Category: roi

It’s Time to Flip the Social Media & Community ROI Equation on its Head

It’s no secret that many Brands realize tremendous value from their social media and online community efforts. Value in the form of cost-reduction for support and service, ideas for and feedback on products, product and brand advocacy… the list goes on and on. Most organizations have analytics in place and some form of dashboard that tracks performance, and in many cases, actual financial impact of social and community efforts.

Unfortunately, there is also a problem with the current approach Brands take: it’s unsustainable – unsustainable because it is predicated on Customers doing valuable work for free. 

We need a new social and online community value equation.  Stay with me here. In the early days of community, all brands really had to do was show up. Hosting a discussion forum met pent-up need for customers to connect, share and help each other. The motivation for participation was generally either purely altruistic and/or driven by the desire for enhanced reputation and recognition.

More recently Community Advocacy programs, elaborate reputation systems and game mechanics were introduced to drive contribution to communities. On the one hand, these programs and technologies enhance the Brand community experience. On the other (and more cynical) hand, they could be perceived as an inequitable attempt to squeeze more value from community members.

Further, there is currently an explosion of expertise and talent marketplaces like Maven, PopExpert, Odesk, Google Helpouts and 100s of others, Community experts now have myriad marketplace options and some are starting to charge for their talent and expertise.

To net it out:
1. Brands generally view Communities as cost-saving vs. value producing, and consequently:
2. Brands haven’t truly considered what an equitable value exchange might look like between the organization and the community;
3. Compensation to the community contributors comes in the form of either reputation and / or fulfilling on an altruistic need, with a very small percentage of member getting “MVP” benefits;
4. There is an explosion of knowledge and service marketplaces that allow experts to place financial value for knowledge and expertise.

In short: Brands have to rethink their social and community strategies from an exchanged-value perspective, or risk losing their community.

What to do?
The most critical thing is to rethink the Social & Community value equation, and to move beyond the myopic view of Customer Communities as solely a means to reduce cost. Instead of asking what the benefit is to the organization, real research and critical thinking needs to be applied to the needs, expectations and values of customers who might participate in a community. The range of value received from the the community by participants needs to be broadened – access to communal knowledge and connections are an expected part of the digital experience now. Compensation for Community participation and contribution must evolve beyond reputation and become more tangible, possibly in the form of products, services or even financial compensation.

A few key questions to explore:

  • What if community members knew the explicit value of their attention and contribution to a community? 

  • What impact would this knowledge of value have on the current community?
  • How might we enhance the community experience by surfacing and rewarding contribution beyond rank and reputation?

  • What are the emerging knowledge and service marketplaces that might attract our current key contributors?

  • How might our competition attract our customers with a more valuable community experience?

I’d love to hear other’s perspective on the issue of sustainable participation. Please chime in via the comments below.

The Role of Brands in Online Communities

There seems to be a wave of bad advice and misguided thinking regarding where and how brands should engage with their communities. Examples include pundits advising brands to prioritize social efforts “off domain”, being passive observers in their communities instead of active hosts, and a general sentiment that hosting a brand-based online community is high effort and low return.

This is really unfortunate, as I’m convinced many organizations are missing key opportunities to realize value from online communities. The reasons for the bad advice and thinking are myriad and may include legitimate causes like: steady pressure from a slowly recovering economy, increased demands for customer attention online and competition for prioritization amongst a growing list of places to play in social media. Unfortunately, the lack of direct experience and ego play a role as well.

So, what’s at stake? Your network of customer relationships. Said another way: you can rent this network on Facebook (along with other tenants), or you can make the investment in hosting, growing and managing the network yourself. Renting is cheaper in the short term. Building and hosting the network creates a business asset that is generative in value if managed properly.

The Role of Host
When I say “host”, I am specifically talking about on-domain, brand-hosted communities that are built on a community platform (like Lithium or Jive) and housed under the brand’s domain. Examples include Autodesk’s AREASAP’s Community Network , Dell’s TechCenter and Lego’s CUUSO . The value of these communities is multi-dimensional, but hosted brand communities are generally a “clean, well-lit place” for a company to:

  • offer customers peer to peer support, lowering support costs and increasing customer satisfaction;
  •  co-develop product and service ideas with customers, lowering research costs and creating products with a built in market;
  • give special access to and content from insiders (like product developers) in the company, increasing the value of the community for members;
  • share special content to enhance the use of (or use in) the products;
  • discuss improvements or extensions to products and services;
  • facilitate niche communities of practice around specializations;

to name just a few in the long list of possible activities that produce value for both the brand and community members.

Being a Good Host

“if you talked to people” by Hugh MacLeod @gapingvoid

The web is littered with failed attempts by brands trying to kickstart communities. Many remind me of the famous Bette Midler quote “but enough about me… what do YOU think about me”. Many early failures hit the wall simply because they made the simple mistake of being selfish. Brands need to be able to come up with a simple value equation as part of the strategic development process for community that accounts for both their business needs as well as that of the community member. If both parties can’t win, there is really no sense in playing. I offer the examples I gave earlier as proof that this can be done – Lego, Autodesk, Dell and others have been and are successful in their efforts. A few reminders on etiquette for being a good host (and there are many others):

  • Be present and attentive
    Ensure that staff are available to participate, answer questions and respond to feedback.
  • Be engaged
    Actively manage the community, ensuring basic moderation is happening and that there is a regular cadence of content and activity.
  • Be respectful
    Ensure that communications, content and activities are geared towards shared value, vs one-sided discussions about the host organization. Being respectful goes beyond generally being civil and includes the expectation that the community hosts will form relationships with members and support the community over the lang haul.

Brands as Networks
One definition of brand is “the collectively held perceptions about an organization shared amongst its stakeholders”. I find this fascinating because the statement implies that a brand can’t manifest unless it is in a networked environment. Brands need networks in order to exist. Online (and offline) Communities are a living, breathing expression of a brand.

The Net:

  • Online Communities should be a focal point of brands social strategy, and a “center of gravity” for social presence;
  • Brands should not shy away from the role of active community host – it’s not an option, it’s a responsibility
  • To be a good Community host, approach the task with the attitude that *everybody can win* instead of a zero sum game of Brand vs Customers

Online Community ROI: Models and Reporting – Research Study Posted

Research is a large part of the activities that I and Forum One Networks engages in. The Online Community Research Network studies and publishes 6 times a year on topics that matter to those responsible for guiding online community and social media activities in their organization.

The Online Community ROI Models and Reporting research study was initiated in February of 2008. The study was created in order to investigate further into the ROI research that we conducted in the last half of 2007, and to gain insight into specifically how organizations were valuing and reporting on their online communities activities. Further, we wanted to gain insight into who the stakeholders were for ROI metrics, and how the reports were being received.

I will be blogging highlights of the report over the next few weeks. To obtain a full copy, as well as access to all of our other research, and the professional network of online community pros, please consider joining the Online Community Research Network.

We received approximately 150 completed surveys. Participants included large software companies, large community destination sites, niche community sites, platform providers and interactive marketing and advertising firms.

Q16: Which of the following quantitative and qualitative metrics are critical for communication ROI at your organization? (question 16 from the study)
The top-ranking metrics are: Traffic patterns & statistics; Community member engagement; Unique number of visitors; New Member Registrations; Member Satisfaction; and Product Feedback / R&D ideation.

The middle-ranking metrics are: Number of referrals to the community by members; WOM generated by community; transition of lurkers into active community members; impact of the community on revenue; organization or brand-mentions on other sites; and ratio of comments per post.

When looking at the data segmented by type of respondent organization, Traffic patterns, member engagement and unique community visitors scored consistently high.

Top-ranking Metrics

Middle-ranking Metrics

Lower-ranking Metrics

Q23: What were the 1-2 compelling sources of value from your community or social media efforts that you constantly communicate?

This question was intended to solicit the “elevator pitch” stats or metrics that community managers and strategists use internally to their organization to evangelize community and social media efforts. Answers ranged from the unique ability of online communities to create value to cost reduction of existing communication channels and corporate functions.

These were all write in answers. The main themes are as follows, with selected quotes inline below. (full report contains all write in data).

1. Community helps problem solve faster and more efficiently than Customer Support, saving our company time and money:
• “Customers are able to get faster response and answers to their problem utilizing the community over contacting Customer Support.”
• “Knowledge share, and hence problem solving, is more efficient due to the community model.”
• “Using WebBoard is more efficient then email, telephones or fax. It saves us time and money and increases our ability to service the consumers in our sector.”
• “The ROI on employee time devoted to the forums far exceeds the returns on the usual support methods.” [Thus saving our organization time and money.]

2. Availability of information and content for specific areas of interest:
• “Expanded resources & knowledge for specific areas of interest and centralized resources.”
• “Niche communities, focused on specific areas of interest. Market leaders on-line and in print with high cross over traffic.”
• “You won’t find this content anywhere else – written by our members to raise best practice within vendors.”

3. Increases site traffic / more engaged relationship with us:
• “The more we invest into community, the more organic traffic we get.”
• “Our members consume 49% more average page views per session every month than non-members.”
• “Our community sites get more than 3 times the engagement for solutions, capabilities and use case content than our traditional sites.”
• “Our forum generates more page views than the site itself.”
• “Our community traffic by far exceeds traffic to all traditional product areas.”
• “Increasing site traffic proves that there is an interest and demand from our customers to have a more open and engaged in relationship with us.”
• “Our programs on average engage participants for 45 minutes each time they visit.”
• “Time spent on the site is higher on forums pages than anywhere else on the site, indicating that community members are more engaged.”
• “Views of photo albums remain the most popular area of the community. Members may not wish to participate in discussions, but they do want to see photos of their events.”
• “An online discussion moderated by subject matter experts that followed an in-person event with the same moderators achieved the most participation of any attempts to engage our users.”
• “Our social media content generates more content and discussions off site, increasing our reach.”
• “The ability of our blogs to drive customer engagement and PR activity.”

4. Idea Creation / What we learn from members of the community:
• “Ideas for our books.”
• “It’s all about what we learn from the developers through our community interactions.”
• “We will have the opportunity to get first hand feedback on products and ideas for improvements and enhancements.”
• “We discovered some problem areas in usage and service adoption that caused us to change our materials and strategy.”
• “We have been able to gather more than a thousand best practices/lessons learned in two years use.”

5. Lead Generation / Conversion:
• “Converting contacts, acquaintances, and other informal relationships into donor relationships.”
• “Converting contacts into activists and issue leaders.”
• “When we enlist our community members to represent us physically or virtually, our reach and conversion metrics dramatically increase.”

6. People are saving time / building skills by using our site:
• “In our Sourcing Professional Forum, procurement professionals are constantly sharing templates and best practices across organizations, bootstrapping their RFP effort, saving time and increasing value.”
• “People creating and building productive relationships with people that help them improve their practice or do their work better.”
• “The National Board of Certified Teachers can share best teaching practices with ease never before possible.”
• “In our premium areas, customers are using online training and certification to manage global implementations, knocking down traditional barriers to skill building in an online, social learning setting.”
• “Our users have access to every single college coach in the country. This is something no other site offers. Our site is always free to the users and they will never be charged. All of our competitors charge users to use their recruiting website.”
• “Our community members credit participation in our community with their increased skills in using our products.”

7. Build customer loyalty:
• “Anecdotal stories of knowledge sharing, connections made for business purposes and special access created through connecting members.”
• “Community members are more likely to volunteer their time, services, advice, and financial support than non-members.”
• “Employees who belong to the community almost never ‘turn over’. They are consistently the best performers out in the stores.”
• “Offering a community to your clients where they can speak to you and each other significantly increases customer loyalty.”
• “More connected members spread the word and come back frequently.”
• “If you want to understand your stakeholders and develop the relationships, you have to think in communities.”
• “Online dialogue creates a more open environment that deepens trust and team work throughout the organization.”
• “Our community has one of the highest net promoter scores for our brand of any corporate offering.”
• “Our members say that they like the site and related services – direct comprehension of value, esp. during account meetings.”
• “Research shows that customers in a community can have a sense of involvement with the company as long as we make sure they are heard and that involvement can lead to great loyalty.”
• “Our community members are actively engaged with the brand and don’t hesitate to tell us what they like, and don’t like. They feel a real sense of ownership of the brand.”
• “Our ability to personally communicate with future users of our product substantially influences their perception of our company.”
• “Increasing site traffic proves that there is an interest and demand from our customers to have a more open and engaged in relationship with us.”

8. Online community is growing our membership base:
• “In a climate where professional associations, and especially manufacturer associations, have struggled to maintain members, we have consistently and significantly increased in membership year-over-year for the past 5 years. This growth directly coincides with our implementation of online community services. Over 85% of our members find our member-only e-mail discussion groups alone to be worth the price of annual membership.”
• “95% of our members would recommend membership in our online community to other parents raising children with food allergies.”
• “Our blog has increased community participation by 80% over the past year.”
• “We boast membership in 125+ countries.”
• “We have 8000 registered members across 95% of local authorities.”
• “We have doubled the size of our community membership in the last 6 months. 2 years ago, only 34% of our Company’s upsells and renewals were also members of the Community. In 2007, 75% of our upsells and renewals were Community members.”
• “We have the largest active user community in the marketplace.”

Again, to get access to the full report, as well as other research and the professional online community network, please check out the OCRN site.

Marketing & Online Communities Research Report Released

Our Online Community Research Network ( initiated the The Marketing & Online Community research study in June of 2007. The study explored the current state of marketing to online communities, from the perspective of both the online community host, as well as from the perspective of the marketer.

The research participants included large software companies, large community destination sites, niche community sites, platform providers and interactive marketing and advertising firms.

We discovered early on in the research process that while community hosts and practitioners were willing to share their experiences, most marketers were not. At the beginning of the research I conducted several in-person interviews, it became clear that most marketing and advertising agencies have not met with great success in their community marketing efforts, and are unwilling to talk about their experiences. What limited success marketers have had is generally viewed as proprietary knowledge within the agency, and is closely guarded.

I’ve included excerpts from the report below. To download the full report, please go here (short registration required).

What are the biggest challenges you face working with third-party marketers?

It is clear from the survey responses that most online community hosts are still negotiating the relationship with third-party marketers, their messages, and their methodologies.

The main challenges in working with third-party marketers included:

• Third-party marketers want to control content/context in which their ad will be shown.
• Difficulty matching ads with content
• Overhead associated with helping marketer understand community culture
• The lack of a pre-screened third-party ad network
• Marketers seem to have no affinity with community / company brand
• Advertiser push invasive or unusual advertising to get results
• Difficult to determine fair rate and cost basis

What general advice would you give a colleague that was considering incorporating marketing and advertising into their community?

Respondents shared valuable advice about incorporating marketing and advertising activities into communities, from their direct experiences.

Recommendations included:

• When introducing marketing messages into your community, be very cautious and attentive to your member reactions, and open to their feedback
• Understand your audiences needs and sensitivities to advertising messages
• Establishing a good relationship with the agency account manager is key
• Establish creative and messaging guidelines for marketing to ensure appropriateness
• Make sure ads are appropriate and add value to community
• Be clear about policies and ensure that policies are available to and understood by community
• Involve the audience. Surveying members to determine which brands / types of messages they would
• Ensuring the right mix of content to ads
• Test and refine based on marketing effectiveness and feedback

Again, to download the full report, please go here (short registration required).

How to Develop a Community Strategy

This post is targeted at folks just getting started with online community activities at their respective organizations. It is written with the brand or product-specific corporate communities in mind, but is somewhat applicable to independent communities and non profit organizations.A few key points to begin with:

First, the working assumption here is that most of you reading are engaged in some sort of initial community building activity, but do not have a comprehensive community strategy guiding your efforts.

Second, keep in mind one of the key decisions you will need to make is the mix of attention, energy and dollars you spend hosting a community, vs participating in external community sites like Facebook and MySpace.

Third, (particularly for marketers) engaging and building relationships with your community is a bit of a mind-shift from thinking “quarterly-driven campaigns”. We have heard this as a recurring theme in our research and the conference we host on Marketing & Online communities. You won’t have the same criteria for success with community building efforts as you do with a print campaign. You won’t retain control of messaging. You have to be willing to invest the time to build relationships with members (yes, even one on one). This isn’t a quick in and out.

So, how does one start to evaluate the opportunity with online communities? Research! The following 4 step framework describes my typical community strategy development exercise we use for our clients:

Step 1. Define Business Goals and Objectives

This first step establishes a baseline definition of the organization’s goals and potential objectives for engaging in community building activities. These goals and objectives will serve as guidance throughout the project to ensure that the final strategy reflects a direction that creates value back to the organization. This process varies by organization type, the number and role of stakeholders, and the maturity (or existence) of the community team. The research in this step includes identification of the stakeholders for community within an organization, interviews with the stakeholders, and an initial brainstorm with members of the stakeholder’s team to discuss objectives for community. Themes and business goals for a community strategy will emerge.

Step 2. Community Ecosystem Review
During this second phase the goal is to do an audit of the current community ecosystem, including customer, prospect, partner and competitor touch points. This information will help establish a baseline of market-oriented sites and activity, which will be important to understand the opportunities for new community activity by your (or your client’s) brand.

Using tools like BlogPulse, Technorati, Delicious, and Google Blog search, conduct searches for brand mentions in the blogosphere and on smaller niche communities. You will quickly come up a list of the communities hosting conversations about your organization, products or brand, and the members (often time bloggers) engaging in those conversations.

It’s also important to research activity on the “walled garden” communities, and larger social media sites that some times don’t surface in search results. Sites like Facebook, MySpace, YouTube, Ning, Flickr, Satisfaction, etc. In particular, look for ad-hoc groups that have sprung up around your brand, or content tagged with your brand and/or products.

Step 3. Member Needs Analysis
This phase will establish a baseline for potential community member’s needs, as well as their expectations of your organization. This critical phase will also guide decision-making on the types of activities to engage in, and the approach (offline / online, hosted / independent).

This research is ideally done in person, or on the phone, but in a pinch you can also use a web-based survey tool like surveymonkey. Recruit research candidates from the list that you made during the Ecosystem Review. Develop an interview script that really probes their needs and expectations of your brand. Ask what types of marketing and advertising the members would find acceptable, and which types they won’t. Ask if they would be willing to help shape programs and advertisements (if you choose to go that route), Themes of member need, expectation of conduct from your organization, and tolerance of advertising / marketing messages should emerge from this research.

Step 4. Community Strategy Development
This final phase will combine the inputs of business goals, user needs and the existing community audit to form a community strategy. Evaluating member need and business goals side by side should provide you with direction on the types of community opportunities to engage in. The ecosystem audit will provide direction on where to participate, and if there is an opportunity for your organization to host part of that conversation by building a destination site, hosting discussion groups, etc. Based on the content of the previous phases, the team should be able to pull together the following key areas of strategy:

  • Business goals: 3-5 points of value or reasons the organization is engaging in community-building activities
  • Member needs summary: 3-5 key needs community members have of your organization that can be fulfilled or supported via online community
  • Community ecosystem map: A list (or diagram) of the key communities and community members that are currently discussing your organization and/ or brand
  • Recommended community tactics: A list of key tactics that meet the business goals as well as member needs
  • Metrics / ROI strategy: Specific metrics to evaluate community-building efforts by, and an ROI model that articulates dimensions of value (loyalty, affinity, time engaged, etc)
  • Engagement plan / calendar: Key tactics mapped to specific dates

As with anything, your mileage may vary -)

I’ve also seen the “Gnome” model used by companies, with much less success.

Online Community ROI 2007 – Report Released

We publicly released the Online Community ROI report last week. The research project was conducted as part of the Online Community Research Network agenda, and was initially released to OCRN members in May. The study had many interesting findings, including:

• Only 22% of respondents could clearly articulate ROI on community efforts
• The majority of respondents gave a high priority to establishing an ROI model in the near term
• 49% were reporting some dimensions of value back to management on a monthly basis
• “Value” of online community efforts are contextual to an organizations goals and objectives

Download the full report here, free of charge.

This was cross-posted from the Online Community Report

Online Community ROI: Reporting on Dimensions of Value

We conducted the Online Community ROI research study in May of 2007, as a function of the Online Community Research Network. The study explored how organizations determined ROI, what dimensions of value were being reported to management, and the attitudes in the organization around the concept of community value.

We had over 50 completed surveys, and participants included large software companies, large community destination sites, niche community sites, community platform providers and consultants. Most respondents were senior staff that managed most / all online community budgets for their organizations.

Organizational Attitudes Towards Online Community Investment

Overall, the survey results indicated a fairly high tolerance for investing in online community activities without clear “hard numbers” ROI. Other date in the survey results shows that dimensions of value other than fiduciary are being accepted as “return” on community investment and involvement. However, the majority of respondents did say they were expected to communicate clear return in the future. Creating a clear ROI model for most organizations is clearly a priority, even those not under immediate pressure to communicate value.

Attitude Towards Communication of Value

A small number of respondents reported that they had the ability to tie community initiatives back to their corporate goals, and to clearly communicate ROI. The majority of research participants felt their initiatives are adding value, but can’t provide a complete ROI model. A small percentage of respondents feel their initiatives are disconnected from corporate goals, and they currently don’t report on value. This speaks to the need for most organizations to create an ROI model, and one that includes more dimensions of value than direct financial value.

Online Community Budgets

One last data point from the survey. When we asked about online community budgets. 75% of those that answered indicated a spend of at least $50k, and there were a significant number of that indicated spends of over $100k and over $500k annually, not including headcount. Obviously one would need to understand an organization’s spend in other areas to determine the proportion of overall annual budget, but these budget numbers do indicate significant investment in community by the participating organizations.