Disclosure: Area 224 does not have a business relationship with either of the companies mentioned in this article.
“Engagement.” This is the social media marketing buzzword du jour. Don’t just talk at people, engage with people. Get them talking to you, converse with them, find out what’s on their minds. Build a relationship. Then sell them something, maybe.
Engagement can probably be described in layman’s terms like this:
Talk with people so they’ll give a crap about your brand.
A lovely case-in-point from two diametric opposites on the Social Media Marketing spectrum: The Fourth Kind (a movie whose “social media hub” is here) and Community First Bank (located in South Carolina, and you can see their Twitter page here.
So, dear reader, why are we betting on the bank?
Well, for starters, there’s a lesson here in a little thing called “lifetime customer value.” We’ll begin with the math.
Really. We’re serious.
Get me “engaged” in this movie, by visiting the Twitter page, sharing an alien abduction encounter story of my own on Facebook, or reading Larry King’s blurb on the movie (center bottom of page) — do all that and I might be convinced to spend $10 on the movie, maybe a little more on popcorn. Perhaps I’ll buy the DVD when it comes out.
As of this writing, 32,000 fans on Facebook (with an estimated fan acquisition cost of $5 per, based on typical spend of Facebook-only ad campaigns plus the creative), plus 650 Twitter followers (use the same $5 per in marketing costs, for setup of your account, staff time, creative, etc.).
So we’ll say it this way:
32,650 times $5 = $163,250 in SMM INVESTMENT.
That’s what it costs this movie to acquire lifetime customers, or engaged fans, or followers.
$10 in lifetime customer value for each fan — assuming (generously) that half will see the movie and the other half will buy the DVD for 10 bucks.
$326,500 for an ROI of 100%.
(Note: we realize this is a very quick math exercise, and that we’re being both overly generous and overly simple. Stick with us.)
What about the bank?
A quick scan of the Community First Fan Page on Facebook gives us 400 followers, give or take. Twitter stream has just 38 followers — but they just launched that on Thursday.
Let’s call it 500 followers to be generous.
Math:
500 fans/followers at $5 per to acquire. $2500 total.
PLUS, as you can see, they’re doing a contest where they give away $100 to lucky fans/followers. Let’s put down another $2000 for those giveaways, plus the implementation costs, etc.
TOTAL SMM INVESTMENT: $4500.
ROI = ???
This brings us to the details, the ask, the big question…and why we’re betting on the bank:
What is the lifetime customer value for a new bank customer?
That’s where the math can get fuzzy. BUT, that’s where engagement comes in.
Did you notice the bank’s contest? Get clues through a variety of media — LOCAL media. Find the clues on Facebook, and on Twitter. Win money by visiting a branch. Wait, we’re now engaging.
Engagement – real, true engagement, ratchets up your lifetime customer value, no matter what industry you’re in.
By getting fans and followers to visit the bank to try to win money, the bank is increasing the number of touch points, the number of chances to connect with customers in person. The opportunity to put a human face with the bank’s message.
Is the lifetime value of these customers MORE THAN $10?
You betcha.
We could argue til we’re blue in the face about how much more than $10 a lifetime bank customer is worth. Make a $1000 deposit that throws off 1% in interest revenue for the bank and you’re at the $10 threshold already. Get a mortgage through the bank, open up an IRA, a couple CDs, whatever.
The movie, on the other hand, is engaging just sorta. Oooh, you’ve been abducted by aliens, too? Come see our movie. Thanks for the $10.
Again, folks, we’re betting on the bank. Wouldn’t you?
{ 8 comments… read them below or add one }
Hey Dave,
Great post, thanks for pointing me in its direction. The math is definitely “simplified,” but the overall point couldn’t be more true. The marketer that truly engages and interacts with its following will be the ultimate winner.
I absolutely love the contests that the bank is doing — great way to drive interaction with followers and to lure in new people.
Enjoyed the read!
Clay
Thanks, Clay…
I wish more local businesses would start looking at Social Media Marketing as an extension of their customer service – and another way to interact with people on their terms.
Considering my lack of faith in the big banks, I’d definitely be rolling in to Community First!
Cheers,
Dave
A coworker teases me about living in Mayberry when I tell her about my little three branch bank – but you know, I pull into the drive through, I know the teller and she knows me, my husband, my Dad, my brother … and I wouldn’t go any place else no matter what another bank offered me.
I use social media in my own job – I know my clients and they know me. I really do care about them, and you can’t fake that. It’ll ring true at the drive through or through the computer. And you’re right, I’d bet on that every time.
Here here! So on target. I think we are switching from mass follower to quality follows.
Sarah – you’ve touched upon a Holy Grail of sorts – how to get the big brands (like movie studios) to understand that genuine human interaction may be the thing that tips the scales.
Keep banking where they know ya!
Cheers,
Dave
You know the drill – you and I could compete for number of followers, and then find someone else with a 1 in front of that number. Quality trumps quantity any day — and even those I know with 20,000+ followers (who aren’t famous) got there through engagement, conversations, and back-and-forth.
Dave, its an interesting read, but it still begs the question…
For example in your movie example you have a $5 acquisition cost (we’ve actually seen the number closer to $2 but thats beside the point) and a $10 LTV becasue they go to the movie 1X.
You also assume that the “becoming a fan” and seeing the movie was a direct correlation, and the reason the fan saw the movie.
My question is how many of these fans would have seen the movie anyway. If I was interested enough to fan the movie, clearly I was inclined to go see it anyway. As a big budget flick, I’m sure they’ve got tons of other communications happening stimulating demand, so what actually did that $5 in acquisition costs get them. If we assume 25% of fans saw the movie as a direct result of being a fan then thats a $20 CPA and a -100% ROI!
Ted – VERY INSIGHTFUL!
Funny that I was taking pains to be nice to the movie folks, but you saw it as a possible negative ROI and an expensive CPA proposition.
This is one of the challenges — or opportunities — of measurement in SMM. Sure, a movie could launch a Twitter-only campaign and track it and know exactly that 1 tweet = 1 movie ticket, or whatever. But the nature of the beast is a lot more integrated than that – as you obviously know.
Thanks for the comment!
Cheers,
Dave