Community ROI
Or … Wild Goose Chase
Or … Justifying Online Communities
Or … The ROI Narrative

(posted by Holly Pendleton)

Categories:
• Support
• Product Development
• Marketing
• HR
• Metrics that have been compiled to date: (Joe Cothrel @ Lithium)

• Community users remain customers 50% longer than non-community users.
(AT&T, 2002)
• 43% of support forums visits are in lieu of opening up a support case. (Cisco,
2004).
• Community users spend 54% more than non-community users (EBay, 2006)
• In customer support, live interaction costs 87% more per transaction on average
than forums and other web self-service options. (ASP, 2002)
• Cost per interaction in customers support averages $12 via the contact center
versus $0.25 via self-service options. (Forrester, 2006)
• Community users visit nine times more often than non-community users
(McKInsey, 2000).
• Community users have four times as many page views as non-community users
(McKInsey, 2000).
• 56% percent of online community members log in once a day or more
(Annenberg, 2007)
• Customers report good experiences in forums more than twice as often as they
do via calls or mail. (Jupiter, 2006)

Methodology:
• There really isn’t a good model for community ROI
• Building an ROI model based on activities supported by the community makes more sense.
• ROI on activities that your company doesn’t currently do right now is a whole different approach.
• Use of stories / narrative to sell the value of the community to the business and to the participants / targets

• Harvard Business Review – study on ebay community – Germany –

HBR Article (requires sub, this is an overview)
Full Research Published

• Seems that there is a pressing need, there is a narrative aspect, it is contextual based on the business

• Let’s keep the conversation going – Bill and others will dump a bunch of stuff on the wiki and others are blogging on this … so let’s keep the conversation going.

Jay Cross: Here's a perspective we didn't discuss. It's meta, not mechanics.

All business decisions are relative. A sales manager asks a new sales person, “Did you have a good day?” Following three great meetings with prospects that morning, the sales person replies that yes, she had a good day. “Did you make any sales?” asked the manager. The sales person said no, she had not. “Then you did not have a good day,” replied the manager.

When assessing value, where you stand depends upon where you sit. A director may measure success in terms of lower costs. A line manager is concerned with quarterly targets or higher revenue. A senior executive focuses on organizational flexibility and competitive advantage.

Managerial decision-making is more subjective than people recognize. ROI is often a hurdle or a means to focus preliminary cost/benefit analysis to screen out clear losers. When the time comes to make choices, gut feel and good judgment win out over formulas.

Sponsors don’t usually back a project unless its economics are so compelling that they can “do the math” on the back of an envelope. If the odds are good that I’ll get $750,000 in benefits from my $75,000 investment, I don’t need four-place accuracy to decide to spend the money. This is business, not a science experiment. A Fortune 50 company recently told me, “We manage this place with sound-bites.”

What if the benefits of your proposal are not obviously compelling? Pick another project.

Bill's Notes / Thoughts
The problem:

• There is data available, but it may not be
universally accepted
• There are dimensions of value we can prove, but
aren’t compelling
• There are dimensions of value we suspect, but
can’t prove
• In general*, most folks are being asked for ROI

Prezo attached: OCU_ROI.pdf