August 05, 2008

The Lifetime Value Of The Blogger Who Voluntarily Promotes Your Brand

Let's assume that you sell widgets. Your widgets are stylish and well built.

And then a blogger writes about your widgets. You're probably already measuring the impact bloggers and social media have on your brand, right?

Here's what you learn:
  • 500 individuals visit your website, with a referring URL from the blogger. 10% of those visitors purchase something, 50 in total, spending $200 each, for a total of $10,000.
  • 10 bloggers link to the blogger who wrote the original article. Another 500 individuals visit your website with referring URLs from these ten bloggers. 5% buy something, 25 in total, spending $200 each, for a total of $5,000.
  • Total sales = $15,000.
  • Total gross margin = $7,500.
  • Total contribution = $6,000.
Your brand generates $6,000 of profit because of the voluntary efforts of one kind blogger.

How do you, the executive of this brand, measure the lifetime value of a positive blogger? Do you choose to reward the blogger for her efforts, and if so, how?

Profit per New Customer

It's common for folks to measure cost per new customer. Total Marketing Cost = $10,000. Total New Customers = 130. Cost per New C...