Wednesday, March 3, 2010

Calculating Community Equity



So I have been thinking about David Allston's idea of community equity, and have worked out what I think is a good approach to the problem. The above equation would return the added community equity.

ACE (added community equity) is simply community equity generated during the current time period minus the community equity generated during the previous time period. This shows the net benefit of actions taken by the company during the current time period (whatever that may be).

For comparison purposes community equity is equal to total community equity divided by the number of followers. I have framed it this way so that two users with widely different follower bases can compare the value of their actions during a similar time period. Community equity, then, is the sum of each follower's followers times a given weight for each follower, plus the number of clicks per thousand followers (for the account) plus the number of new users.

The weights are defined as the ratio of positive tweets over negative tweets if there are more positive than negative tweets, or the ratio of negative tweets over positive tweets if there are more negative tweets than positive. Weight is calculated for each individual follower.

Actions taken into account in this equation:
  • Actions taken by followers that increase awareness of brand, either positively or negatively, will have the most affect on community equity. People talking about your brand and retweeting your tweets are worth the most.
  • Clicks per thousand followers is a measure of interactivity and attractiveness of content. I use clicks per thousand followers as clicks per followers would have to little affect. This may need to be changed straight clicks - any opinions on this?
  • New followers - it is reasonable to assume, in my opinion, that new followers are in some way engaged in your content and information, or they wouldn't have followed you. This is a major assumption many followers may just be looking for you to follow them.
What is not included:
  • The number of followers you have: This is not added to your community equity score directly as non-interactive followers add little to you community. While you are having an impression on them, the people that go to bat for you are really having the most affect on your brand and your community.
  • Number of tweets can have either a positive or a negative affect on trust building - if you are spamming tweets with marketing material and little value-added, you would be negatively affecting your brand. I would like to include something about this in the equation, but it may not be readily available information. 
Added community equity would have to be compared to prior periods to determine what numbers are a good range, what is average, and what is below,

There is a lot more that could probably go into this, but for a starting model it sounds good. Let me know what you think could be added to make it more reflective of community equity.

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