In my previous blog I wrote that online communities have hard ROI associated with them and are logical first steps in any social strategy. I’d like to expand on this and explain the six types of online communities I think will deliver the most significant return on investment for consumer-oriented organizations.
1. Customer support communities
Most organizations start here. Customer support communities provide forums for your customers to share ideas, answer each other’s questions and network. The business benefit of these communities is call and email deflection into your customer care organization. This application of social networking delivers very tangible cost reduction ROI.
2. Innovation communities
The second most popular place corporations start with social networking is through innovation communities. These allow subsets of your consumers to submit their own ideas and to vote on ideas submitted by others. What you get is the best of the best ideas in stack, ranked order. Generally these innovation communities are focused on product and service improvements and can help your business solicit and vet the best ideas from your customer base.
3. Market research communities
Market research communicates are used to reduce the cost and increase the speed of market research. Traditional market research requires focus groups and physical visits. Community research can be done at a fraction of the cost and much more quickly than traditional market research. As a result more ideas can be tested or refined faster.
4. Customer loyalty communities
Customer loyalty communities are much like customer support communities, but tend to be oriented not on call and email deflection but on building community around a topic of common interest. For example a shoe company might launch a loyalty community around running marathons. The business result is increased engagement and brand loyalty; people who participate in loyalty communities tend to spend more with the sponsoring organization.
5. Product reviews and other user generated content
Consumer supplied product reviews tightly linked with e commerce sites add creditability to your offerings and increases revenue. Shopping cart conversions increase and average order size can also grow.
6. Corporate communications and feedback communities
Social networking can also be used as a platform for discussion around company sponsored content – like this corporate blog. Key elements are the ability for companies to post their content and for consumers to comment on it. ROI here is softer, but still tangible. Corporate communications communities allow a company to publically state their position and offer an opportunity to discuss topics of interest that might not always be a fit for traditional communications channels like journalists.
I hope this helps demystify corporate applications of social networking. In my next blog I will address how social networking fits with our ‘Eight to Great’ methodology for improving the customer experience.
Greg Gianforte
November 12, 2009 at 8:56 pm
How would you suggest that large companies of a conservative nature use social media to their greatest advantage?
November 15, 2009 at 7:00 am
Good question. It depends on your goals.
If your goal is cost reduction and improved experience, then type #1 above.
If you goal is engaging and soliciting ideas from your customers more, then some form of #2, #3 or #4 above.
If you want to generate more revenue, then #5.
You can’t steer a bus if the wheels aren’t turning. Consequently, it is most important to just do something. One of the easiest to get started with is #1 a moderated Customer Support Community. We generally do this through a pilot, so companies have very little risk.
November 16, 2009 at 10:04 am
If you mean socially or politically conservative, that’s easy – do it just like everyone else, but of course try not to annoy your customers with outspoken political views.
If (as I think) you mean reluctant to change, with a backward-looking view of what customers want these days, it’s harder. To make a quick impact, you will need one of two things: a “believer” in a fairly high position at the company who can simply say “make it so”, or a competitor in the same industry demonstrating success with social media. I recently saw some of the same issues and wrote about it on my blog here:
http://real-crm-advice.blogspot.com/2009/11/social-crm-introduction-sort-of.html
A slower way of getting started is to ask for some off-project time to work on it, and start slowly. Try to get a pilot program started for a blog or simple forum (preferred, so people can introduce their own subjects), and get one day a week set aside to evangelize on the greater internet.
There are lots of horror stories about what not to do – but online/social marketing is a low-cost, high-return opportunity (but it’s hard to measure at first, which has delayed or prematurely ended some efforts).
November 19, 2009 at 1:47 pm
Greg, good article.
However, in order to measure the Social Media ROI, you need real numbers. Everything else is just fluff. If I am a marketing person and I need $50k for a social media marketing campaign, I need to prove to the CFO that the campaign will generate a positive ROI. If I can’t, then I should not be given the money (ok, that is a bit harsh as 84% of all social media campaign do not measure the social media ROI).
In order to generate an ROI analysis, I first of all need to identify the “return” in the ROI. “Investment” is easy = the technology and marketing cost. But how do I quantify the “return” and then how do I use that in a ROI analysis that I can deliver to my CFO to get money?
I spent some time working on this problem and subsequently developed a Social Media ROI calculator (in Excel spreadsheet format). You can download the calculator on my blog.
Best,
Dag.