When Social Media Strategists Propose Calculating Customer Lifetime Value…

These days I get about 3 Social Media white papers a day and most of them are just empty self-promotional talk.

This day’s winner in the category of impracticality got into talking about measuring social media ROI and touted “customer lifetime value” as the primary method of measuring success.

When social media strategists say, “you should calculate customer lifetime value” as if it was “you should drink a glass of water” they actually say, “I heard that somewhere and it sounded good, want fries with that?”

Here’s what they’re not telling you:

Calculating customer lifetime value (CLV) takes large sets of data (customer), over extensive periods of time (6 to 12 months to 3 years, not quite a lifetime), multiple key performance indicators (value), and serious analytic brain-power. In the end the numbers that you’ll get will be scrutinized, and criticized. And in the time it will take you to finish you analysis a new media trend will be in full bloom and you missed the boat.

So CLV is not for beginners and strategists should not tout that as the primary method to measure marketing results, unless the business and the strategists have the capacity to build the appropriate analytics structure.

Otherwise, here’s a simple model to evaluate results:

1. Track all social metrics (new followers, number of mentions, number of retweets, number of comments, number of unique personas interacting with you online, etc, on a weekly and monthly basis)
2. Record dates for all social campaigns, even if it was just asking an interesting question. Ideally you’d have a publishing calendar in place to help you track and record all your social media activities.
3. Track all website metrics (see Google Analytics for examples of metrics)
4. Graph and overlay graphs of social metrics, web metrics and sales data to see patterns.
5. Where you see consistent parallel movements between your social, web and sales metrics, you got a winner. Use your publishing calendar to see which initiatives were the winners.

We’ll talk more about measurements in a future post. In the meanwhile, watch out for overly-complicated promises of Social Media ROI measurements.