In part one of the presentation, we focused on looking at the research that has come out during 2011 about social media for B2B companies and how you can use that research to understand how to use social media in your organization to solve your pain points. In part two, we’re going to look at several companies who are doing just that. Through published case studies and an example from Impact Interactions itself, we’ll see how you can utilize social media in a manner which generates real economic value to your firm. So let’s get started.

As always, should you have any questions or would like to comment, please do so below in the comments section.

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!

The methodology is built around a very simple, yet powerful concept: Restaurant menus. Our training workshops provide teams with the questions that they must answer to successfully utilize social media. The goal is to clearly identify your strategy and objectives, then build a menu of tactics to support your effort.

So, are you a Pizzeria or a Fine Dining restaurant? Do you have a limited menu or an expansive menu with ever changing offerings (think of daily specials)? Does your audience have the time for a five course meal or do they want take out? Do you have multiple chefs or is there one person making your pizza?

By answering these and other questions, B2B teams begin to gain clarity in their objectives, audience, content strategy, and measurement requirements. Once we complete this session, we move into the tactical way to utilize social media in order to build out the menu of offerings.

Not all tactics are appropriate, nor does B2C social media strategy always deliver the intended results. By understanding how B2B social media tactics differ from B2C and work together to deliver results, our client SAP has generated significant results. In terms of helping partners succeed in a tough economy, it’s Best Performance for Partners social media program delivers training and information efficiently to help each partner organization succeed in meeting its revenue and lead generation objectives. For SAP, the partners who are participating are learning better ways of marketing and selling which benefits SAP directly in the form of revenue achievement.

For SAP, the Best Performance Challenge is an innovative way to build its partner channel competency each year. The Best Performance Circle, composed of the top partner organizations in EMEA and India, reinforces SAP’s commitment to its partners by using an online community to strengthen its relationship with a key part of its sales ecosystem.

The video below by Raimund Mollenhauer, Head of Enablement & Talent Net for SAP Partners, SME EMEA & Global describes how SAP is using Impact Interactions’ methodology today to deliver results:

The innovation continues at SAP with future roll-outs of additional Best Performance initiatives. Their use of social media not only speeds the adoption of these initiatives, but also delivers value to the partner channel in a cost effective manner.

To learn more about B2B social media best practices, our workshops, or social media for channel management, please contact us or ask a question here on this blog.

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…

by Matthew Lees

The first post in this series laid out the question and noted some important similarities between internally facing and externally facing communities. The second post discussed key differences between such communities.

This third piece looks at employee and customer communities from the perspective of the vendors that provide tools, technologies, and services to organizations that sponsor online communities.

The Vendor Perspective
In one of my semi-annual industry reports (“Online Community Platform Company and Product Update – 1H 2008”), I wrote the following:

“2. Blurring of External vs. Internal Communities. Our focus at the Patricia Seybold Group is on enabling those who engage with companies from the “outside,” so we tend to be more interested in systems that support external communities of customers and/or business partners. This is not a clear delineation, though, as Web 2.0—social networking in particular—hits the enterprise. But as advocates of customer-centric approaches to business, we are sanguine on the trend that is moving away from the “us vs. them” mentality (with employees as “us” and everyone else as “them”), and toward a more group- or stakeholder-based approach, with customers and partners simply being another group of stakeholders. It’s happening slowly, but internal systems are being opened up to allow appropriate access to customers and partners. And community platform vendors are leading this trend; half of the companies we cover have products specifically developed for combined internal and external collaboration.”

That was written in August 2008. Many of the vendors I cover still offer products to support both employee and customer communities. Here’s a breakdown of some of the companies:

Technology Solutions for External Communities
•    Awareness
•    Lithium Technologies – Social CRM
•    LiveWorld – Community Center
•    Pluck
•    Powered – Social Marketing Platform
•    RightNow – RightNow Social Experience

Technology Solutions for Internal and External Communities
•    Blogtronix – Blogtronix Enterprise, Blogtronix Community
•    Ingeniux – Cartella
•    Jive Software – Social Business Software (SBS)
•    KickApps
•    Leverage Software
•    Mzinga – OmniSocial
•    Small World Labs
•    Telligent – Telligent Enterprise, Telligent Community

(There are a great many technology vendors that provide tools and services for supporting internal communities only. My fluency with these platforms is more limited, although some well known products are Atlassian Confluence, IBM/Lotus Connections, and Socialtext.)

One Foot in Both Camps
The vendors that provide solutions for internal and external communities have a foot in both camps. That gives them a larger potential customer base, but it also hampers their ability to excel in one area. So, while I am still “sanguine on the trend that is moving away from the ‘us vs. them’ mentality,” I’m not convinced this is the best long-term approach. I see three main reasons as to why:

•    Corporate Bandwidth. None of these vendors is in the Fortune 500 or Fortune 1000 range. They’re all relatively small companies doing cutting edge stuff, mind you, but they don’t have the deep pockets to be able to do everything they want to…and do them all well.
•    Marketing and Sales Strategies. In a nutshell, they’re selling to different people in different business units. Convincing the CIO and the head of HR to sign with you takes different materials, case studies, and ROI analysis than selling to the CMO, the head of customer service, or the chief of R&D.
•    Development Efforts. Developing software for different use cases is a challenge. These vendors no doubt receive feature requests from customers of their internal and external products; many of these requests likely overlap, but many likely don’t. Desired integrations have similarities and differences, too; integrating with social Web applications (e.g., Twitter and blogs) may be wanted by both camps, but those managing internal communities may ask for integrations with ERP, accounting, and scheduling systems, while those managing external communities may need integrations with CMS and CRM systems. Deciding on the direction of developmental efforts is a tough enough call when you’re serving just one market, let alone two.

To some degree, online communities are online communities. But vendors with one foot in the internal community camp and one foot in the external community camp have more challenging strategic decisions than those focusing in one area. Things are pretty good now for all vendors, as the world of social technology continues to blossom. Within the next year or two, though, I expect to see some changes, such as re-jiggering product lines, acquisitions, and consolidation.

Next
The final post in this series looks at Internal/Employee and External/Customer communities from the perspective of the people charged with managing and ensuring their success.

I grew up watching television shows where each week there was a “Special Guest Star” on an episode each week. These guests provided a little extra to the show and usually were cool celebrities. Think of all the villains on Batman for example or the Brat Pack on “Vegas” or the vacationers on Fantasy Island…or for those of you a little younger, the guests on the Simpsons.

Following that idea, I’d like to introduce our Special Guest Blogger, independent analyst Matthew Lees.

Matthew is a well respected analyst in the Social Media and Online Community World (see his bio here). He is the author of reports through the Patricia Seybold Group such as:

1. Selecting An Online Community Platform
2. Best Practices In Crowdsourcing
3. Analyst Report: Lithium’s Social CRM Suite

After reading his research and reviews of his findings, I thought Matthew truly understood how to make social media technology work in an enterprise organization. So, like all good social media practitioners I followed him on Twitter (@mlees) and his blog. Matthew and I first met in person at one of Forum One’s Online Community Unconferences. We’d been reading each other’s blogs and reports and discovered that we come to the industry with the same high level focus… using these tools to improve business results. While Matthew focuses on the technology and its impact, we focus on the process and the users. Together, we cover the issues that all enterprises need to succeed in their social media projects.

We decided in late December over a crab cake lunch here in Maryland, that we should find a way to collaborate together. Our idea is to inform, educate, and drive the best practices we’ve developed to a broader audience with this blog and our twitter accounts. Matthew will be posting here over the next few months both independently and collaboratively with our team members.

If you have a suggested issue of topic for us to cover, please contact us by adding a comment on this entry or by using our contact form.

So, with that said welcome Matthew!

Mike Rowland, President

The world is adopting social media at higher and higher levels according to a recent Neilsen Report.  According to the research by Neilsen, global time spent on social media sites increased by 82% in December 2009 when compared with December 2008. Pretty large increase especially if you look into the footnotes and understand that this research is based upon only U.S., U.K., Australia, Brazil, Japan, Switzerland, Germany, France, Spain and Italy. No China, no India, no Russia, nor are there any Nordic countries listed.

But this growth coincides with what we’re seeing here at Impact Interactions. We’ve helped develop and launch multiple communities in countries such as China, Russia, Italy, France, Germany, Brazil, Argentina, Mexico, Poland, and elsewhere over the past several years. And while clients are still interested in their communities in the U.S. their focus is shifting. We are seeing more interest in companies asking us to help them launch communities and social media plans in countries ranging from Japan to Russia to Brazil to Mexico.

The growth in third party applications such as Twitter and Facebook have helped companies to understand the potential reach of the medium, but it is the local language social networks like StudiVZ (German) which have helped in-country marketing teams decide that they must be engaged with their customers using social tools. So even as Facebook moves past these local social media/networks, the smart marketer understands that it’s not the tool so much as it’s the growth that matters in deciding whether social media is a good tactic in a particular market.

In our experience leading a social media workshop in Innsbruck, Austria at the prestigious Management Center of Innsbruck it was clear that our non-US audience were more engaged on local language social media tools including blogs and social networks than on the U.S. offerings. (In fact, it was there that I learned more about StudiVZ and other offerings.)

That doesn’t mean that non-U.S. members are not on Facebook, Twitter, or LinkedIn. But it does mean that for the savvy global marketer the research and identification of which sites or applications to use is a bit more difficult. While the strategy remains the same, each Internet culture requires a clear focus on localized tactics. That means a cookie cutter approach using the same tools like Twitter, Facebook, or other application across multiple markets will not deliver the results you desire.

Watch the growth, it’s here to stay. But also look for the smaller sites that can deliever more value to your organization when using social media globally. As the old adage goes “All marketing is local.” The same applies to social media.

-Mike Rowland, President

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.

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.

What is interesting about these quotes is that the communities referenced were launched in the 1998 to 2000 time frame when online community was a new offering on the web. To gain these results, our clients had to change the behavior of their potential members to include online communities in their work routines. While it seems old fashioned today when everyone knows what an online community is, these results demonstrate one of our best practices:

Too often organizations buy into the idea that the offering itself will be enough. The “build it and they will come” idea has been proven to fail almost every time. And yet, we see organizations thinking about cutting their community investment or launching a community and letting the community run itself. That is a recipe for failure as well. It also reflects the thinking that online communities and social networks are a ‘soft’ application (meaning that they cannot prove their value quantitatively). It is for this reason that many managers move to cut online community budgets dramatically during downturns. This is exactly the wrong time to cut, this is the time to build.

In times of economic uncertainty, your customers and prospects will perform more due diligence than ever prior to buying your product or service. Online communities and social networks are valuable tools in that process. Will a community without a strong company presence be able to influence the purchase decision? Probably not. This reinforces a second best practice:

So how does this tie into the ROI argument? Simple… if your organization is not prepared to engage with the community members by answering their questions, providing documentation, linking them with content, and asking their opinions your community will wither away during the downturn. If your organization is ready to engage with your community, you will build additional brand loyalty among members. Your community will be vibrant in comparison with your competitors who are pulling back. You will be demonstrating the value of working with your organization over the competition. By providing correct information rather than partially correct information (community managers facilitating conversations do this part), you help your prospects learn more about your products/services/company and build confidence in them that you’ll be there to help.

Remember that in most B2B communities, the ratio for those visitors who read versus those who add content is roughly 25 to 1. This means that every successful interaction potentially influences another 25 visitors on average. Depending upon the product or service, it can be much higher. Influence is correlated with purchase intent. When your community is functioning properly and is well managed, the influence it wields is tremendous.

By mining your registration database against your customer database, you’ll be able to prove the value of your online community. By using a proxy of 2-5% of sales made to community members were influenced by the community, you’ll be able to calculate a basic ROI. To refine the proxy, survey your members about the influence the community has had on their purchase decisions. You’ll be surprised how large a percentage of community members have been influenced by something they read or received from the community. But if you are not investing in your community, you will not get the growth needed to generate a positive ROI.

And that’s just the sales/marketing ROI. For those B2B communities engaged in self-service customer support, the cost avoidance equation is easier to figure out and measure.

Want to learn more? Visit our website (Impact Interactions) to download our free presentations on online community best practices.