How much is a ‘like’ worth?

New research reveals that ‘likes’ aren’t the best indicator of future purchases, but some other types of digital engagement are.

GAINESVILLE, Fla. – The average person ‘likes’ about 12 posts per month on Facebook. With 1.82 billion active users logging onto the social media platform every day, that adds up to a lot of likes. Roughly 728 million likes per day, in fact. But how much is a ‘like’ really worth?

According to new research from the University of Florida Warrington College of Business, it’s not much, especially if you’re a company looking to drive sales through social media.

In a forthcoming study in the Journal of Interactive Marketing, JCPenney Professor of Marketing Richard Lutz and Georgia Tech’s Tim Halloran (DBA ’18) studied various types of digital consumer engagement on Facebook to determine if and what kinds of engagements are linked to future purchases. Using loyalty club member purchase history and social media data from a fast-casual restaurant chain, Lutz and Halloran found that a ‘like’ is one of the least likely types of social media engagement to lead to a future store visit. The researchers estimated that, in this particular study that used a $12 baseline customer value, a ‘like’ actually decreased customer value to $10 over a three-year period.

As Halloran, the lead author on the study, put it, “There’s nothing to like about ‘likes’. When it comes to purchases, there is virtually no difference between a consumer liking a post and merely scrolling by.”

There’s more to social media engagement than ‘likes’, though. Lutz and Halloran also studied the impact of positive and negative comments, tagging, and other engagement options, like ‘loves’. The researchers found that positive comments were the strongest predictor of a customer’s future store visits. Positive comments also had the most value over a three-year period at about $41. ‘Loving’ a post was a weak positive indicator of future store visits, but still had the second highest value at about $29 over three years.

Interestingly, negative comments may serve as an opportunity for marketers to drive future purchases.

Though customers who leave negative comments were less likely to make a visit in the future and had roughly only a $3 value to the company over three years, they can still be swayed to return if social media managers acted promptly.  

“Negative comments are a red flag for marketers,” Halloran and Lutz write. “Corrective action is essential, or the brand’s relationship with that particular customer (as well as his/her purchase frequency) is likely to decline rapidly.”

For companies looking to understand the value of social media engagement on their bottom line, this research offers some helpful insights.

First, as this research highlights that people who engage with brands on social media are more valuable than those who don’t engage, Halloran and Lutz recommend that it’s in marketers’ best interest to grow the number of engagers on social media.

“Certainly among the most loyal consumers, we saw big differences in the subsequent purchase habits between those that engaged in social media and those that did not – especially if they engaged in ways that were associated with increased sales,” said Halloran. “If marketers can quantify these relationships, it gets them closer to understanding the financial value of social media engagements and ultimately the true ROI of a social media campaign.”

Second, as Halloran and Lutz did in this study, the researchers recommend quantifying the relationships of different types of engagement with a customer’s lifetime value. As noted for the fast-casual restaurant chain, a positive comment was worth about $41 over a three-year period, but a ‘like’ was only worth about $10 over three years.

“Customer Lifetime Value (CLV) is a widely used metric in brand management,” said Lutz. “By focusing on CLV and tracking customer engagement over a period of several months, a clearer picture emerges of the real value of social media engagement, as contrasted with isolated reactions to a single post.”

Lastly, by understanding the value of various types of engagement, managers can create social media content that is associated with higher customer values.  

“For example, focus should be on eliciting positive comments and loves, with minimal attention to likes, as well as using the platform to respond to negative customer postings so as to not lose those valuable customers,” the researchers note.

This research idea stemmed from Lutz and Halloran’s connection through the University of Florida Doctor of Business Administration (DBA) program. During Halloran’s time in the program, Lutz served as his dissertation chair. With a background in consumer marketing, Halloran had just started as a part-time lecturer at Georgia Tech when he began the UF DBA program.

As he worked through the program, Halloran was offered a full-time position and later was promoted to Senior Lecturer and given additional responsibilities such as being the faculty director of Georgia Tech’s Executive MBA program upon completion of his DBA.

“The ability to work directly with a legend in marketing academia in Richard Lutz, learn from the top professors across all business disciplines, and do it with an energetic and fun cohort provided me a strong foundation in the world of academic research and how it can be applied at the practitioner level,” Halloran said. “As a result, the DBA degree has enabled me to take on new responsibilities at Georgia Tech.”

Before he came to lead Warrington, Dean Saby Mitra worked with Halloran at Georgia Tech. Mitra noted that with the strong training Halloran received in the UF DBA program, he was ready to lead an important class for MBA students at the Scheller College of Business.

“Tim put his UF DBA to great use at Georgia Tech,” said Mitra, who previously served as Senior Associate Dean for Faculty and Research at Georgia Tech’s Scheller College. “When the Scheller College needed to introduce a new course on product management in the MBA program, Tim was a natural choice. He was already a popular instructor for the core marketing class in the Scheller College MBA programs. He designed the product management course from scratch and did a fantastic job in teaching a very important course. I am sure that Tim’s training in the UF DBA program had a lot to do with his success.”