Online Community ROI

Occasionally I’m asked to explain what the purpose of social media is for individuals and businesses. Too often I’m greeted by sceptical views and a strong belief that social media encourages people to waste time. First of all, TV wastes time. Social media enables participation.

As Clay Skirky points out in Cognitive Surplus, “Someone born in 1960 has watched something like 50,000 hours of TV already, and may watch another 30,000 hours before she dies.”

Clearly, we have an excess of time. We are idle when taking the train to work. We are idle after dinner and once the kids are in bed. Despite our good intentions of maximizing our twilight years we tend to find other things to do rather than build that boat or write a novel. As much as we’d like to believe that we are all making the most of all of the hours in the day we do have some form of down time and it’s within this time that people chose to participate online.

The return on investment is the part that many businesses struggle to define. In meetings online community advocates are shouted at by finance to, “show me the money!” Top dogs want proof before business as usual gets derailed.

Here are a few quick facts to throw into your next presentation:

• 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)

Statistics provided by Bill Johnston

The simple truth is that consumers don’t want to be passive. We don’t buy something these days without doing a little research. We ask our friends and family what they recommend. We ask our co-workers and post on Facebook or forums. We have access to our own “experts” who know us better than any marketer. In a world overwrought with too many products and services competing for our attention we need more information as consumers to make informed decisions.

Image by Creating Passionate Users

The psychology of the consumer can no longer be assumed. How a product is used is not always how it’s advertised and the ROI of opening up a dialogue is discovering the true potential and reach of a commodity. Brand longevity is a result of faster processes to address customer service issues and quicker innovation. Customer loyalty is possible when brands are transparent and stop taking their customers for granted. By inviting consumers into the production space fewer advertising costs are incurred.

Think about how an online community could improve your business:

• How many customers do you lose because your current processes don’t allow you to respond fast enough?
• How much do you spend on advertising to new customers?
• What would change if you focused on empowering existing customers to spread the word instead of expensive TV or print campaigns?
• Can your community members answer customer’s questions for you?