If you want to understand how to perform valuations of corporate initiatives, including social media, then you need to understand the difference between value and benefits.
Benefits are what you get from a corporate initiative but Value is the money you receive from increased revenues or cost savings.
Benefits are intangibles and some will directly derive from specific feature functionality. Others will be sourced by emotions.
In contrast, Value is tangible -- and it's currency.
Let me give you a consumer example
Suppose you visit your friendly neighborhood Honda dealer to buy a CRV. You’ve done your research and selected the CRV because:
- A large-enough engine will give you good acceleration on the freeway.
- Good gas mileage means lower gas bills.
- Low maintenance demands means cost savings over the life of the car.
- Spacious interior makes it feel like a big car.
- And the picnic table stored in the cargo area is cool.
All those bullet points? Those are some of benefits of owning a CRV.
Depending on your options, you’ll pay somewhere between $22,000 and $28,000 for a new CRV. The amount you pay reflects its value.
If you want to add Rear Privacy Glass to your selected car, giving you the benefit of more privacy from prying eyes, then you pay a higher price tag for the car. If you want the fancy seats with lumber adjustments to allow you to set your seat for maximum comfort, then further rachet up price tag.
Said another way, the more benefits you get from your car from specific feature functionality, the more valuable your car will be.
Now let’s look at social media
Understanding the definitions of benefits versus value is important in social media in order to properly perform the valuation of a social media initiative.
Metrics – actual or forecasted -- are benefits. So measures like increased web visitations, more page views, higher customer satisfaction, etc. are leading indicators of potential revenues or cost savings. Use them as foundations to build your valuation forecast picture but don’t confuse them with value.
Because when it comes to corporate initiatives, including social media, value is revenues, cost savings, and profitability. Period.