Proving Social Media's Value (Forum ROI model) - SMX Advanced

June 2, 2009 Edmund Wong @edmundw SVP, Strategy iCrossing Proving the Value of Forum Engagement (a.k.a. How to convince your boss to fund your forum project)

User forums represent a large source of online conversations
Tech companies (e.g., consumer electronics, software) have an opportunity to participate in forums , which can account for 30-50% of total UGC, in a meaningful way
Whether you are looking to build your own user support forum or participate in 3 rd party forum conversations, you can apply an ROI calculation to this form of engagement

Benefits of engaging in user support forums
Do something about the significant discussions about your brand
Visibly provide support that others (“Lurkers”) can benefit from
Drive traffic , especially natural search, to e-commerce store and main site
Improve customer service and potentially call center cost
Test new product ideas and gather feedback
Foster an online community that increases customer retention
Show you care

But senior management will still ask: What’s the ROI?

Many companies have a “value” for a customer Average customer Customer Value (LTV)

But not all customers are created equal Neutral Promoter Detractor Customer Value (LTV)

And don’t forget “referral economics” Important to decrease detractors and increase promoters Source: Net Promoter Economics: The Impact of Word of Mouth, Satmetrix, 2008 Customer Value (LTV) Neutral Promoter Detractor

Calculating referral economics Source: Net Promoter Economics: The Impact of Word of Mouth, Satmetrix, 2008 78% 3.87 17% 0.5 29% 4.24 68% 0.8

Support forum economics Active Users Direct Value Active Users Referral Value Active Users Lurkers Lurkers Direct Value Lurkers Referral Value Direct Value Referral Value

Incremental value from engaging directly with active users in forums Before After Lift from Promoters Gained Lift from Detractors Saved Active Users Direct Value Active Users Referral Value Promoters Neutral Detractors + # Promoters gained X Referral Impact (per Promoter) X LTV = # Promoters gained X ∆ LTV = # Detractors saved X ∆ LTV + # Detractors saved X Referral Impact (per Detractor) X LTV # of customers

Rinse and repeat for “lurkers” in the engaged forum threads Lift from Promoters Gained Lift from Detractors Saved Lurkers Direct Value Lurkers Referral Value
Perform similar calculations with Lurkers, those who may be reading but not posting to the forum and may be influenced by the threads you conversed directly with other users on
Some additional assumptions:
Lurkers start off less negative toward the brand
Actual impact is probably a little lower
Before After Promoters Neutral Detractors # of customers

If you pull it all together, you get this Note: Excludes cost savings from decreasing call center burden + – Total Program Value (i.e., incremental revenue) Lurker Lift from Detractors Saved Lurker Lift from Promoters Gained Active User Lift from Detractors Saved Active User Lift from Promoters Gained Profit Program cost (e.g., technology investment, community manager) ROI

Thanks! Edmund Wong SVP, Strategy iCrossing [email_address] @edmundw

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Proving Social Media's Value (Forum ROI model) - SMX Advanced

by Edmund Wong on Jun 02, 2009

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Proving Social Media’s Value (Forum ROI model) - SMX Advanced — Presentation Transcript