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What's the Lifetime Value of an Email/LinkedIn/Twitter Contact?

Pappa's got a brand new bag, and the Capitalist is at a new company.  One of the strengths of DAXKO is a willingness to think about new approaches, especially when it comes to social media, and as a result, I have found myself thinking a lot about the following question:

What's the lifetime value of the connections each employee, department head or alumni has fromSix_degrees_of_separation a talent perspective?  (connections = contacts in Outlook, LinkedIn, Twitter, Facebook, etc. - anywhere connections can be quantified)

Heady stuff for sure, maybe impossible to solve.  As it turns out, IBM has taken a pretty good run at this across a block of their consultants.  The nice thing about IBM is they seem to be a data-mining machine, and also are looking for new, innovative ways to manage their unwieldy workforce.

More on the IBM study from Read Write Web:

"In a recent study conducted by IBM, researchers from IBM and MIT found that the average email contact was "worth" $948 in revenue. This is believed to be the first time a specific monetary value has ever been assigned to social network contact. To arrive at that number, the researchers dove into the address books and emails of 1600 IBM consultants (identities withheld, of course) and compared the communication patterns with the consultants' performance in terms of billable hours, projects participated in, and revenue generated.

In addition to determining the value of an email contact, the researchers also found that those who had strong email ties with a manager enjoyed greater financial success than those who kept themselves more distant. In fact, those with strong links to a manager produced an average of $588 of revenue per month over the norm. (So maybe you should start emailing the boss more?)

Another value tied to greater financial success was network reach. A more diverse circle of correspondents - specifically, the number of people reachable in three steps - was also tied to higher performance."

Thoughts on my mind as I try to get my head around the concept for my organization:

1.  What's the best way to encourage the development of deep networks across your employee-base?  Can incentives play a part, or are those empty dollars spent?

2.  Can you embed network development as a performance management component moving forward, confident that it brings value to the individual employee (good for their career regardless of where they work) as well as to your company?

3.  Do managers at your company have a bigger need to build their networks given the fact that they are the ones with direct recruiting needs?

4.  What roles do broader networks have for individuals regarding their professional development ? (note - not getting another job, but using their networks to get better at what they do for your company)

5.  How does a traditional company let go of the fears of having talent poached in order to embrace the concept of employees building their external networks?

Thoughts?  I'm deep today, right?  Cartoons to return tomorrow in this space, for now, tell me what questions I need to ask that don't appear above. 

Answers are appreciated as well...


Paul Hebert

Interesting stuff! As work becomes more team-based and less individually focused, these networks (internal and external) become more important. Not only from a getting work done standpoint but also for innovation and new business generation.

You mention incentives - tricky area for this particular issue.

Social networks work because they based on social norms. In other words, in order for the network to have value it must be built on social trust and social rules. If you introduce an economic element (ie: incentive - either cash or non-cash) you change the dynamic and the value of the network drops. The connections will start to form based on the user getting some form of individual payment - not based on the value the connection has to the individual AND the network.

Work on social reinforcement options such as visibility for contributors to the network, case studies of how the network helped people get their jobs done better, anything and everything that doesn't have an economic value attached to it. Once you introduce an economic incentive (even fake ones like "points") - you change the way people will behave in the network.

Dan Ariely has a great chapter in his book "Predictably Irrational" about social norms and how they influence our behaviors.

Ann Bares


A great, thought-provoking post. We are featuring it - and a few of your questions - over at the Compensation Cafe's Friday Special, to see what kinds of answers and ideas we can provoke.

Steve Roesler

Hey, Kris, congrats on the new gig and a thought-provoking article.

Will get the James Brown background track to you so you can start off right...

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