The ROI of an online community

[#1]

One of the biggest questions facing organizations interested in launching peer-to-peer social networks involves determining the return on investment (ROI) -- with a particular eye on improving the customer experience while simultaneously lowering support costs.

"Most firms, when looking at building an ROI model, are focused on customer service in the beginning because that is what's tangible," said Natalie Petouhoff, Ph.D., a senior analyst at Forrester Research. "You have a gut-level instinct on what is tangible in terms of customer support."

However, additional value opportunities are equally attractive -- yet are often overlooked or under-utilized in building an ROI case, she added.

These include:

• "Voice of the customer" or "customer-driven innovation" (indentify new product and services opportunities and how to improve existing products and services).
• Reduced search engine optimization (SEO) costs
• Increased customer retention

Natalie noted that while champions of community must ultimately prove the value to management, many who are initially unable to prove ROI are forced to start with informal "ad-hoc" budgets and borrowed resources with an eye on starting small and then later proving the worth for expanded initiatives.  

To help win these battles in both cases, Natalie published a recent report titled "The ROI of Online Customer Service Communities." In it she identifies four key factors to determine ROI that encompass:

• Benefits: How will your company benefit from customer service online communities?
• Costs: How much will your company pay, both in hard costs and resources, for customer service online communities?
• Risks: How do uncertainties change the total impact of customer service online communities on your business?
• Flexibility: How does this investment in customer service online communities create future options for your organization?

Natalie will address all four factors - and will also share in-depth insights in addition to fielding participant questions - during a free, live webcast on Sept. 2 (more information and registration here).

During the webcast (which will include Lois Townsend, manager of social media strategy and operations at HP), Natalie will also review key findings from her most recent report, titled "Best Practices: Five Strategies for Customer Service Social Media Excellence."   

In the meantime, if you have questions for either Natalie or Lois that you'd like to get in ahead of time, please post them below. I'll do my best to get them addressed during the webcast (or following it). I also invite you to follow Natalie on Twitter. Her user name is drnatalie.

[#2]

For what it's worth [pun intended] my version of ROI:

http://kevintren.posterous.com/the-new-roi-is-receipt-of-influence

[#3]

@Kevin Keithley:

"Receipt of Influence" is an interesting suggestion. But Return on Investment is based on the idea that when a business funds a program or initiative, it should not only expect to get more back than it invested, it should plan to do so within a specific timeframe. What you put in and what you get back is often expressed in monetary terms, since this serves as a proxy for value on both sides of the equation that everyone can understand.

Measuring something like Receipt of Influence risks putting your program in a category that a) the business doesn't understand and b) doesn't believe it has to fund.