Mike Maples, Jr., who is an investor in Twitter. They are funded by Silverton Partners and G51. The management team have backgrounds in Web 2.0 and the enterprise.

That’s a mix which can make for a winning combination in the enterprise space. Socialware’s technology is reflective of that experience. We’ll be interested in seeing how the company develops in the year ahead.

Social Media is B.S.* for Many Local Businesses

*B.S = Bad Strategy

In the past month, I’ve attended three webinars, read 14 articles, and attended an early morning in-person seminar all on the subject of Social Media as a business tool.

After all this, in all my experience, I’m afraid that the Social Media Emperor has no clothes!  That’s because I’ve seen no reason to believe that it will actually be worth the effort that it takes to do this stuff properly.

You would expect me to be an evangelist of this work. I’ve not only worked in this field since 1992, I’ve built several social networks (with my team).  But no, I’m not an evangelist, I’m a skeptic.   Having seen the bubble of Internet vapor burst in early 2001, I feel strongly this may be happening again, only this time, the losers could be struggling small businesses who invest their time and energy unwisely.

What a small business needs from its efforts, be they online or off, is ROI. If you have 12 hours in a day to run your business, you probably do not have time to setup Facebook fan pages, write blog articles, tweet on Twitter, and still sell. manufacture, ship, and keep the books as most small businesses do.  So before you tell me to go Yelp, or contribute to the public works Wiki, or check my comments and trackbacks, you’d better be prepared to tell me what it will be worth to me in additional sales and more importantly: profit!

Putting My Money Where My Blog Is

Frankly, I’d love to be shown a true ROI analysis which demonstrates in a meaningful way what benefits blogging, Facebooking, Tweeting, or Yelping have brought to you or a client that you work for.  I am seriously interested enough in this information, that I am willing to put an open offer out here for a cash and services package worth at least $500.  If you can show me a real analysis of ROI (time + expenses) for using these tools versus how it has directly impacted your revenue, I’ll give you:

  • A year of “green” web hosting (worth about $150)
  • Web site Search Engine Optimization (worth about $250)
  • $100 in cash

This offer is good through the end of 2009, open to anyone with serious intent to help me learn something about these tools. I remain the sole arbiter of whether you’ve succeeded, but it will be worth it to me to be shown the light, if there is any.

In the meantime, while the jury’s out, I’m helping my clients to cover these many Social Media bases with the least possible amount of time and effort expended. I do it with a process that allows them to simply send a text email to a specific address and then this system will:

  1. Post the message to your web site’s blog
  2. Post it to all of your social media presences (facebook, linked-in, GOTML, etc)
  3. Post the subject line as a tweet on Twitter (linking back to your site)
  4. Send a beautifully formatted graphic html email to your prospect list
  5. Offer you response data to measure interest in the message
  6. Give you a foot rub and a pat on the head (just kidding)

If you are interested in having me wrangle the media for you as noted above, or if you want to submit an ROI analysis, please email me:  And I promise to publicly recant my skepticism when I’m properly educated.