Moving Beyond Counts & Traffic – Social Media Measurement That Works

Lots of interesting research coming out on Social Media recently. We take note because the results and conclusions continue to demonstrate that measurement remains a high priority for executives, but what is delivered is not meeting their needs. Let’s take a look at some recent examples of companies surveyed about their social media efforts from a measurement point of view.

First a study from White Horse of 104 companies using social media shows us that when companies try to measure the success of their social media efforts, that very few (less than 15%) are able to get to an ROI for their work. They continue to use traffic and participation (we put that in our behavior metrics) to demonstrate success.

Here is another study which demonstrates a similar point, that companies are using social media traffic and behavior metrics as a measurement of success. This study completed by King Fish Media in June 2010 has great information; unfortunately, it reveals that while many companies say that they have a social media strategy in place they don’t understand how to measure its results.

Perhaps it is the way the research is presented versus the actual question asked, but when you read the measurements used for value they are not representing economic value in most cases. Rather, marketers and others measuring social media continue to focus on representing traffic as some sort of proxy for value. Worse, many still believe that the number of followers on Twitter or fans on Facebook is a valuable metric to use to demonstrate value. They couldn’t be more wrong…

Even the famed Guy Kawasaki is promoting an idea that the more followers the better during a TweetChat on MarketingProfs…but his perspective is the larger the audience from a sheer numbers perspective the better your results will be. In our experience, that is just not true. We see that the more QUALIFIED followers you have, the better your results MIGHT be.Why? Because the value of a follower is zero until they do something that brings value to the organization. If all they are doing is following and never taking action, can you assign a value to them? We think not. Have you analyzed your followers? How many are customers? How many are prospects? How many are competitors? (How many have followed your account to simply build their own counts through an auto-follow?)

So where does all this lead? Well, if you are attending theiStrategy meeting in Chicago on September 15-16, we’ll be there to address this issue. I’ll be presenting this topic on the morning of the 16th to the attendees.

I’ll demonstrate a stronger methodology for using a more integrated approach to your social media efforts which allows you to focus only on the metrics that really matter… those that lead to economic value for your organization.

For those of you who cannot attend, the presentation will be added to our social media resource center after the meeting ends. For those of you who are attending, please bring your questions!

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Tracking Down Online Community ROI (Part 2: Business-Side Metrics)

by Matthew Lees

Part 1 looked at community-side metrics. This is the data you get from your community’s Web server log files, your community platform database, and any third-party analytics systems (such as Google Analytics or Omniture) that you’re using.

It’s also the data that you – as a business sponsor, community manager, or other stakeholder – likely have direct access to. And while it’s important information, it’s used primarily to help ensure the health of the community, not quantify and provide insight into business value. For that, you need to tap into business-side metrics.

Business-Side Metrics
These are the metrics that do show business value. Unfortunately, for most online community use cases, such data lives in places that you probably don’t have direct access to or control over. This is where the legwork and the relationship building that Mike Rowland referred to in the previous post come into play.

Where to look in your organization and who to build relationships with depends on what you’re after. Here are four common business cases for B2B communities, with an overview of their potential business value as well as mention of the relevant business-side metrics, location of these metrics, and people who can help you access and understand these metrics and what they mean for the bottom line.

1. Service and Support. Reducing contact center costs is one of the primary business goals of a community in which customers help answer each others’ questions and solve each others’ problems (via what’s often called “peer-to-peer support”).
Business-side metrics: number of incidents (by source, e.g., phone, email, chat, etc.), first-contact resolution, agent hours
Where the metrics live: contact center analytics system
Who to make friends with: not only the VP of Support, but also the manager who is the most fluent with the call center’s reporting and analytics

2. Product Development Feature Set and Road Map. Here you’re probably looking for (a) ideas for new products and services, (b) ideas for new features and functionality, (c) ideas around improving customer-facing processes (i.e., making it easier for customers to do business with you), and (d) the prioritization of these ideas. These ideas and their prioritization by customers can improve processes, reduce time to market, and give you higher confidence that your product road map is what your customers want.
Business-side metrics: number of customer ideas that are implemented; number of existing ideas that were validated by customers; time to market; dollar value of reduced time to market (can be a squishy number)
Where the metrics live: product tracking system; business process systems (ideally these all track the sources of ideas)
Who to make friends with: product development / R&D teams, particularly the keepers of the road map and features/capabilities lists

3. Customer Acquisition and Lead Generation. Communities are a great way for people to go beyond what they read on your Web site and in your marketing collateral, to get a sense of how people are using your products in the real world. So prospects are part of the community ecosystem as well as existing customers. A vibrant community full of helpful, engaged customers can be effective in moving prospects into your sales pipeline.
Business-side metrics: number of new accounts that came in through the community, new revenue from these accounts
Where the metrics live: CRM system or other sales tracking application
Who to make friends with: the sales team, particularly the sales operations manager who tracks sourcing

4. Customer Satisfaction and Loyalty. Numerous studies have shown that online communities can have a positive affect on customer satisfaction and loyalty. The tricky thing in demonstrating this for your own community is to separate out cause and effect. Communities can be self-selecting; your most satisfied and loyal customers are probably over-represented in your community. For them, the community didn’t cause their high level of satisfaction, for example. Any surveys you do to measure satisfaction and loyalty should take this into consideration.
Business-side metrics: survey results; customer satisfaction / loyalty methodology or system, such as Net Promoter Score (NPS)
Where the metrics live: survey results database; satisfaction, loyalty system
Who to make friends with: the marketing specialist who measures customer satisfaction and loyalty for your organization

Legwork and Relationship Building
You may have noticed that the business-side metrics are really just the ones that your organization and your colleagues are already using to identify and analyze business value. You’re just looking to apply and tune them towards quantifying their impact from the community.

Of course, while the methods may be familiar, it isn’t necessarily easy to compile metrics and estimate dollars saved and/or generated. A lot of it comes down to doing the legwork and building relationships with the right people. Ideally determining community ROI is at the top of their priority list as well as yours. It will take time and attention to come up with ROI hypotheses, test them using data you’ve tracked down from wherever it lives, analyze the results, revise your hypotheses accordingly, and iterate. Hopefully your colleagues become partners in these efforts.

So how do you build these relationships, make those allies, and get the information you need? We’ll leave that for another day. But experience shows that chocolate helps…

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Social Media Metrics – Driving to Value

We’re members of the Online Community Research Network and recently received the latest report on Community Metrics derived from a survey of the membership. While we’re happy to see a lot of progress in the responses about tying measurement to business objectives, we continue to see confusion about measuring value. Over the past ten years, we’ve developed a methodology that can help online community and social media managers structure their reporting in order to focus on the value their efforts produce in terms of business objectives.

Looking  at the report’s question #12 (Were your community’s metrics created in support of your organization’s broader business goals or were they created independent of a corporate business?), the following responses were given:

• 47% Created to support existing business goals
• 31% Created independently but helping refine existing business goals
• 22% Neither of the above (summarized from three additional responses)

Looking at what metrics the respondents use to support or refine existing business goals provides insight into the confusion over what constitutes value in online community and social media efforts.

Question 19 asked “What are the three most important community key performance indicators (KPIs) in the reports you send to upper level management?” The answers are a startling contrast to the answers to Question 12:

1. Number of Page Views or Clicks
2. Number of Site Visits
3. Number of Unique Visits

Why are these responses startling? Because the metrics are traffic metrics not value metrics. These are base level metrics not KPI worthy metrics for upper level managers. (In fact, three of the top five metrics measured as detailed in an earlier question were traffic metrics too: Unique Visitors, Page Views, and Visitors. Only two were not: Registrations and Posts.)

What these two questions’ responses demonstrate is that the respondents are still struggling with determining value from their community work that truly builds into measurable business objectives.

When asked about ROI, 71% of respondents confused engagement and traffic metrics with value. Only 29% correctly identified a tangible value metric to use in measuring ROI.

To provide a little clarity in reporting metrics, let’s look at how Impact Interactions’ reporting methodology can help. First, our categories are structured as follows:

• Traffic - The basic building blocks that measure “How Many?”
• Behavior – The second level of metrics measuring conversion and engagement
• Value – The highest level of community metric where the activity has an economic or dollar value associated with it (This is what management really cares about!)

Some of the actual metrics that we use for clients are as follows:

1. Traffic - Unique Visits, Unique Visitors, Page Views, etc.
2. Behavior- Page Views/Unique Visit, Page Views/Unique Visitor, Active Members/Unique Visitors, New Registrations/New Unique Visitors, Total Registrations/Total Unique Visitors, Downloads/Registered Member, Content Added/Registered Member, Content Added/Unique Visitor, Downloads/Unique Visits, Full profiles completed, Referrals from Twitter/Facebook/YouTube, etc.
3. Value – Number of successful customer support resolutions in the community, Total Contact Sales Inquiries/ Total Unique Visitors (or Registered Members), Total Leads Qualified/Generated, Product Referrals, Positive Product Reviews as a % of Total Product Reviews, Direct Revenue Generated from Community Activities, Length of Sales Cycle for community member vs non-member, Average Purchase Size/Frequency for community member vs non-member, etc. 

Take a look at those metrics again. The first two categories of Traffic and Behavior can usually be obtained using the platform’s tools (like Jive, Telligent, or Lithium) or through your web analytics’ tools (like Google Analytics, Omniture, or WebTrends). The Value metrics take a little more work. In fact, to really be able to perform a realistic ROI calculation, you will need to get help from outside the community/social media area of your organization.

To derive an ROI related to marketing objectives from a community, you’ll need to access your CRM system. For a support ROI, you’ll need to know the cost per interaction in complementary/competitive areas such as a call center. The standard tools won’t get you there, you’ll have to build relationships within your organization in order to really build a solid analysis that ties back to business objectives. An ROI model built on traffic will contain far too many holes to be useful.

We’ve been helping our clients with these issues and have developed a strong set of best practices that can help you succeed in your reporting. Please feel free to share your insights into this issue and ask questions about reporting and analyzing your community and social media efforts. We’re happy to answer them and help reduce the confusion.

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Online Community – Moving Beyond Metrics to ROI

We gave a presentation on building ROI models for online communities at the Online Community Unconference in Mountain View, CA on June 10th. It was added because so many of the participants stated that ROI and calculating the value of their community was the most important issue they faced.  So, we didn’t have time to build a true presentation, but rather lead a workshop for participants to learn more. It was lead by our president, Mike Rowland.

Here are the summary notes taken during the session:

• Have to first identify what is the economic value of the community to the organization offering it: (Don’t confuse traffic or behavior metrics with value)
  • Cost Avoidance
  • Increased subscription rates or lower churn rate
  • More frequent purchase rates
  • Higher purchase level/amts
  • Faster close for large item sales
  • Reduce lead generation cost
• Once you’ve identified your value metrics, break down your metrics into 3 buckets to look at communities:
  • Traffic – PV, visits, visitors, etc.
  • Behavior – What they do when the get there, who they are, download/visit, contribution/member, responses by employees vs. customers
  • Value – can attach an economic value to it. Need $ to get to a true ROI model. See above list.
• You have to build relationships w/ the folks in your company. Need access to other systems. You cannot build ROI from community analytics provided by software vendors or from traffic and behavior metrics alone. 
• ROI Frameworks:
  • Cost Avoidance
    • The person who proposes the question needs to verify the answer. This is a feature needed in the platform.
    • # of community support resolutions X $ complimentary support resolution (1-800 number) = total cost avoidance -> economic value
    • Track over set period of time (e.g. quarterly or yearly)
    • ROI = (total economic value – total costs to set up and run forum) / total costs –> over one period and as a percentage
  • Increased subscription or reduced churn
    • Customer database compared to community database
    • cust. database = Average churn rate (e.g. the number of months the avg user subscribes) X price/subscription = customer value
    • Community database – look at active members and see if the churn rate is better or worse.
    • Price will be the same, so you’ll have to see if the churn rate was more or less. If subscriptions are longer, than you have a higher customer value for community members.
    • Shows you slowed the churn rate down.
  • More frequent purchase or Higher Purchase level/amts
    • Use your eCommerce DB or CRM system
    • What is the avg amt customers spend/purchase?
    • go back to comm DB and parce out active members and compare to ecommerce DB (which ones spend more/purchase?)
    • Do comm members have a higher spend/purchase? active comm users X avg $ they spend = economic value
    • Need to trend this and see how it fluctuates.
    • what is the average number of items in completed shopping activity? (e.g. 1.6 items) Do comm members buy more?
    • Avg cost/item X avg # items = economic value
  • CRM decrease cost
    • Want to find what avg value of customer is
  • Faster close of sale (Good for large purchases like software or hardware systems)
    • How fast are organizations moving through your CRM system to sale?
    • Identify active organizations in community DB to compare them to avg organizations.
    • How long does it take the avg. organization to go through sale stages? What’s the cost/sale? Do active organizations in your community go through more quickly and spend more?
  • Lead generation cost
    • Similar to above, but use cost to generate a lead for average customer versus those which originate in community/social media campaigns
• How can you tell if a user came to your comm and then bought your product through a 3rd party reseller? You can’t unless your resellers provide access to their databases which is next to impossible to get.
• Users of support communities become brand neutral after their issue becomes resolved.
• Hidden costs of community for ROI Analysis, make sure you count these:
  • Servers
  • development costs
  • customizations
  • widgets
  • maintenance
• Make sure that you are amortizing your costs across the same time period as your economic value or you will skew your results.

One point to remember is that the value of communities really is derived from active members, not all members. So define your active members with criteria that meet your behavioral key performance indicators (KPIs). For example, an active member can be someone who posted in a forum, downloaded a featured whitepaper, uploaded content, or viewed a webcast in the past month. For B2B especially, it doesn’t have to be an activity within the past week as most B2B community members average 2-3 visits per month unless they are deep into the sales cycle.

The number one issue to watch out for when building your ROI framework is the use of proxies. If you cannot get the data, don’t guess at a proxy for the value because the more proxies you utilize the bigger the house of cards that you build.

Lastly, value can be a set of different items. For a subscription based community value can be both churn rate differential and purchase levels. ROI is not a single value formula, it is a multiple value formula in most cases as there is marketing value in support communities and vice versa. So make sure that you are at least attempting to capture as much of the value drivers as possible in your analysis.

Want to learn more about online community or social media ROI? Contact us today or leave a comment.

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B2B Communities – What Works

We gave a presentation at last week’s Online Community Unconference (site is open to the public as of June 19th per Forum One) in Mountain View, CA on B2B Communities. We weren’t surprised by the number of attendees looking to learn more about the best practices for running a B2B Community, but were surprised a little bit by some of the misperceptions on managing them.

Top Best Practices for B2B Communities:

1. B2B Community Members have higher expectations than B2C members. You must engage with them as they want to engage with your company just as much as they want to engage with their peers.
2. B2B Communities require internal SMEs to engage early and remain committed to meeting member needs until external SMEs can compliment the internal SME efforts.
3. Third party applications like Twitter and Facebook should not be used as external competitive communities, but rather should be utilized as beacons to drive traffic to your community and key information.
4. You can measure the ROI for B2B communities, but you cannot get there by using only community software metrics and/or web analytics packages like Omniture or Google Analytics. None of these provide true value metrics that have an economic value associated with them. To get to ROI, you must build relationships within your organization so you can obtain real data on customers, leads, ecommerce transactions, etc.
5. When budgeting for B2B communities, be realistic. For example, no single vendor of software or web design or implementation services will ever come in exactly where they quote when you want additional features or customization. So build a small cushion into your budget to be safe.
6. To attract business decision makers, you must focus on how they will use the site… not how you want to market to them.
7. The higher the level within an organization your potential members have attained, the lower the amount of time they will have to spend on your site. So don’t waste their time!

In short, B2B communities can deliver impressive results when managed properly with a focus on those segments who deliver the value to your organization. Don’t be all things to all people, that strategy is doomed to fail. To learn more about the best practices for B2B communities, please download our presentation , ask questions in the comments area below, or contact us.

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Online Community Unconference East 2009: The More Things Change, The More They Stay The Same

At last week’s unconference, I noticed that many of the questions asked throughout the day repeated one another. Veterans in the online community world noted that the questions we are asking ourselves today seem to be the same ones that we have been asking for the last 10 years. One woman who had attended last year’s Online Community Unconference brought up an old expression to describe it, saying, “The more things change, the more they stay the same.” I find this to be very true of the knowledge base in the online community industry. Even though communities and other social media are relatively new, their core elements are not so new at all. Online communities are just a new platform that allows people to build relationships and interact with each other, just like people have been doing since the dawn of time.

 

 

In order to really understand social media, you need to understand the social part of it. And while some people may tell you that the social part means just letting all of your members do whatever they want, I believe it is much deeper than that. It is about using our knowledge of human desires, feelings and behaviors in order to build a community in the truest sense. Successful “real world” communities don’t allow their members to do whatever they want, do they? To be successful, whether IRL (in real life) or online, communities need to have a specific purpose with regulations that help people to fulfill that purpose. Governments, school systems, the workplace, family, and friend groups all have specific functions and have guidelines (explicit or implied) that are built around fulfilling those functions. Prosperous online communities are no different. The people involved in online communities are the same people involved in outside communities. These people need structure, guidance, and freedom all balanced perfectly in order to make online communities as valuable as other communities and to make people want to be a part of them.

 

 

I found it very interesting when Scott Moore hosted a session called Psychology For The Community Manager. He took psychology principals on human behavior and analyzed them, explaining how these principles relate to behaviors in online communities as well. One example he gave was the Bystander Effect. This principle states that people are less willing to offer help to someone when others are present. This is because people tend to feel like someone else should be the one to do it, or because they fear that they will be judged on their actions and instead do nothing. Applied to online communities, Scott gave an example of how the degree of community moderator involvement can greatly affect the extent to which members help each other. If members feel like the moderators are ever-present and that they will do everything, then members are not as willing to solve their own or other people’s problems. The lesson here was that while your moderators are essential to communities, managers need to be aware of their impact on the member engagement and shape the community norms so that members will help each other to a reasonable extent and turn to moderators in advanced cases.

 

 

I am surprised that more people don’t connect the world’s knowledge of psychology and sociology to online community development. Oftentimes people who build online communities take the stance that social media is brand spanking new and that everybody is experimenting and learning everything from scratch. While there are aspects of social media which are a definite departure from many traditional corporate viewpoints, there is no need to start with a blank slate. That’s one of the reasons why people are always asking the same questions year after year. Instead, follow Newton’s lead and innovate by standing on the shoulders of giants. Utilize existing resources and tap into the knowledge of those who have been there before you. Then you’ll be years ahead of everyone else.

 

 

Jeremy Latimer

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Beware the 90%-9%-1% Myth of Community Participation

Over the past year or two, it has been very fashionable for social media consultants to push the 90%-9%-1% community participation breakdown as the benchmark for all communities to reach or surpass. We’ve seen this statement be presented at the Community2.0 conferences, Forum One’s community conferences, in blogs, and now in a new site 90-9-1.com. While we do not doubt the sincerity of our competition in trying to develop a benchmark that is easy to remember and use, we do have an issue with this one.

Let’s start with the generalization across all communities and social media. Do active blogs and wikis really have 1% superusers and 9% active users who are adding content? I doubt it. Take out the company sponsor/employee who is employed to maintain the blog or wiki and the numbers drop in a big way. Most of the blogs we’ve seen metrics on in the B2B space have a ratio closer to 99-.9-.1. That’s a lot less than the ‘benchmark’ being touted as the industry standard. Go to any of the major blogs whose audiences are the high users of social media like AllThingsD or TechCrunch to see how low these ratios actually are. I don’t have the metrics, but a casual glance reveals that even at TechCrunch, the ratio is closer to the 99-.9-.1 than 90-9-1.

What about online communities? There again, the ratios are dependent upon the purpose of the community. With most community consultants failing to distinguish between a B2B and a B2C community, most advice provided is based upon B2C communities. But that is a major mistake. B2B communities are very different than B2C in terms of function, objectives, members, and participation. In our experience managing and measuring many B2B communities, the participation results are all over the map. One client offers an open B2B technology community with a ratio of 70-25-5. A previous client offers a closed B2B support community that achieved a ratio of 60-30-10. Another B2B client had a ratio of 98-1.9-.1.

Even the B2C communities we’ve managed have a different ratio based upon their targeted audience. AARP’s online community (that we are managing) currently has a ratio closer to 99.9-.07-.03. Using the myth of 90-9-1, this community would be considered a failure. But with a membership of over 800,000 new members in the past year and the demonstrated success in meeting the organization’s online goals, it is far from a failure.

Why is there a difference between what we are seeing and the myth of 90-9-1? Our experience has proven to us that there is no magic number to reach for when building and managing your community. Rather, the results are dependent upon several factors:

1. What are the demographics of your audience? Older audiences read more, participate less (with the exception of political communities and blogs). Male dominated audiences tend to participate at higher rates than female dominated audiences with the caveat that men usually try to dominate the participation in mixed audiences. Audiences who are more comfortable with technology will usually have higher participation rates than non-technology audiences.
2. What is the focus of your community? Support communities have much higher participation rates than any other type of community we’ve measured. General entertainment communities without a purpose usually spike, but then show declines in participation as they age (usually due to dominant members who use the community as their bully pulpit).
3. Are you B2B focused or B2C focused? B2B communities should have higher participation levels because members come to find information and build relationships with the company offering the community. If they find what they want, they return. A well run, facilitated B2B community will bring members back again and again.
4. What level of outreach and marketing are you performing? Unless your community becomes the next viral success, your participation rates are directly related to the amount of success you have in marketing your community.
5. How engaged is your organization in the community? In B2B communities, the higher the engagement of your employees, the more members will participate. In B2C communities, the moderators must be visible, yet not play in the community as members. They are the referees. When B2C moderators become too friendly with members in a community, new members see favoritism not balance. They then have a disincentive to participate.
6. How much content is available? Without content, there isn’t much to discuss.
7. Does your organization practice the “If we build it, they will come” method for managing communities? If so, your participation rates are doomed to be low (as will your conversion and other engagement rates). You must actively manage your community. We recommend personas as well as employees to demonstrate desired community norms and to establish the member to member interactions model for the community.

If you’ve read down this far, hopefully you’ll agree that the 90-9-1 ratio is a myth not reality. Where is your community with regards to this ratio? Does it matter? Not really.

What does matter is what are the measurable results for your community or social media offering. Are members getting what they need? Is that successful interaction benefiting your organization? These are the questions that are important, not a ratio.

We’ve helped many organizations achieve stronger results with their social media projects than they thought possible. We have created the best practices for B2B and B2C efforts that can help meet both the needs of your audience and your organization. We’d be happy to help your organization move beyond basic social media tactics to a more strategic method to engage members and achieve business results. To learn more, please contact us.

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Online Brand Defense: What Campaigns Can Learn from the Obama Attack

By now, we’ve all seen and heard about the false rumor released about Barack Obama attending a madrassa in Indonesia published online by the conservative Insight magazine. The amazing thing is that the article was published online and was allowed to run rampant all over the blogosphere for several days before the rumor was finally killed off. In our work with online communities that discuss politics, this rumor spread like wildfire with many, many conservative posters slamming Senator Obama and his campaign. Online Community sites like Hannity.com, Slate.com, and even AARP.org had many members publicizing the rumor for several days.

Once the mainstream media picked up the story, it had additional power online.

Yet, there was no one online to debunk the rumor for Senator Obama’s campaign.

As we see it (and we admit we’re biased), organizations must be prepared to deal with the inevitable attacks that take place online. In the case of presidential campaigns, they need a team that is established in the main online communities of the web as well as familiar with the bloggers out there who want to dethrone a candidate if they can. There must be a plan to deal with the negative publicity that is a part of online life today. It is no different than what we advise companies to do.

The question is whether the Communications Directors for these campaigns understand this as well as the Brand Managers who understand why brand defense is so important online today.

Want to learn more about how Impact Interactions helps organizations defend themselves online? Contact us today.

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