How Much Does a Brand Ambassador Program Cost?

Organized brand ambassador programs are becoming more popular with companies, but there’s very little information out there about the prices companies can expect to pay for creating and maintaining a brand ambassador program.

So I wanted to give you some information on pricing with this post.  Let me state up front that the prices you see in this post are intended to be used as a guide and a starting point for your research.  The prices you are quoted might be completely different, or they could be exactly in line with what’s listed here.  The prices listed here are based on my experience working with companies on  similar programs, information gained from talking to industry peers and from good old-fashioned online research.

First, let’s start with a definition of a brand ambassador program for the purposes of this post:

A Brand Ambassador Program is an ongoing business initiative designed to create a relationship with select customers that helps the brand work with these customers to reach certain business goals.

Keep in mind that a Brand Ambassador Program is more robust than a Brand or Customer Advocacy program.  These programs typically revolve around engaging with fans to help promote the brand and spread certain messaging about the brand.  A Brand Ambassador Program typically has a self-promotional element for the brand, but it’s also focused on other key business drivers, such as customer feedback, customer service and generating sales.

It’s also important to note that the brand ambassador program is ongoing.  Often when companies think of a brand ambassador program, they are considering something closer to a brand advocate outreach program, or an influencer outreach program.  Both of these are closer to a campaign in structure in that it typically has a starting and ending point.  A brand ambassador program is an ongoing effort.

Since a brand ambassador program is ongoing, there are two major considerations:

1 – Startup and maintenance costs are typically higher

2 – Business gains realized from the program are typically higher

So the answer to the question ‘How Much Does a Brand Ambassador Program Cost?’ is typically ‘it depends’.  Let’s look at the factors that influence the costs of launching a brand ambassador program:

1 – Determining the strategy and desired outcomes from the brand ambassador program.  Answer the ‘what will success look like?’ question.  What needs to happen as a result of this brand ambassador program in order for it to be deemed successful?  You’ll need to do an audit and strategy creation for the proposed program.  This is also where you can decide if it’s financially feasible to go forward and launch your brand ambassador program.

2 – The scope of the program.  Will your program have 5 members initially or 500?  The size of the program at both onset and over time will play a huge role in its cost.  Also, what type of relationship do you want to have with your Ambassadors?  Many brands are excited about the idea of launching a Brand Ambassador program because they like the idea of having passionate customers spread the brand’s message.  Brand promotion is only one way that ambassadors can help grow your brand.  Since ambassadors are constantly in direct contact with other customers, besides selling directly to them, your ambassadors can collect valuable feedback about your brand.  This feedback can then be applied to improve your brand’s existing marketing. design and customer service efforts.  These improvements can lead to a real decrease in business costs that should be considered when calculating the return of having a brand ambassador program.

3 – How many employees will be required to work with the program?  This ties into the previous point.  Keep in mind that the costs associated with this point and the previous one are typically far less when the program is launched, but will likely increase over time as the program matures.  However, as the program matures and grows, it will self-fund any additional staff that’s necessary to the program.

So as you can see, there are a lot of moving parts in place and it is difficult to get exact dollar amounts on the cost of your brand ambassador program.  A good rule of thumb is to shoot for breaking even during the first year of your brand ambassador program.  What I mean by that is have the costs associated with launching the program at least equal the amount of revenue/business value generated from the program’s first year.  Keep in mind that these projections should be included in the strategy plan and audit that’s created in the first point above.  Also keep in mind that in the first year you’ll incur some startup expenses that won’ be a factor after the program is up and running.  So once you factor in program growth and running it more efficiently over time, if you can break even during the first year, you’ll be in good shape.

So What Are the Actual Costs to Launch and Run a Brand Ambassador Program?

First, let’s look at the cost of the Brand Ambassador Audit.  This will give you the strategy for your proposed program, and help you decide if it is financially feasible to launch.

For a Small Business (Up to 500 employees) – cost for the Brand Ambassador Audit is typically $1,500 – $5,000.

For a Medium-Sized Company (500-10,000 employees) – cost for the Brand Ambassador Audit is typically $3,500-$25,000.

For a Large Company (Over 10,000 employees) – cost for the Brand Ambassador Audit is typically $10,000-$50,000

In short, the bigger the company the more extensive the audit required.  This audit is a one-time fee paid before you launch the program.

Next, let’s look at training and ongoing maintenance.  This is where you work directly with your chosen ambassadors to train them on how you want them to engage with customers, and what they should be working to accomplish.  Also included is time devoted to working directly with your ambassadors.  Keep in mind that, as mentioned above, the scope of your brand ambassador program is critical when calculating ongoing costs, as well as returns.  For example, many brands are simply interested in a program that helps them use fans/advocates for self-promotion.  To that end there are plenty of vendors that are focused on helping brands ‘activate’ their brand advocates, such as SocialToaster, Zuberance and Social Chorus.  However, if you also want your program to focus on other areas such as customer feedback, improved customer loyalty, etc, then additional costs will be accrued.

Monthly training and maintenance costs:

Small business – typically $500-$2,500 a month

Mid-sized company – typically $1,000-$10,000 a month

Large company – typically $5,000-$25,000 a month

Again, the main factors here are number of ambassadors (fewer means less cost) and scope of the program (more limited means less cost).

Employee and Ambassador Compensation Costs

Let’s look at the third major area of expense in a Brand Ambassador Program, the costs to compensate employees and ambassadors.  First, keep in mind that you should expect to compensate your ambassadors if you are asking them to perform certain functions on behalf of the brand that they normally would not do.  You will not only spend time training them, you will also be asking them to spend actual time working on behalf of your brand to connect with other customers.  They deserve to be compensated for their time.

This expense will be difficult to nail down, especially at first.  As the program matures you will get a much firmer handle on how much time is needed from both your employees and brand ambassadors and can budget accordingly.  Also as your brand’s ambassador program matures, the amount of time required for training and maintenance per ambassador will decrease to a degree as your processes become more efficient

In short, this expense fluctuates wildly based on what you expect from your brand ambassadors.  Also, keep in mind that you may not need to pay all ambassadors (In fact, paying ambassadors money is often the worst way to compensate them).  In general, if you are asking ambassadors to let you train them, or to jump on regularly scheduled conference calls, or in any way adjust their normal schedules to accommodate an ongoing relationship with your brand that benefits your brand, then you should consider paying the ambassadors.  But if all you are asking your ambassadors to do is hand out a coupon to any customer that expresses an interest in your brand’s products, then maybe not.  It’s a fine line between working with your brand’s fans to do what they want to do anyway (spread their love of your brand), and asking them to invest more time than they would normally.  In short, if it feels like you are asking them to work for your brand, then you should pay them as if they are workers.

For purposes of this post and to give you some numbers to use as a guideline, assume that 10% of your ambassadors will be paid at a rate of 5-10 hours a week.  Also assume that your employees will spend 10 hours a week managing your first 50 ambassadors, and 15 a week managing from 50-100.  Amount of employee time per ambassador will decrease as you add more ambassadors to your program.

So for example, if you have 100 ambassadors in your program, you would pay 10 of them 5-10 hours a week, and your employees would spend 15 hours a week managing the program.  That would total 65-115 hours a week for your brand ambassador program.  And again, this is just an estimate to give you an example of how you could budget time and how many hours compensation the plan would need.  Your actual hours required could be more or less.

So lets now total up the costs:

For a small business, the expenses are:

Brand Ambassador Audit (One-time fee) – $2,500 – $10,000

Monthly training and maintenance – $500 – $2,500

Monthly employee and Ambassador compensation (estimated) – $250 – $1,000

Total Year One costs for a small business to launch a Brand Ambassador program – $11,500 – $52,000

Yearly ongoing costs for a small business to maintain a Brand Ambassador program  – $9,000 – $42,000 each year

For a mid-sized company the expenses are:

Brand Ambassador Audit (One-time fee) – $5,000 – $25,000

Monthly training and maintenance – $1,000 – $10,000

Monthly employee and Ambassador compensation (estimated) – $1,000 – $5,000

Total Year One costs for a mid-sized company to launch a Brand Ambassador program – $29,000 – $205,000

Yearly ongoing costs for a mid-sized company to maintain a Brand Ambassador program  – $24,000 – $180,000 each year

For a large company the expenses are:

Brand Ambassador Audit (One-time fee) – $10,000 – $50,000

Monthly training and maintenance – $5,000 – $25,000

Monthly employee and Ambassador compensation (estimated) – $5,000 – $15,000

Total Year One costs for a large company to launch a Brand Ambassador program – $130,000 – $530,000

Yearly ongoing costs for a large company to maintain a Brand Ambassador program  – $120,000 – $480,000 each year

And again, let me reiterate that all of these numbers and figures are not absolute and should be considered a guide or starting point.

Now that you have the numbers in place based on the size of your company, you can take those numbers and compare them against the projected benefits from a brand ambassador program to decide if such a program makes sense for your brand.

For example, let’s say that you are a mid-sized company that, based on the above formula and numbers, decides that it will cost your brand approximately $50,000 in Year One, and $40,000 annually thereafter to create a brand ambassador program.  Now that you have a handle on the costs of the program, you can then look at the projected benefits from the program and decide if it makes good fiscal sense.

This is why it’s important to understand that in order to get the budget necessary to fund a brand ambassador program, you are going to need to be able to show that the program will generate more than it will cost.  So if you go to your boss with a plan to start a brand ambassador program that will cost $25,000 a year and generate $15,000 annually in sales, you won’t get that check signed.

Here’s a real-world example:  When Fiskars launched the Fiskateers brand ambassador program, it had two key goals:

1 – Increase product sales by 10% in 4 specific cities within 9 months

2 – Increase online mentions of the Fiskars brand by 10% within 9 months

With these specific goals, Fiskars can track the profit it would make from these sales as well as the sales generated from the increase in online mentions, and compare that to the cost of the program, and know if it makes sense.  BTW according to the book Brains on Fire, the Fiskateers program doubled sales in those 4 cities within 9 months and increased online mentions by 240% in the first 4 months.

Again, keep in mind that these numbers are a guide, and your figures might vary greatly.  For example, former Maker’s Mark CEO Bill Samuels Jr has claimed that it cost the brand $2 Million to launch its wildly successful brand ambassador program.  That program is now rumored to have over 500,000 ambassadors, all of which consider it their job to promote the Maker’s Mark brand.

On the other hand, let’s say your brand would love to launch an ambassador program, but you simply don’t have the budget to outsource the creation of such a program.  Here’s an excellent recap of how Paper.li is launching its brand ambassador program in-house.

UPDATE: Kelly Hungerford, who is spearheading Paper.li’s Brand Ambassador program, left a fascinating comment with more information on its program, make sure you check it out.

 

Are you considering launching a Brand Ambassador Program for your company and want to know what it would cost?  I’ll be happy to help answer any questions you have, simply email me!