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Overcoming Online Communtiy ROI

I have a hunch that the world of online community ROI is shifting. More data is available to support decisions and most importantly, it appears that businesses are placing less emphasis on ROI as a requirement for community projects.

Last week I had to miss what appears to have been a great event called the Online Community Business Forum. I've attended Forum One's Online Community Summits for years and always considered it time well spent.

A couple of friends, Joe Cothrel and Bill Johnston presented some data about our strange and wily friend - Online Community Return on Investment.

From the Online Community Report Summary of the Event ...

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Publicly available stats (compiled by Joe)

  • 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)

From the April 2007 ROI Survey:

  • Only 22% of respondents had clear ROI Model
  • 42% had staff of 1-5 people
  • 49% Report Monthly to Mgmt
  • Establishing ROI Model was a priority for most respondents in the near term

Full powerpoint deck here.

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Mukund Mohan also did a recent survey of developer communities with 112 respondants. One of the highlights regarding ROI was:

¾ (75%) don’t provide ROI information for their developer communities and don’t see the need from management to do so. One participant put it “Its so obvious what the ROI is that we don’t see the need to justify it�?.

Link to the summary file with charts and results.

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Dave Hersch of community platform company Jive Software shared his views recently in a blog posted titled "ROI ShmoROI"

I've been getting a number of reporters asking about the ROI behind an application like Clearspace lately. My general response is that it's a fool's exercise. Trying to determine if the savings and revenue increase are worth the expense is like trying to measure whether the view from atop Everest was worth the climb -- it's exceedingly hard to measure and it should be painfully obvious.

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Here's my perspective...

For me, ROI is important, but I think the equation should be flipped. One of my core beliefs is that, in the future, businesses will rely on their communities of customers to remain competitive.

In this context - what is the cost of not pursuing a community strategy? What will happen, over time, if community doesn't become a part of the organization?

The threat I see is the inability to remain competitive. If your organization doesn't treat their customers like a community and build those interactions into value, your competitors will. Your lack of a community strategy *now* may become a competitive liability in the future. You may be faced with competitors who save support cost, innovate more quickly and produce higher quality products because of their engagement and relationships with their customer communities.

In this way, the question becomes: what is the future cost of not pursuing a community strategy now?