Wednesday, January 7, 2009

What's A Community Worth Anyway?

The nagging question of 2009 in my line of work is—what’s all this ‘community’ and ‘social networking' stuff worth anyway?

Ask the right question.

I recently had an inquiry from one of our sales folks who asked a seemingly innocent and reasonable question: A prospect was asking “what type of participation can they expect if they added community to their e-commerce site?”

They wanted to know if x number of people visit the ‘main’ site, what y number of people would participate in the community?

I know both the prospect and the sales person were hoping for a neat, succinct answer. Say…10%. It really didn’t matter what the number is, they just wanted a number.

Implied in the question, of course, is the question “what is a community worth?” It’s that ROI issue—if a client invests money in a community site, how will they know if they got an appropriate value in return?

Now, I love our sales folks. They live and breath this stuff too and they have a challenging job. Part of my job is to give them insight/information to help make their job easier.

I hate giving a long answer to a short question, but here is my (edited) email response:

What Does 'Participate' Mean Anyway?“

Not only does community participation vary based on online/offline promotion of the community and how community is integrated on the website, it can also vary by what one calls 'participation'.

Responding to a poll question or clicking to rate something can be totally anonymous and not require any member self-identification with the community. Yet those are acts of participation that provide tremendous value to the community.

Reading a blog entry and gathering information from it is valuable to me, the reader, even if I don’t choose to leave a comment. Did I ‘participate’ in the community by reading the content, or do I only count as participating if I register, login and leave a comment?

Benchmarks, who's got benchmarks?

I know that everyone in the industry wants benchmarks so they can gauge the expected results of their community investment. The problem is that there aren’t any objective criteria to qualify benchmarks, in part because of the number of variables that enter into the equation.

Not only are there varied definitions of what constitutes community participation, but the site implementation and community visibility on the site factors in, as well as any offline promotion given by the client means that any figure we give is truly a wag. Sure, we can say 10-20% of total visitors on some of our sites will click on a ‘community’ link but we (or anyone else, for that matter) don't really have any reliable data to support what type of participation a community can expect.

Thinking in terms of "if we invest x number of dollars, we should get y number of posts, comments, visits, etc," is really the wrong way to think about online community, though. You probably already know that and this might not be what the prospect wants to hear but...

…the value is immeasurable. It has value, or course. We just can’t measure it yet. We need to rephrase the core question.

Value. C'mon, what's it really worth?

Here are a couple of examples of why we need to reshape that customer question/objection of what is essentially "what is the investment worth?"

1. I purchase a lot of stuff off Amazon and I read a lot of ratings and reviews before nearly every purchase. I don't buy things with bad reviews, I do buy things with positive reviews. I personally have never written a review and rarely leave ratings on products I buy on Amazon, yet I am significantly affected by the actions of the community.

There isn't a good way to track the value to me, or from me as a consumer, but I will state categorically that I do not buy ANYTHING without checking out reviews and ratings. I don't actively 'participate' in the community, but without it, I take my purchases elsewhere.

2. Many times on a community site, customers will complain about:
--product defects
--poor customer service
--desired features that are lacking

Even when the forums are NOT specifically customer support boards, what is the value of the ONE post that asks a question/complains about a problem that is resolved by either: a) an official representative of the company or b) a member-generated response?

In either case, you could calculate the saving of a reduction in customer support call, but you don't really know the reach of the one question. The question could be posted once, but read by 100 people and thus saving 100 customer support calls at a cost of z dollars each, or it could have been seen by 1,000 people.

We really don't know since those metrics won't show up as 'participation'. The value is there, but how do you calculate it?

If Something Good Happens and No One Knows About It, Does It Have a Value?

Likewise, how do you calculate the benefit of the ONE feature suggestion that is really good and makes the product better and makes it sell better? I doubt if anyone can really say “wow, member BraNdLuvveR had a great suggestion and sales increased 17% because of that improvement they suggested.” The value exists in being part of the conversation with your customers on what they would like to see to love your product even more, but how do you quantify it?

Or, what is the value of seeing one customer service issue resolved publicly that not only makes THAT customer happy, but also influences other readers of the forum who think "wow, this company is pretty cool and will resolve any issues I might have with them?"

Personally, I DO make purchasing decisions based on input that I get as to how their follow up customer support is likely to be. I bought Bose headphones for a Xmas present this year instead of comparable Shure headphones because I'd read on discussion boards that while both products fail at about the same rate, Bose will supply new headphones with no questions asked, where Shure's policy on returns involves jumping thru a bunch of hoops.

That was a $300 purchasing decision based on whether I thought I would have a *future* good customer service contact with the brand or not.

But how do you track that value?

is the right question?

In sum--as a community manager, I would be very leery of giving out metrics and expectations of performance during the sales process. It's more valuable to get the company involved to CLEARLY state their objectives, and then see how we can move towards that goal, rather than tell them what they might expect.

The more pertinent question, imo, isn't what they can expect to happen...but what do they WANT to happen by developing and connecting with their community?

And then ask them how they would measure that.”

Amazingly, after a response like that to a simple question, my sales folks still talk to me and respond to my emails. I love the people I work with--they tolerate my roundabout responses to their direct questions. :-)

And I'm getting double-duty from an email by getting a blog post out of it too, so I'm maximizing MY roi value from the question.

So my question to you, dear readers, is how DO you measure the value of an online community?

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