Two of the most common questions Forrester receives from marketers are “How do I know if it’s worth having a community?” and “How can I prove to my executives that my community is worth their investment?”
To get the initial funding and keep support coming for an owner community — one which you operate and fully brand on your own website — you must be able to clearly measure and communicate the value up to your CMO and CFO. That means capturing the effect it will have on your company’s profitability as a part of your overall marketing investments.
We have built upon Forrester’s Total Economic Impact (TEI) methodology to provide you with a reference framework to estimate the ROI of your community.
Key Quantifiable Benefits: New Leads, Closing Leads and Less Costly Support
Each of the following metrics ties directly to either profit or revenue. Seventy-one percent of B2B marketing executives we recently surveyed reported that revenue-related metrics are among the most important measurements for their marketing teams.
New lead generation
Focus on how many new leads or prospects come to your company each year because of your community, multiplied by your average deal size and overall lead close rate.
For example, the community manager for ServiceNow originally intended his community only to provide support to existing customers. However, as the community organically grew and the community manager tracked visitors, many of the visitors were new prospects for the company who arrived through organic search.
Increase in lead close or conversion rate
The effect your community has on your overall lead close rate, multiplied by your average deal size.
For example, Dell has found that its community influenced (was a factor in the purchase decision for) 25% of large enterprise revenue and 18% of public revenue.
Deflection of support calls
How many potential support calls get answered by the community, multiplied by your average cost per call.
SAP worked with its customer support team, for example, to arrive at a US$ 130 per call cost and then tracked the total reduced call volume to an annual savings of US$ 22 to 25 million. Cisco Systems used a similar methodology and a cost per call of US$ 120 to estimate that its support community results in an annual costs savings of US$ 120 million.
Key Qualitative Benefits: Better Products, Happier Customers
Besides the quantifiable benefits, there are two additional benefits that you need to capture and communicate when proving your community’s value:
Improved products and solutions via ideation
Product improvements informed by soliciting ideas for new features and product direction via your community.
For example, Marketo’s community managers bring every top-voted idea to its engineering team, which has used ideation to build more than 160 different features in the one year that it has had an ideation platform as a component of its community.
Increased customer satisfaction with your company overall
Increases to your company’s Net Promoter Scores and similar metrics because of their positive experiences in your community.
For example, StrongMail, in a recent survey, found that 29% of their customers overall had increased satisfaction with StrongMail because of their community activities.
Key Costs: People And Platforms
When you implement an owner community, there are several costs you must account for and deduct from the benefits:
The fully loaded cost of your community managers. While it’s possible to run a community with inexpensive managers in their early careers without domain experience, Forrester instead recommends hiring (and funding the salary of) more senior managers who not only understand social media, but also understand your solution areas as well.
IT and development resources
All costs associated with developing and maintaining your community. Even SaaS platforms require additional development resources from your IT department or VAR to customize the solution to fit with your goals.
The annual spend for the technology that your community is built upon. We recommend working with an established community software vendor to supply the technological underpinnings of your community. It’s possible to build a successful community on free-software, but doing so costs you in both development time and customer experience.
Bring It All Together Into A TEI Model
To illustrate how these factors come together, we created a reference model of a successful owner community implementation for a B2B company with an average deal size of US$ 100,000 and 2,000 qualified annual leads:
In this reference example, our model predicts that your community will generate a 57% ROI, and produce a net present value of about US$ 420,000.
Editor's Note: Read more from this month's focus on customer communities.
About the Author
Zachary Reiss Davis is an Analyst at Forrester Research, serving Marketing Leadership professionals. Hear more from Zach on owner communities at Forrester’s Forum for Marketing Leadership Professionals, April 18-19 in LA.
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