I read a Harvard Business Review article recently that cited a glaring omission in the nature of our traditional accounting systems. Our accounting practices focus on revenue, inventory, and assets, but assign no value, not even a mention, to information. For businesses that heavily leverage information to succeed, that can be a big problem, and here’s why: when no value is assigned to information, the costs associated with managing, stewarding and upgrading information become a low priority. There’s no way to incorporate financial gains to an ROI calculation.
So what to do?
Well, here’s an idea, we could start citing constituent value in our activity reports, status reports and project reports. And that starts with being able to assign constituent value. One way to do that is by computing lifetime value. KISSmetrics offers a great how-to for understanding and calculating lifetime value (click on the image below to view the full discussion).
Lifetime value, combined with other segmentation variables, such as membership in more than 1 constituency class, giving capacity, probability or recent interaction can help the emerging development of quantifiable information.
If you have an example you’d like to share, please let me know!