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)

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

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