Lots happening on the Lithosphere with the new design coming up, so I've been spending a lot of time in another blog recently.

But today I'd like to return to the topic of numbers - specifically, the numbers that matter.

When I was at the Web 2.0 expo at the begining of this month, I had a good opportunity to see what numbers a lot of social media experts and vendors were using to make their case, from numbers of posts, numbers of views, numbers of registrations or even numbers of communities.

And recently there has been a great deal of fuss over the race between Ashton Kutcher and CNN to reach 1,000,000 followers on Twitter, as well as Oprah's entry onto the Twitter scene and what it means.

People are looking at the social media space and still trying to figure out how to keep score, when the real measure of success is the same as it's always been: are the companies engaged in social media using it to improve profits through increased revenue and decreased costs. For vendors, are your products and services doing this better than the others?

So in the spirit of the times, here is a collection of numbers from the Lithium Technologies website I'd like to share:

• Linksys, a division of Cisco, has reduced it's call volume by over 1.4 million calls annually as a result of it's thriving customer support community.
• FICO (formerly Fair Issac), a leading provider of credit scoring, realized a 41% increase in spending by community members after the launch of the myFICO forums.
• Sage North America, part of The Sage Group, has seen a 15-point increase in its customer loyalty score and experienced a 300% increase in participation in ... as a result of the ACT! community.
  

Maybe those numbers help explain why Lithium Technologies is putting up some numbers of its own in this tough economy.

To paraphrase Will Hunting: Do you like numbers? I got ROI - How d'you like them numbers?

Photo by TheBusyBrain

We talk a lot here about the importance of finding and engaging your super users to drive community success. But it's always nice to see it in action on one of customer's communities - like our friends at Verizon, who just today issued a press release about the success of their Lithium powered online Verizon Community Forum in enhancing their overall customer experience, as well as providing an excellent resource to help Verizon improve their product offerings. From the release:

"According to Mark Studness, director of e-commerce at Verizon, the Community Forums have been well-received since rolling out last July, generating more than 10 million page views.

'The Community Forums have spurred interaction among customers because people today expect to be able to find answers to their technical questions online,' said Studness. 'The feedback we've already received shows that our customers value the personalized peer-to-peer advice and feedback they receive from fellow users.'”

Aside from Mr. Studness' super cool name, 10 million pageviews for a new community in 8 months and growing is an excellent metric. And if you read the full release (also up on the Lithium site), there was an excellent profile of one of their community's super users, Justin and what keeps him coming back. But I thought I'd take it a one step further on this blog to see what kind of content people are getting with all those pageviews:

• 19127 posts in the community since it's launch. That's about 80 posts a day for 8 months of consistent posting - in fact, today's rates of content generation are probably much higher as the community has grown.
• 1309 posts were from the top two members on the Kudos leaderboard for the community, Justin (522 posts, named in the press release) and TimSykes (787 posts) combined for an amazing 7% of the total posts in the community. It's even more amazing when you realize that TimSykes didn't even register until October.
• 318 posts marked as accepted solutions. This is one of my favorite numbers, a clear indication of value of the content being created on the community, and also a conservative metric because accepted solution rates are typically an order of magnitude lower than the number of answered questions in the community.

By finding and engaging those all-important super-users, Verizon's community is flourishing. Which helps to explain why Verizon is seeing significant operational efficiency and cost savings as a result of deflected calls and a growing knowledge base of peer content.

Do you have a super user story you'd like to share? Let me know!

photo by inju

Proving ROI can be difficult for marketing and brand loyalty initiatives, and communities focusing on these kinds of objectives aren't any different. After all, it can be almost impossible to separate out all the many things that influence customer's decisions. How much of a customer's purchase is that 30-second ad on TV or radio really responsible for?

To address this question, advertisers on broadcast media will often try to implement some kind of controlled testing or staggered roll out to isolate the influence of their campaign from other factors. And for campaigns composed of limited bursts of content like traditional media this can be an effective strategy. But as the media mix and the frequency of interactions increases, this becomes harder and harder to disentangle.

Particularly for online communities and other ongoing social media, control and testing methodologies are ineffective and even dangerous to apply. Dangerous, because the attempt to isolate and control factors such as audience size and duration can actually be detrimental to building a thriving community of members, which prevents you from achieving your objectives. Alastair Ray talks about the problems of measuring integrated campaigns in an article on thinkbox.tv titled simply "Return on Investment":

"And with the rise of the integrated campaign where all media work together and often run at the same time that is making evaluation of the different elements including TV more difficult... And while the consensus is that integrated campaigns are indeed more powerful than non-integrated ones it’s vitally important to ensure the evaluation doesn’t distort the communications plan it’s designed to assess."

He was speaking of integrated marketing campaigns across multiple media, but I would argue that this applies to any ongoing program or initiative where factors are difficult to isolate. Or as Jeremy Griffiths, Effectiveness Director at MediaCom was quoted in the same article: '“We tend to avoid compromising the plan simply for the ability to get a better measurement of it.” 

It can be hard to prove a true causal relationship between community and objectives like increased purchases. After all, it may be that the people most likely to buy are the ones who are most likely to join a community (so community membership alone won't indicate a true cause of increased purchases among those members in that case). And if you are trying to influence not only the highly visible and active members of a community but the silent majority of passive participants as well, this makes the measurement even harder. So if time and control methodologies don't work well for measuring community success, what should marketers do to validate their investments?

I haven't seen an easy easy answer to this question yet. The most rigorous methodologies today are ones that use statistical analysis to measure both the likely impact of your particular campaign, and what would have occurred had you done nothing at all (factoring in the downward pressure of your competitors efforts). But that level of detailed analysis often requires expertise and resources that today's leaner marketing departments may not have access to.

A effective compromise solution we've seen employed is to baseline the current behavior of existing customers, then track how their behavior changes (if it does) once they join the community, according to the objectives you are trying to achieve. You can also capture data on awareness trends and qualitative anecdotes after the community has been deployed to help describe what changes you are seeing and why they occur.

Finally, be sure that you understand exactly what it is that your are trying to achieve, and make sure you are gathering data that will measure this appropriately. Look closer at what additional value you are expecting from community members - perhaps instead of measuring the increase in purchases for the most active members, the greater value may be that the most active members are affecting the purchases of others on the community. Using web analytics, you might then track who is viewing this content and whether this ultimately ends in a lead generating activity or even a purchase.

Ultimately, rigorous study and evaluation of enterprise community performance are good things for your business. You just want to make sure that you are not limiting your chances of success for the sake of measurement.

photo by timsamoff

There is a school of thought in social media which believes that communities cannot be made, they are only discovered. On the other side, some folks believe that you can build it and they will come. The answer probably exists somewhere in the middle.

Of course, we at Lithium are in the business of helping companies build a community around their products or services. Leaving aside the argument about whether these are communities that were 'made' or 'discovered', there has been a recurring outcry from some folks in the social media scene against the soundness of this strategy. "Fish where the fish are" is a common refrain to companies considering the build vs.. join decision, and I'd be the first to agree this is very sound advice. But I'd argue that this isn't really an factor against building a community site of your own for two reasons:

First, there's nothing to prevent you from building a community site of your own and reaching out to groups in other places; in fact, it should be a key part of your outreach strategy.

Second, and more importantly, chances are good that your customers visit your company site today with some frequency for a number of reasons: support, product news and updates, etc. If these folks aren't the core of your new community, who is?

Sometimes you don't need to go very far to find the fish: it's quite possible they may be swimming in a lake in your own backyard.

photo by libookperson

We had some recent interest on ROI for support communities in the Lithosphere community private boards, and I blogged about some useful resources for ROI in my last post. We also just posted a great new white paper on the topic, produced in collaboration with FT Works: Gold In Them Hills: Computing ROI for Support Communities White Paper. ROI is certainly on the forefront of everyone's mind on these uncertain economic times.

So whether you are just starting to look at ROI, or if you are looking for more ways you can show the value of your community to your organization, I thought I'd post a quick rundown of different ways to compute community ROI:

Sales & Marketing

• Increased sales by community members resulting from increased product sales for community members can often be measured if you have analytics tools integrated across both your e-commerce and community sites.
• Increased sales through recommendations can be measured when consumers visit recommendations in the community before they make a purchase.

• Improved brand affinity/customer satisfaction can be measured through embedding community participation questions in your existing surveys. Then apply this to areas where customer satisfaction and loyalty play a part, such as lower churn/customer retention.

Support

• Call deflection is still the primary means of measuring ROI in support communities. Measure both the direct deflection (number of questions answered) and indirect deflection (number of times answer was viewed) against the cost of a support call to get the full ROI. This single calculation alone can be staggering.
• Increased agent productivity since agents can leverage the customer community as a knowledge base substitute or add-on, which you can measure in decrease in call handle time or escalation avoidance.
• Decreased support agent costs via faster ramp-up time, utilizing less skilled agents, lower facility costs of home agents and lower turnover. Measure the savings of each on a per headcount cost basis.
• Strategic savings across areas like support for multilingual products, long-tail support, business continuity and spike handling, or a delay in strategic expenditures and investments. Specifically, measure what you can avoid or delay spending on by using a community to address these issues.
• Better analytics through emergent issue identification and product feedback. Measure the number of issues resolved and the costs saved by discovery.

Product Development

• Product feedback is not easy or cheap to come by using more traditional methods like surveys and focus groups. Measure the costs saved by using a community for these activities instead.
• Product adoption rate can difficult to track in some cases, but you if you can see an increase in adoption by community members you can compute the increased revenue by product price.

Much of what is listed above is discussed in the whitepaper which also includes many specific calculations you can use and rationales behind each, so be sure to check it out if you want more detail. Support communities comprise the main focus of the paper, but you'll find community rarely stays in neat little buckets. So why ignore all the other benefits your community has to offer?

Have you implemented any of the above methods to calculate ROI for your community? Let me know, or post your own ROI calculation in the comments. And be sure to point out which ones had the biggest impact to your organization!

photo by Brooks Elliott

Edited to fix link.

My previous blog not withstanding, the need to show some demonstrable ROI on community and social media projects in today's tough economy is palpable. With that in mind, here's some online community ROI resources I've found useful:

"Where for art thou" Community ROI?

Sean O'Driscoll's comprehensive post covering ROI for Support, Sales & marketing and Product/Program Development.

Online Community ROI

From the blog of Bill Johnston, metrics and a link to the PowerPoint he and Joe Cothrel presented at the 2007 Online Community Business Forum.

Online Community ROI and Revenue Techniques

Also from Bill Johnston, this time from the Online Community Reports blog: summary and downloadable report from Forum One Networks on ROI study.

Social Media FAQ #3: How Do I Measure ROI?

Jeremiah Owyang's own review of the subject, with many links to more links and still more links - a treasure trove!

Any other links or ROI calculations you'd recommend? Leave them in the comments and I'll update the main article!

In the movie Jerry Maguire, there was this wonderful scene where Jerry (Tom Cruise) and Rod Tidwell (Cuba Gooding, Jr.) were celebrating together after a game where Tidwell played well and almost received a serious injury. Another football player turns to Jerry's rival at his old agency and asks "Why don't we have that kind of relationship?" What follows is perhaps the most blatant fake hug in history.

Sometimes we forget how simple it really is. Listen to your customers. Talk to them. Show them that your human. It's not always about showing me the money, it's about showing me that you care.

Don't get me wrong, ROI is important and a good way to track the success of your efforts. But don't let it become an obstacle to connecting with your customers. Or you may one day find them looking at your competition and asking: "Why don't we have that kind of relationship?"

If they do, I recommend against the fake hug. It never helps.

Photo by CJ Sorg

An interesting comment was made in a Techdirt blog by Blaise Alleyne in the article Is Firefox Missing The Point In Its Response To Google Chrome? In case you have no interest in the latest web browser battles, Google just released a new web browser called Chrome, which some view as a threat more to Mozilla's Firefox browser than to Microsoft's Internet Explorer.

But here is what caught my eye from the article:

"The community is one thing Firefox has that Chrome can't copy overnight."

Wouldn't it be great if we could all say that about our products when our competitor releases their hot new app? Not to fuel our complacency, but as a resource to empower our competitive spirit?

Do you have any stories to share where your organization drew on its community to help address a competitive threat?