Word of Mouth Rule #9: How much is a Single Advocate Worth?

In “The Ultimate Answer,” author Richard Owens, the CEO of customer satisfaction company Satmetrix, says a single Advocate of an enterprise software company is worth $565,000, based primarily on the Advocate’s lifetime referral value. So how much are your Advocates worth?

Here’s an easy way to calculate this. Many companies track the Average Customer Lifetime Value or CLV. To simplify this, this is often calculated as follows:

CLV

There is now a growing body of evidence (Yahoo!, Comscore, others) that Advocates are a minimum two to three times more valuable than average customers based on referral value. We believe these estimates do not reflect the true value of Advocates because many of these studies were conducted before the rise of social media (Facebook, Twitter, etc.) and therefore don’t reflect the ability of Advocates to reach and influence thousands or even millions of prospects.

So a simple way to calculate Advocate Lifetime Value is by multiplying CLV by 3X. Via Zuberance’s real-time analytics, you can get more precise measurements of Advocate Lifetime Value.