May 27,  2009 Social Media Club The ROI of Social Media: Customer Service Communities Natalie L. Petouhoff Senior Analyst ...
The #1 Customer Service 2009 initiative should be social media.
<ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI Methodology to Calculat...
Why is social media important to customer service? <ul><li>It’s… </li></ul><ul><ul><li>Twitter </li></ul></ul><ul><ul><li>...
Customer disdain, social media and customer service have…  <ul><li>…   formed a perfect storm that is super charging chang...
What is a Customer Service Online Community? Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forres...
Who’s got an online community? B2C… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
Who’s got an online community? B2B… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
Verizon… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
iRobot… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
myFICO… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
Intel… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
<ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI Methodology to Calculat...
TEI ™  is Forrester’s ROI methodology Costs (Impact on budget) Benefits (Impact on business) Flexibility (Options) R I S K...
Assumptions <ul><li>Multiple customer service goals </li></ul><ul><li>Attracts super users </li></ul><ul><li>Engages commu...
<ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI methodology to calculat...
Examples of benefits <ul><li>Cost savings </li></ul><ul><ul><li>Reduce call volume </li></ul></ul><ul><ul><li>Reduce email...
There are many benefits of Customer Service Online Communities… Source: May, 2009 “The ROI of Online Customer Service Comm...
The answers are in the community Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester report <...
First Contact Resolution (FCR) goes up Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester re...
Customer advocates create more value Source: February 2008 “Redefining High-Value Customers” report.
“Bad word of mouth” gets handled! <ul><li>Do the “ostrich” or…  </li></ul><ul><li>Handle it… </li></ul><ul><ul><ul><li>Ale...
Invest in turning customer informants Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report ...
What about the rest of the company? Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester repor...
<ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI methodology to calculat...
Examples of customer service online community costs <ul><li>People </li></ul><ul><ul><li>Training </li></ul></ul><ul><ul><...
Start-up costs of customer service online communities… Source: May, 2009 “The ROI of Online Customer Service Communities” ...
Recurring costs of customer service online communities… Source: May, 2009 “The ROI of Online Customer Service Communities”...
<ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI Methodology to Calculat...
The ROI of online customer service community is… Source: May, 2009 “The ROI of Online Customer Service Communities” Forres...
The TEI of online customer service community is… Source: May, 2009 “The ROI of Online Customer Service Communities” Forres...
Where to begin?  <ul><li>Take the self-assessment </li></ul><ul><li>Evaluate your organization </li></ul><ul><li>Compare t...
Join the social media revolution Source: April 6, 2009, “How to Win Funding for Your Customer Service Project ” Forrester ...
Thank you <ul><li>Natalie L. Petouhoff </li></ul><ul><li>+1 310.919.8467 </li></ul><ul><li>[email_address] </li></ul><ul><...
Research in this presentation <ul><li>July 2009, “Social Media Best Practices for Customer Service: Case Studies” </li></u...
Research in this presentation <ul><li>Why Talking To Your Customers Is Ruining Your Business, August 29, 2008 </li></ul><u...
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Dr. Natalie Petouhoff ROI Of Social Media Social Media Club Presentation/ Forrester Research

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Many enterprises are considering social media and are wondering if there is return on the investment. Forrester's @DrNatalie has taken a stab at calculating an ROI when social media is applied to customer service. The result? Large ROIs and benefits to every part of the company! Applying social media to customer service may be the tipping point for business to take social media as a serious enterprise application!

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  • Dear Sir/Madam,

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  • Hi Natalie,
    Surely this is an illuminating presentation. I have a question regarding slide 14, in which you mentioned risk. Have you considered the Trust Factor? I dropped out of several social media website as I felt uncomfortable with the 'opaque information collection' and its storage. I feel this factor is going to be very influential in determining the success of social media website.
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  • Interesting. We could view this as a quantification of the POST approach of Li & Bernoff.
    A quibble - your present value and NPV are the same although we could of course put in our own interest rate.
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  • Hi Natalie, I have to thank you for uploading the results of your excellent study! The German market is really underdeveloped when it comes to social media and customer involvement technologies. One of our studies showed that 2/3rds of the travel companies in Germany do not offer any such technologies for customer service purposes and still rely mainly on hotlines, web forms and email. Your study really puts water on the mills of our small, but innovative company hiogi and also because of your results and the latest IDC forecast (over 41% annual growth of the service-community market), we launched an international version of our web-based and mobile SaaS: http://en.service-community.net/

    Best regards
    Bjoern
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  • WOWOW! thank you all for your notes and messages! I am so happy that this Slideshare allows us to share our work and spread the information so -- so many people can see it and learn! THANK YOU! THANK YOU! THANK YOU! from the bottom of my heart! @drnatalie
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  • Dr. Natalie Petouhoff ROI Of Social Media Social Media Club Presentation/ Forrester Research

    1. 1. May 27, 2009 Social Media Club The ROI of Social Media: Customer Service Communities Natalie L. Petouhoff Senior Analyst Covering: Social Media, Customer Experience and Customer Service Forrester Research
    2. 2. The #1 Customer Service 2009 initiative should be social media.
    3. 3. <ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI Methodology to Calculate ROI What are the benefits of online communities? </li></ul><ul><li>What are the costs of online communities? </li></ul><ul><li>What is the ROI of customer service social media? </li></ul>Agenda
    4. 4. Why is social media important to customer service? <ul><li>It’s… </li></ul><ul><ul><li>Twitter </li></ul></ul><ul><ul><li>Online communities- Lithium, Helpstream, Jive… </li></ul></ul><ul><ul><li>Facebook, LinkedIn, MySpace </li></ul></ul><ul><ul><li>RightNow, Parature and nGenera </li></ul></ul><ul><li>It’s not just a… </li></ul><ul><ul><li>Forum </li></ul></ul><ul><ul><li>A wiki </li></ul></ul><ul><ul><li>A blog… </li></ul></ul><ul><li>It’s a community that interacts with each other on an ongoing basis </li></ul>
    5. 5. Customer disdain, social media and customer service have… <ul><li>… formed a perfect storm that is super charging change </li></ul>
    6. 6. What is a Customer Service Online Community? Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester report <ul><li>Online communities have evolved from “bulletin boards” </li></ul><ul><li>Today they are “posts” in the form of forums, blogs, and chats. </li></ul><ul><li>Updated “posts” sent via email or RSS syndication subscriptions </li></ul><ul><li>This instantly distribute new information to EVERYONE </li></ul>
    7. 7. Who’s got an online community? B2C… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    8. 8. Who’s got an online community? B2B… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    9. 9. Verizon… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    10. 10. iRobot… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    11. 11. myFICO… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    12. 12. Intel… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    13. 13. <ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI Methodology to Calculate ROI </li></ul><ul><li>What are the benefits of online communities? </li></ul><ul><li>What are the costs of online communities? </li></ul><ul><li>What is the ROI of customer service social media? </li></ul>Agenda
    14. 14. TEI ™ is Forrester’s ROI methodology Costs (Impact on budget) Benefits (Impact on business) Flexibility (Options) R I S K <ul><li>Uncertainty </li></ul><ul><ul><li>Impact of “assumptions” </li></ul></ul><ul><li>Benefits </li></ul><ul><ul><li>Quantified value </li></ul></ul><ul><ul><li>Defined metrics </li></ul></ul><ul><li>“ Options” created </li></ul><ul><ul><li>Are there new opportunities the future? </li></ul></ul><ul><li>Cost </li></ul><ul><ul><li>People </li></ul></ul><ul><ul><li>Process </li></ul></ul><ul><ul><li>Technology </li></ul></ul>Source: August 4, 2008, “The Total Economic Impact ™ Methodology: A Foundation For Sound Technology Investments” Forrester report Total Economic Impact
    15. 15. Assumptions <ul><li>Multiple customer service goals </li></ul><ul><li>Attracts super users </li></ul><ul><li>Engages community to be honest about their opinions </li></ul><ul><li>Company is interested in community’s opinions… </li></ul><ul><li>Small to medium sized call center </li></ul><ul><li>Three year time frame for analysis </li></ul><ul><li>Has federated search </li></ul><ul><li>Allows agents to have access to the community </li></ul>Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    16. 16. <ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI methodology to calculate ROI </li></ul><ul><li>What are the benefits of online communities? </li></ul><ul><li>What are the costs of online communities? </li></ul><ul><li>What is the ROI of customer service social media? </li></ul>Agenda
    17. 17. Examples of benefits <ul><li>Cost savings </li></ul><ul><ul><li>Reduce call volume </li></ul></ul><ul><ul><li>Reduce email volume </li></ul></ul><ul><ul><li>Increase agent productivity </li></ul></ul><ul><ul><li>Increase in FCR </li></ul></ul><ul><ul><li>Reduce SEO costs </li></ul></ul><ul><li>Revenue improvements </li></ul><ul><ul><li>Increase customer lifetime value </li></ul></ul><ul><ul><li>Increase product ideation </li></ul></ul><ul><ul><li>Increase lead conversion rates </li></ul></ul>Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report Benefits (Impact on business)
    18. 18. There are many benefits of Customer Service Online Communities… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    19. 19. The answers are in the community Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester report <ul><li>Customers solve each other’s problems </li></ul><ul><li>Less or no interaction from a company. </li></ul><ul><ul><li>Customers read posts </li></ul></ul><ul><ul><li>Fewer call to the contact center </li></ul></ul><ul><li>And agents use the community-enhanced KM database </li></ul><ul><ul><li>Reduces their call time </li></ul></ul><ul><ul><li>Provides more satisfying answers. </li></ul></ul>DSL provider
    20. 20. First Contact Resolution (FCR) goes up Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester report <ul><li>FCR affects </li></ul><ul><ul><li>Customer satisfaction </li></ul></ul><ul><ul><li>Purchase reprobability </li></ul></ul><ul><ul><li>Good word of mouth… </li></ul></ul>My question was answered !!!!!!!!
    21. 21. Customer advocates create more value Source: February 2008 “Redefining High-Value Customers” report.
    22. 22. “Bad word of mouth” gets handled! <ul><li>Do the “ostrich” or… </li></ul><ul><li>Handle it… </li></ul><ul><ul><ul><li>Alert executives </li></ul></ul></ul><ul><ul><ul><li>Quickly post a resolution to the community </li></ul></ul></ul><ul><ul><ul><li>Avoid </li></ul></ul></ul><ul><ul><ul><ul><li>Brand damage and </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Increased call volume… </li></ul></ul></ul></ul>Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    23. 23. Invest in turning customer informants Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report <ul><li>Even informants can be turned into advocates: </li></ul><ul><ul><li>Use a built-in system to recognize, rank, and reward users </li></ul></ul><ul><ul><li>Acknowledge their suggestions </li></ul></ul><ul><ul><li>Thank them for helping customers </li></ul></ul>
    24. 24. What about the rest of the company? Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester report <ul><li>Product Development </li></ul><ul><ul><li>New ideas coming from communities can save product development millions </li></ul></ul><ul><li>Product Q&A </li></ul><ul><ul><li>Get solutions that can’t be found any other way </li></ul></ul><ul><li>Marketing and Sales </li></ul><ul><ul><li>Now promoting a product that was designed with customer input. </li></ul></ul>
    25. 25. <ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI methodology to calculate ROI </li></ul><ul><li>What are the benefits of online communities? </li></ul><ul><li>What are the costs of online communities? </li></ul><ul><li>What is the ROI of customer service social media? </li></ul>Agenda
    26. 26. Examples of customer service online community costs <ul><li>People </li></ul><ul><ul><li>Training </li></ul></ul><ul><ul><li>Staff </li></ul></ul><ul><li>Process </li></ul><ul><ul><li>Marketing of community </li></ul></ul><ul><li>Technology </li></ul><ul><ul><li>Community website design </li></ul></ul><ul><ul><li>Single Sign-on </li></ul></ul><ul><ul><li>Integration to contact center </li></ul></ul><ul><ul><li>Platform subscription fee </li></ul></ul><ul><ul><li>Analytics </li></ul></ul><ul><ul><li>Reporting </li></ul></ul>Costs (Impact on budget)
    27. 27. Start-up costs of customer service online communities… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    28. 28. Recurring costs of customer service online communities… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    29. 29. <ul><li>Why is social media important to customer service? </li></ul><ul><li>Using Forrester’s TEI Methodology to Calculate ROI </li></ul><ul><li>What are the benefits of online communities? </li></ul><ul><li>What are the costs of online communities? </li></ul><ul><li>What is the ROI of customer service social media? </li></ul>Agenda
    30. 30. The ROI of online customer service community is… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    31. 31. The TEI of online customer service community is… Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report
    32. 32. Where to begin? <ul><li>Take the self-assessment </li></ul><ul><li>Evaluate your organization </li></ul><ul><li>Compare to best practices </li></ul><ul><li>Get alignment </li></ul>Source: January 13, 2009, “Forrester Customer Service Innovation Framework and Self-Assessment ” Forrester report
    33. 33. Join the social media revolution Source: April 6, 2009, “How to Win Funding for Your Customer Service Project ” Forrester report
    34. 34. Thank you <ul><li>Natalie L. Petouhoff </li></ul><ul><li>+1 310.919.8467 </li></ul><ul><li>[email_address] </li></ul><ul><li>www.forrester.com </li></ul><ul><li>To Get the Slide Deck, go to: </li></ul><ul><li>www.forrester.com/socialmediaclubla </li></ul>
    35. 35. Research in this presentation <ul><li>July 2009, “Social Media Best Practices for Customer Service: Case Studies” </li></ul><ul><li>May 2009, “The ROI of Online Customer Service Communities” </li></ul><ul><li>April 6, 2009, “How to Win Funding for Your Customer Service Project” </li></ul><ul><li>January 13, 2009, “Forrester Customer Service Innovation Framework and Self-Assessment” </li></ul><ul><li>January 21, 2008, “The Economic Necessity Of Customer Service” </li></ul>
    36. 36. Research in this presentation <ul><li>Why Talking To Your Customers Is Ruining Your Business, August 29, 2008 </li></ul><ul><li>August 4, 2008, “The Total Economic Impact™ Methodology: A Foundation For Sound Technology Investments” </li></ul><ul><li>July 2, 2008, “Customer Service: A Keystone Of Your Corporate Revenue Strategy” </li></ul><ul><li>February 4, 2008, “Redefining High-Value Customers” </li></ul>
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