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online community metrics framework

In our latest research study, “The Business Impact of Online Communities,” we found that almost half (49%) of communities report revenue gains from their online community. This is an exciting proof-point, but it warranted further investigation. What enables some communities to be financially productive while others remain a cost center?

 

To answer this question, we analyzed the data to identify the winning conditions that bring in the green. It became clear that mature online communities tend to report greater revenue gains:

  • 55% of communities five years or older generate or influence more than $1M
  • 43% of communities that have existed for two years or less generate or influence less than $10,000

 

At first glance, it seems that it takes at least five years for a community to stabilize, build critical mass, break even, and generate revenue.  But then we started to peel back the onion to better understand the drivers behind this hunch.  Based on in-depth conversations with our clients, backed by additional research, we’ve found that “ramp up” issues don’t stand between communities and revenue – measurement and reporting issues do.

 

In fact, it does not typically take five years for an online community to realize revenue.  It takes five years for community leaders to develop processes and metrics to measure and report revenue gains.  It does not have to take so long!

 

Here are three steps marketing and community leaders can follow to recognize revenue faster:

 

  1. Build a business case

Too often, organizations build online communities based on a single use case – such as customer support or employee advocacy – not a full-blown business case that articulates a clear path to an ROI.  As a result, community managers put their time and attention into the tactical aspects of managing their communities instead of focusing on the business impact that the community is making.

The catalyst for change usually occurs when the community graduates from being a social experiment and becomes aligned with a line of business.  That’s when an executive steps in and wants to know how the community is advancing his or her business goals.  And that, in turn, forces the community manager to articulate KPIs and success measures.

 

It’s time to put the horse before the cart!  By building a solid business case – including a revenue model – at the outset of the process, community managers can measure what matters from the get-go.

 

We spoke with Leo Daley, Director of Services Marketing & Community at Kronos who discussed the importance of planning business impact from the start. He says “We just went live in October, and our community is first and foremost a support destination, so we’re focused on providing a great customer experience in finding answers to support questions and managing support cases. Doing that well drives customer success and loyalty. Also, our sales reps are telling me the community is a unique differentiator with prospects. And since the Kronos community is on the same platform as our CRM and support, we’ll be able to measure the impact.”

 

  1. Get your financial house in order

You won’t know if you’re achieving the benefits of your business case if you’re not tracking basic financial data.  Yet, in our research study, 25% of marketing and community leaders – one in four – report that they don’t know or don’t track their community expenses. And almost 40% do not know whether their community saves their organization money or not.

 

The mandate for community managers is crystal clear:  know what you’re spending and know what you’re saving.  Even if your community is generating revenue, without a clear picture of spend and yield, it’s impossible to calculate ROI.

 

  1. Connect the dots

In our study, we found that 36% of online communities influence revenue via customer retention and satisfaction – which is how the majority of marketing and community leaders define competitive advantage.If your community platform is not integrated with your other customer-focused platforms, how can you measure the influence on revenue?  You must connect your member data to customer data.

 

Michelle Groff Burling Director of Content Management, Communities, and Collaboration at Hitachi Data Systems had more to add.   “One of our key initiatives is to redefine what and how we measure to gauge the business value derived from our community,” Michelle explained.  “As a start, we mapped the community’s purpose to our organization’s business strategy – associating all the work that takes place in community back to our goals. This provided the foundation for measurement areas that will offer key ROI insights. Some examples include identifying sales inquiries attributed to community, the number of resolved issues, and support call deflection.”

 

So what’s the bottom line?  Revenue is not dependent on community maturity.  Communities that generate or influence more revenue do so because they have developed a financial model for tracking revenue.  With a solid business plan, sound financial metrics, and integrated customer data, you can cut to the chase – measuring and reporting revenue sooner, rather than later.

 

You can download the study here (free) and I will be sharing more about the research at my session at JiveWorld on Tuesday @ 4:15. I am getting so excited about the event!!  And, if you have any questions or want to chat about the Community Impact framework please reach out - we can meet in Vegas

Many people travel over the summer – checking off the destinations on their bucket lists.  Here at Leader Networks, summer is the time to focus on a different sort of list:  our biennial Online Customer Community Big List. And Fall brings the exciting opportunity to share our research with you.

 

The Big List of B2B Online Customer Communities is the most comprehensive list of online B2B customer communities in the world.

 

It includes big companies, small companies, foundations, and non-profits. We first created The Big List in 2011, featuring 94 communities …and the findings went viral. In 2014, we initiated the process again and the list grew to 126. For the 2016 edition, we are pleased to note that identifying new communities is no longer a challenge! In fact, online communities are now a mainstay of competitive advantage for many B2B firms. So, rather than create a database this year, we analyzed the list of 126 to see how they have changed over time.

 

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What key trends did our 2016 Big List research uncover?

 

1) Communities are driving competitive advantage for many B2B firms.

More than 40% of the communities that made the Big List 2016 are now active and thriving.  This supports our long-held observation that online communities can deliver a richly rewarding experience for the organizations that create them and for the members who participate in them.

In Active and Thriving communities, content is updated regularly and the members in the directory (when present) often share bios and photos.  Members seem to be familiar with each other and offer peer-to-peer support.

 

As the market moves closer to maturity, we continue to see that with proper planning and business alignment, online communities offer firms new insights, relationships, and revenue streams while meeting and exceeding their members’ needs.

 

2) Successful communities spawn more communities.

In the past two years, 11% of communities from The Big List have proliferated into multiple communities under the same brand. What was once a single, stand-alone community has become a portfolio of multiple, connected communities that are featured on the organization’s web site. This suggests that the company’s initial foray into communities was so successful they were inspired to create more – and to differentiate them.

Federated communities were mainly found in large enterprises. Many are operated under a single online community Center Of Excellence with shared success measured, consistent content, and professional facilitation teams. These communities from The Big List experienced meaningful growth over time because they possess the scale and efficiencies to fuel best practices.

 

3) Content is king – but not just any content.

Notably, our findings indicate that the communities with member-generated content have greater engagement than those who use the community as a marketing channel.  As a result, we’re seeing many of the less successful communities shifting to focus on member-driven content creation and publication.

 

4) A new B2B community business model is emerging.

Among the independently run communities (not branded by a single organization) many include corporate sponsors for specific forums. This is a great way for independent communities to maintain their neutrality, serve member interests, and generate revenue.

 

5) Inconsistent care makes for an incomplete customer journey.

Our research shows that 35% of communities are supported, but unevenly.  While the right elements are in place – content, information, and discussions  – there is evidence that they are not being nurtured properly.  The result? They run the risk of member abandonment and reputational harm for the organization.

However, these communities are not without hope! With some care and feeding, they are likely to turn around and become an asset to the members and the company that launched them.

 

6) Abandoned communities are a big liability.

Nearly 10% of the online communities from the Big List are no longer carefully managed or visibly updated. Many of the communities in this category have numerous unanswered questions, spam in the forums, aged content and, in some cases, members voicing concern about their lack of support.

Unfortunately, abandoned communities are a significant liability for the brand and reputation of the organizations they are a part of. As customer communities are a front-line experience for prospective and current customers, we strongly recommended that brands invest in reinvigorating these communities or developing a strategic takedown plan.

 

7) Gating may promote customer intimacy.

5% of the B2B communities on The Big List have changed their community model from open to the public to private – creating members’ only communities that require approval to join.  Many of these communities have created splash pages that actively market the business value of joining and provide information about the membership but keep the discussions and interactions behind the firewall.

This shift suggests a small but growing trend for B2B firms to seek greater customer intimacy by creating gated spaces for deeper knowledge exchange on a peer-to-peer and peer-to-company level.

 

Here is the report for the details:


The Big List gives community professionals a snapshot of the diverse online B2B community ecosystem and the great work being done by their B2B peers.  It provides inspiration, generates conversations, and gives companies insight into what’s working – and what isn’t – in the online B2B community space. Most importantly, by providing a benchmark for this category of communities, The Big List shows companies what success looks like so they can raise their bar and get more from their community initiatives.

 

Does your community belong in the Active and Thriving category of The Big List?  Or could you be getting more value?  Our Online Community Scorecard is a research-based, 70-point diagnostic that evaluates your online community’s strengths, weaknesses, opportunities, and threats. In just three weeks, we benchmark where you are today – and uncover opportunities to strengthen your community, ratchet up engagement, and complement your critical operational processes.  partners@leadernetworks.com

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Every marketer from Boston to Bejing seems to be focused on something called the “customer journey.” A Google search on this two-word phrase returns over 627,000 results. It’s one of those “Eureka!” moments – organizations realize buyers start researching a firm’s products and services long before they reach the point of purchase. These firms are now scrambling to find and engage with those customers while they are still on the move and before they arrive at a sales destination decision. But I gotta tell you, this is not news to those of us in the online community world.

 

In fact, the customer journey has long been an integral part of the online community experience. Many – dare I say most? – online communities make “the journey” a key part of their mission, aiding the customer before, during and after the point of purchase or other key decision. Communities are dedicated to helping customers and other stakeholders understand, explore, question and learn about products and services.

 

This “Ah-Ha!” moment for the customer journey highlights two different but parallel approaches – let’s call them tracks – for understanding this process: one is mapping the customer experience; the other is building customer engagement. In our ever-more-connected world, these two tracks are now merging to become one.

Making the Connection: Online communities and the Customer Journey

In our new world of customer-focused and customer-driven interactions, many firms struggle to engage and communicate with prospective and existing customers at appropriate times and places along the customer’s journey.

 

For example, when a sales person reaches out to a prospective customer, often the sales person has no way of knowing where this prospect is in their purchase cycle. Another example: anyone who has worked in customer service knows that customers typically wait to reach out to a company for assistance only after they have reached a high degree of frustration with their purchase.

 

Now imagine if a firm were able to build a relationship with a prospect during their research phase, or engage with a customer before their purchase problem reaches the breaking point? This is what online communities offer: a way to break the cycle of mis-timed outreach and catch-up customer care. Community offers a powerful way to move the buyer’s experience from episodic chaos to a more consistent, confidence-inspiring and customer satisfaction-building trip.

As the two tracks of customer experience mapping and engagement come together, let’s identify the four phases of the customer’s journey: Awareness, Evaluation, Purchase and Retention.

 

Awareness

This is the initial phase, when the prospective customer hasn’t fully defined what she is looking for. She may not have a clear understanding of problem she is trying to solve, so identifying a possible solution is difficult. A community is especially well suited to supporting customers in this awareness phase. A vibrant and engaged community signals there is strong customer support for prospective buyers. User-contributed content – questions asked and answered – plus sponsor-contributed content speeds up the problem and solutions identification process, which might include specific product and service recommendations. All this occurs while the prospective customer is building relationships with community members.

 

Evaluation

During the evaluation phase the prospective buyer winnows the options and examines product and service offerings in detail. It is comparison shopping. One advantage a community can offer is creating a single point of reference and collaboration for a buyer’s team. Online communities bring together a wide range of content and conversations within a single environment. It becomes the place for a single buyer or a team to share information and compare options. The community supports information-gathering from many sources but places all this content in a collaborative framework which supports comparisons and discussions about needs, preferences and decision factors.

 

Consider this situation: our buyer posts a question directly into an online forum and receives a range of responses from other community members. Some of those members will have been through the evaluation phase and made a decision. Some will be in the same state of uncertainty as our buyer. Still others will have long-term experience with the outcomes of a purchase decision. Many voices, many shared opinions. Where is the voice of the firm?

Some advanced-thinking organizations have created specific discussion areas to talk with prospective buyers — dedicated forums staffed with knowledgeable sales people who can respond open way to a buyer’s questions. These skilled sales people must have incentives to participate and training in the techniques of consultative selling to interact successfully with customers in a community environment.

 

First Purchase

At last! The buyer makes a decision and becomes a first-time customer. The psychology is similar to other kinds of journeys; by turns exhilarating, exhausting and complicated. And once the traveler gets to the destination, the party can begin.

 

But this is also a delicate time for the company, because – as with a first-time traveler – the new buyer’s expectations are exceedingly high. Every new customer’s interaction with the firm is memorable. With a complex services purchase, for example, once the papers are signed and the buyer’s team dives into the project, the selling firm had better be ready. The new customers will begin making connections inside the company and with other customers outside. They become voracious learners. They are eager to prove this was the perfect decision — no pressure on the seller there!

 

An online community strategy can really pay off here. There are so many ways community interactions can accelerate projects and delight the new customer’s team. If there is a formal account management team in place, their presence in the community can help speed the pace of information sharing, support and relationship-building.

 

Another way to look at this is to consider the alternative: what if new customers were unable (no place to go) or unwilling (who are the people who sold us this?) to interact with your firm? They will take their questions and concerns to other online venues, such as: a community operated by enthusiasts or experts with no connection to your firm; an outside standards organization; a competing firm.

If your firm is not part of the conversation, it can’t answer questions; verify the accuracy of information shared or follow-up with customers. A community is your company’s opportunity to respond with accurate and authentic information.

 

Customer retention

Customer retention is the outcome of the three prior phases. It’s the desired end state for customer relationships — Gartner Group states 80% of your company’s future revenue will come from just 20% of your existing customers. What firm doesn’t want to create customers for life as part of their overall strategy?

But how many companies make building and sustaining that “customer for life” a goal? In a world of fickle buyers, loyalty is hard to come by. Switching costs are at record lows. The choice to remain a customer is critical for both the customer and the company. How does the customer feel? How did the interactions and support go? Were they listened to? Did they feel whole in the end? An online community attuned to these concerns is very powerful instrument for keeping customers.

 

Online communities don’t always replace traditional support models, especially with complex purchases. But well-executed communities can help the customer when they experience “The Middle Of the Night Problem,” when there is no one to call. And feeling heard and experiencing ultimate responsiveness goes a really long way with customer retention and how they feel about your firm.

 

This post originally appeared on Leader Networks

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