Gold in Them Hills: Computing ROI For Support Communities

Gold in Them Hills:
Computing ROI for Support Communities
Gold in Them Hills
Table of Contents
Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Financial Benefits of Support Communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Non-Financial Support Community Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Case Deflection Savings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Direct Deflection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Indirect Deflection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Decreased Support Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Better Analytics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Customer Satisfaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Increased Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Support Community Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Startup Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Recurring Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Setting ROI Expectations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 About Lithium Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Lithium Technologies, Inc.

lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 2009 Lithium Technologies, Inc. All Rights Reserved.
2 of 15
Gold in Them Hills
Purpose
This paper was created in collaboration with FT Works, a leading consulting firm that provides strategy, operations, and metrics development & tracking services to support organizations. FT Works extensive client list includes Google, Cisco, Autodesk, Chevron, Kodak, Hewlett-Packard and Nokia. This paper describes approaches used successfully by Lithium Technologies customers to compute a realistic ROI (Return On Investment) for their support community initiatives. We define ROI as Cumulative Benefits minus Cumulative Investment. You can use this paper in two ways: to get a general education about community ROI, or to create your own custom ROI analysis. If you only want general information about ROI, simply read through the paper. On the other hand, if you are building your own ROI analysis you will find that you need to pause from time to time to gather relevant data. In most cases you will find that you need to either analyze existing data in a new light or gather data that simply does not exist today in order to complete the analysis. We hope one of the benefits of this paper will be to inspire you to create better metrics for your business. Our goal is to create a meaningful ROI calculation, based on solid and well thought-out data so you can be sure that the ROI figure you obtain is correct and will continue to hold in the future. Therefore, at every juncture of the following analysis we will encourage you to err on the conservative side as you select data. The good news is that ROI for support communities is typically very favorable, so even with our recommended conservative stance you are likely to find a positive outcome for your community.
Our goal here is to create a meaningful ROI calculation, based on solid and well thoughtout data so you can be sure that the ROI figure you obtain is correct and will continue to hold in the future.
Financial Benefits of Support Communities

Support communities can provide financial benefits in several areas, depending on how they are used. Heres an inventory of the main categories. Case deflection. For support communities this is typically the largest, most tangible, and most easily tracked benefit. Customers who get answers through the community dont need to contact the support team for personal assistance. Since assisted support is costly, every request thats avoided (deflected) means a saving. Note that this applies not only to customers who pose a question in the community and receive an answer, but also to the (typically much larger) group of customers who dont need to pose a question at all but find the answer already posted in the community. This is Web 2.0 at its best. Decreased support costs. Most savings occur via case deflection, but depending on how you choose to deploy your community you may also experience additional savings. For instance, the community may allow you to drop your email support channel entirely (replacing it with the community), with attendant savings in staff and tool costs. Or you may be able to avoid building a new support center to handle volume growth. Also, you may be able to boost the productivity of the agents, either by leveraging the customer community as a knowledge base or by deploying an internal community to more easily exchange information.

3 of 15
Gold in Them Hills
Better analytics. One of the very enticing benefits of support communities is to facilitate feedback between customers and vendors, both for existing products and for future products, for instance via a beta community. Customer feedback can be obtained via other means, by mining interactions with assisted support channels or by conducting customer panels for instance, but communities make the exercise much easier, faster, and less costly. Communities are also ideal for spotting smaller-scope, detailed feedback that may never get voiced through an assisted support channel or a formal customer panel because customers see the issue as too trivial to bother. Customer satisfaction. Community users tend to be more satisfied users, tend to recommend your products or services to others, and experience lower turnover rates. The issue for ROI is not whether customer satisfaction is increased by the community but rather how a company can capture customer satisfaction and translate it into financial terms. Well come back to this later in this paper. Increased sales. Although a support community may not be the first tool you think about to increase sales, its an ideal mechanism to make product recommendations. Some of Lithiums customers capture the traffic from their communities to their online sales site and have shown that forum recommendations are most effective in triggering not only a visit to the sales site but actual purchases as well.
Non-Financial Support Community Benefits

Do communities provide benefits other than financial? Absolutely! Just to use one example, community users tend to be satisfied not just with the community but also with your products and services as a whole. So even if you are unable to measure the financial impact of the increase in customer satisfaction, you can rest assured that there are many non-financial benefits of communities. Because our focus here is financial we focus exclusively on those benefits that can be translated into dollars. It does not mean that there are the only benefits you will enjoy from your investment.
Case Deflection Savings

Case deflection usually provides the bulk of the hard-ROI benefits for support communities. Indeed, we find that many Lithium customers dont bother estimating other savings, not because they are not there but because they are likely to be dwarfed by the case deflection savings (and they are harder to measure!). If you have a small user base or you are using an internal-only forum naturally you wont find large savings in case deflection, but thats the exception rather than the rule. Case deflection is best analyzed by separating: Direct deflection, which occurs when a user who would normally place a request for assisted support instead posts a question and gets an answer; and Indirect deflection, which occurs when a user obtains an answer from the forum without having to post a question. In other words, the question has been posed and answered already and the customer can use the answer immediately.

4 of 15
Gold in Them Hills
In most cases indirect deflection generates much higher savings than direct deflection. We see ratios of 1:5 to 1:10 and beyond between direct and indirect deflection, scaling up with the size of the user base. Communities are very much a many-to-many tool.
Direct Deflection
To calculate direct deflection you need two pieces of data: The volume of threads that result in an answer; and The cost of processing an assisted support request (cost per case or cost per call) The cost per case is usually pretty easy to obtain, as its a standard support metric. If you dont happen to have it handy you can simply divide the support budget (at least the assisted support cost) by the number of assisted support cases you handle. If your support organization typically handles highly complex cases and you feel that deflected cases are much less complex than average (a reasonable assumption) you may use a discounted figure for the cost per case. For instance, you may use the cost for the average case handled within the level 1 team. Computing the volume of threads that result in answers, and therefore correspond to deflected cases, requires a little more effort and thinking. Clearly the overall volume of threads is easy to capture but not all threads get answered. So how can you proceed? If you ask users to label threads as answered, use the labels. You will be undercounting successful threads (since a fair number of users may receive an answer but not bother to mark the thread as answered) but thats what you want: you want to be conservative in your assumptions. Otherwise, perform a simple manual audit. Read through the threads that were posted last week (or just one day last week if your volumes are high) and determine the percentage of threads that were answered. You want to use threads that are slightly old so they had a reasonable chance to get answered; if you use this mornings threads you will drastically underestimate the success rate. You want to be conservative in estimating ROI benefits but you dont want to be thoughtless. We find that answer rates tend to remain fairly constant so you dont need to perform the audit more than once a quarter or maybe once a year. If some threads are answered by customers and some by staff members, should you distinguish between the two? If you have staff dedicated to the community, or you have a way to capture the cost of the effort of answering community questions (perhaps via a cost per thread figure similar to the cost per case figure), no worries. You will simply capture your cost on the cost side of the ROI so you dont have to distinguish here between customeranswered and staff-answered. If you have staff that works seamlessly on both threads or cases and you cannot easily tease out their cost you should segregate out threads answered by customers (hence answered for free and clearly belonging in the deflected category) and threads answered by your own staff (that are not free and do not represent complete deflection even if the cost of a community answer is probably less than the cost of a regular support case.)
In most cases indirect case deflection generates much higher savings than direct case deflection. We see ratios of 1:5 to 1:10 and beyond between direct and indirect deflection, scaling up with the size of the user base.

5 of 15
Gold in Them Hills
If you must determine the proportion of customer-answered threads, perform a simple audit. The percentage should remain quite stable over time unless you change your support model so theres no need to repeat the analysis more than once a year. If some of your customers are not entitled to contact support you should remove their answered threads. Yes, their questions were answered, but no case deflection occurred since the customers could not contact support in the first place. How do you distinguish between supported customers and others? It depends on your internal tools. If you can match community users to support contacts the computation is pretty easy. If you cannot, again use a small-scale audit or survey to find out. Note that there can be important differences in the way that entitled and non-entitled customers use the community: typically non-entitled customers are heavier users of the community since they have no other alternatives. As a recap of the arithmetic, direct deflection volume is computed as follows: total thread volume * answer rate And all you need to do to get to savings is to multiply by the cost per case total thread volume * answer rate * cost per case Example ACMEs community added 5000 threads last month, 80% of which were posted by customers with a support contract. 46% of the threads were resolved by customers, the balance by ACME support staff (ACME has a policy to respond to each thread if its left unanswered for 24 hours.) ACMEs cost per case is $20. How much did ACME save through direct deflection? Of the 5000 threads, 5000 * 80% = 4000 were for customers with a support contract. (We dont count the other 1000 since customers without a contract cannot contact Support.) Of those, 4000 * 46% = 1840 were answered by the community. (The others were answered by Support staff so were not deflected.) The savings are 1840 * 20 = $36,800 for direct deflection.

6 of 15
Gold in Them Hills
Indirect Deflection
Now for the fun part: indirect deflection (or savings through search as some call it) embodies the essence of communities: users experiences can be shared. The calculation is. browsing visits * success rate * cost per case Since we already computed direct deflection, that is the savings associated with users who posted questions and received answers, we now want to focus on browsing visits, visits in which the user did not choose to create a new thread, so the calculation can be refined to:
Working with Lithium customers we find that the success rates for finding answers within communities range from a few percentage points (using very conservative estimates, to be fair) to 30%-plus.
(visits threads) * success rate * cost per case A visit is not a page view. Typically customers will visit multiple pages as part of a single visit and it would be grossly inaccurate to consider page views rather than visits. So what constitutes a successful visit? Clearly, one during which the customer finds an answer, but how do we capture that? There are a number of avenues depending on your specific circumstances. If you ask community users to log in and you are able to match the logins to your assisted support entitlement data, you will be able to determine whether community users then move on to log an assisted support request. Naturally, someone could visit the community to take care of one need, find the answer, and then place a support request on an unrelated topic. However, matching up visits to support requests placed within a reasonably short window (say, 24 hours) will give you a solid, conservative estimate of success. Since most communities do not require browsing customers to log in, other techniques are needed to estimate the success rate, typically through a user survey of some kind. There are no silver bullets here. You may use a pop-up survey as users exit the forum (but its difficult to capture forum exits, and in any case many users block pop-ups.) If you are able to reach out to your users in other ways, for instance via email, you can contact them after the fact and gather their perception of success. You could also use data from a survey about overall self-service usage, not just communities. The good news is that you dont need to repeat this type of survey very often as success rates tend to remain fairly even. Working with Lithium customers we find that the success rates for finding answers within communities range from a few percentage points (using very conservative estimates, to be fair) to 30%-plus. Industry data suggest that a success rate of 40%-plus for self-service would be extraordinarily high. One last note about deflection savings: it takes a while to get to a critical mass of community users, so if youre starting out, expect to see a ramp in deflection from just a small amount at the beginning (and mostly direct), increasing as the popularity of the community grows and indirect deflection blossoms.

7 of 15
Gold in Them Hills
Example Lets reprise the ACME example above and focus on indirect deflection. The ACME community enjoyed 50,000 visits last month and is estimating a 20% success rate, based on its survey of self-service (20% is a fairly high number but ACME seems to pay close attention to self-service, including posting answers to all community threads, and thats paying off.) How much did ACME save through indirect deflection? The number of browsing visits is 50,000 5000 = 45,000 (removing the visits where a thread was created.) The number of successful visits is 45,000 * 20% = 9000. The savings totals 9000 * 20 = $180,000 for indirect deflection. Note how the number is a lot higher than the direct deflection number and how it could be even higher if the user base of the community were larger.
Decreased Support Costs

Clearly communities decrease support costs because they decrease the number of support requests, as we just described at length. But they may also have other positive impacts, usually of smaller scale, that we will explore here. Increased productivity. You may find that using communities allows your support agents to be more productive, namely to resolve issues faster and to be able to handle more issues without escalating to the (always costly) next level. The productivity increase may occur with level 1 agents if you find that they can leverage the customer community as a knowledge base substitute or add-on. The productivity increases may occur with agents of all levels if they have access to internal forums that facilitate quick dissemination of information amongst the staff. The math to compute increased productivity savings is not too difficult, although you will need detailed data on resolution time and cost by level of agent. You will also have to ensure you are not double-counting savings if, as is common, there are multiple savings at multiple levels. The savings will be expressed by the following formulas, one for savings achieved within a particular level of the organization: time saved * cost per minute and one for savings related to lower escalation percentages: escalation avoidance * cost at next level Be careful not to be too optimistic with productivity increases. If you start a customer community a common consequence is that the technical complexity of support requests increases as the easier issues get resolved within the community so your agents may spend more time on each case on average, reflecting the increased complexity. You would still experience savings since the overall case volume is lower so the aggregate amount of effort required to solve all cases decrease, but the savings for this particular category would be negative.

8 of 15
Gold in Them Hills
Decreased support agent costs. To be sure, decreased support agent costs are more elusive than increased productivity, but they may exist in your context. They would include: Lower compensation if you can use less-skilled agents who leverage community knowledge (internal or external forum). Your savings equation is compensation savings per head * headcount Lower facility costs if community sharing allows you to use home-based agents. The savings are facility savings per head * headcount Faster ramp up. Using the community as a knowledge creating and sharing mechanism may translate into tangible gains in how long it takes to train new agents. The savings add up: time saved * compensation * headcount Lower turnover. Agents who feel they have good tools tend to stay longer. As we know, turnover means much higher recruiting and training costs so if you can link community use to lower turnover you will see tangible savings. turnover decrease * cost of turnover Strategic savings. In some instances communities may serve as a substitute for other, costly investments. For instance, they may allow you to skip investing in the following areas (in each instance, the savings are simply the avoided cost of the investment): Support for multilingual customers. Supporting multilingual customers is often expensive, requiring hiring new, multilingual employees, and often opening a new location where such people can be found. It may require translating extensive amounts of documentation and training materials for agents. Instead, you may be able to direct customers to a community and avoid or delay the investment in people and facilities. Support for long-tail products. It can be very expensive to maintain a trained workforce to support low-volume, perhaps older products or releases the statistical long-tail of support demand for any mature company. Tapping the knowledge of your customers is the best way to meet this demand. The savings would equal the investment you would have to make otherwise. Business continuity solutions. While we would always recommend having a robust business continuity (backup) plan in place for your support centers, its very expensive to build complete redundancy, especially for major, uncontrollable events such as natural disasters. If your customers can use alternate support avenues such as a community during the disaster recovery time frame they will be much more tolerant and understanding of the failures, especially if you can be candid about the source of the problem.
It can be very expensive to maintain a trained workforce to support low-volume, perhaps older products or releases. Tapping the knowledge of your customers is the best way to meet this demand.

9 of 15
Gold in Them Hills
Spike handling. In the same vein, its awfully hard to be completely ready to handle sudden spikes in volume. By using the community as an overflow mechanism you could save significant dollars. Substitute support channels. Some Lithium customers have been able to simply do away with providing email support by offering community support instead (yes, their communities are monitored by internal staff, but the savings are still significant due to the many-to-many nature of communities). Delay in strategic investments. Is there a new support center in your future to handle increasing volume? Deploying a community solution may help you avoid the steep costs associated with a new venue. Decreased online maintenance costs. If you are converting an existing community to a Lithium-powered community you may well find that Lithiums features allow you to save on administration costs. Customers tell us that they can save in three ways: forum maintenance, forum administration, and the ability to repurpose information gleaned from the forum into the knowledge base (an active community is a wonderful knowledgemining site).
Better Analytics
While issues may take days to percolate through the support centers (typically much longer than it takes to resolve the cases to which they gave rise, since root cause analysis rarely starts until cases are closed) community input can be used much faster. Lets consider both reactive benefits, through better root cause analysis, and proactive benefits, thought better customer input. Product issue identification. If you are able to identify product issues by mining forum data and resolve them, your savings will amount to # issues * cost saved by discovering issue While this technique can apply to all kinds of product problems, communities are particularly suited for spotting low-grade issues, issues that may not be identified through assisted support for a long time because the agents fail to identify their full scope: after all, all the customer had to do was to reboot. But as we know a large volume of small annoyances adds up to a sizable cost, not to mention lots of frustrated customers. Product Feedback. The other, more advanced idea is to use communities as product feedback mechanisms. Seeking customer input for new or future products is not easy or cheap, and communities can be a great avenue for gathering data quickly and inexpensively. The savings will be the cost saved in focus groups and surveys. (# focus groups * cost) + (# surveys * cost)
If you can go one step further and track the adoption rate of the product, you can capture increase in adoption rate * product price

10 of 15
Gold in Them Hills
but its probably difficult to track all the way through. See the Increased Sales section at the end of the paper for more suggestions around sales benefits.
Customer Satisfaction
The customer satisfaction benefits of support communities are undeniable: customers love communities and their enthusiasm seems to carry over to the very products supported in the communities. The challenge is not so much measuring customer satisfaction, but rather translating increased satisfaction into a financial benefit. Most organizations have no established method to do that, and if thats your situation thats fine: simply concentrate on measuring the other benefits. In the organizations weve worked with who have quantified the financial impact of customer satisfaction its typically the Marketing group that has led the effort, showing that an increase of X points on customer satisfaction can be matched to an increase of Y dollars in revenue. Other companies assign a token (and completely arbitrary) value to customer satisfaction, such as $1 for each increase of one point. If you have such data, you can apply it to the following areas: Customer satisfaction with communities themselves. Customer satisfaction with specific topics that are well-served by the communities, better served than through assisted support. For instance, communities are typically an excellent medium for sharing best practices. Customer satisfaction with support in general. Customers typically appreciate communities as part of the total support experience Customer satisfaction with the product or brand. Community users often report higher overall satisfaction You may also be able to measure the impact of the community on reputation: how community participation may inspire your customers to be active advocates for your products and your company. While we believe that community participation does indeed encourage customers to become active cheerleaders its a challenge to capture exact numbers. If you choose to venture into this area you may want to look at two aspects: Independent recommendations. Community users tend to recommend products associated with the community to others. Benefits would be computed through the volume of influenced purchases (You can tell how difficult that would be to track: see the next section for another way of looking at sales influenced by community usage). Better brand value. Community users are more likely to positively influence the brand. Again this is a difficult metric to tease out.
Seeking customer input for new or future products is not easy or cheap, and communities can be a great avenue for gathering data quickly and inexpensively.

11 of 15
Gold in Them Hills
Increased Sales
Do community users buy more than others? It seems from Lithium customers experiences that the answer is yes, and that the only obstacle to capturing that data is a good tracking mechanism to track the behavior of community users, typically by analyzing the origin of online purchases to determine whether they come directly from the community. Look for additional sales in the following areas. Product sales. This is commonly seen when forum posts recommend specific items. The increased sales will be:
Do community users buy more than others? It seems from Lithium customers experiences that the answer is yes, and that the only obstacle to capturing that data is a good tracking mechanism to track the behavior of community users.
# of additional purchases * product price Support sales. Community users may purchase or renew support contracts more readily. The increased sales will be: # of additional support contracts * contract price Lower churn. Community users tend to remain as customers longer than others. If your industry experiences high churn that would be a very high value. While difficult the measure, the conservative increased sales will be (calculated assuming the average retained customer stays one additional year): # retained customers * avg. annual sales per customer
Support Community Costs

Support community costs fall into two categories: startup costs and recurring costs. If you are preparing an ROI analysis for an upcoming purchase you will likely concentrate on the startup costs such as project management for the implementation, but you must also consider recurring costs such as the compensation of the community manager. If your community is way past implementation stage, its not too late to create an ROI analysis. You will likely focus on the recurring costs since startup costs have long since been expensed.
Startup Costs
Heres an annotated checklist for startup costs: Launch fee. This is the fee you pay to Lithium. Cost of other software. This refers to optional, complementary software for communities such as analytics software.

12 of 15
Gold in Them Hills
Project management costs. This is typically an internal cost although you may choose to hire a third party to handle the rollout. It can be difficult to estimate internal costs but do give it a try. Especially for larger-scope initiatives internal costs can be significant. Estimate the headcount (or portion thereof) required and multiply by a weighed labor cost. headcount or % * fully-loaded cost
Integration costs. If, for example, you are integrating the community with your CRM system or enabling single sign-on, Lithium will assess an integration fee in addition to the launch fee. Design work. Integrating the new community with your existing support web site will require some amount of work, either internally or through an outside agency. Process design work. Adding a community means adding new roles (such as moderators) and often new tasks (such as forum data mining.) The process creation and revision work is usually done internally. Internal IT resources. Although Lithium is a SaaS solution, some amount of IT resources may be required if you are implementing a single sign-on solution or other integration. Data migration. Migrating user IDs to Lithium may be handled by internal resources or a third party as part of the initial rollout. Reporting setup. Perhaps inspired by this paper, you will want to set up a reporting environment for your communities such as web metrics. Administrator training. Lithium provides complimentary training but you should take into account the time required for the administrators to attend the training. Training for forum moderators. Here again its a matter of the time investment rather than out-of-pocket training fees. Marketing rollout to customers. You will probably want to tell your customers about the new community. For instance, you may need to invest in an email campaign.
Recurring Costs
So much for the startup costs. What about recurring costs? Usage fee. This is the monthly fee you pay for Lithiums software. Your ROI calculation should project increases related to higher usage (which will be matched by increased case deflection.) Software maintenance. If you purchased add-on software as part of the rollout you will be paying maintenance for it. Reporting recurring fees. Your IT organization or third-party provider may charge you regular fees for creating the reports and its likely you will want to update the reports every once in a while. Ongoing IT support for integrations. Again this is for CRM or other integration.

13 of 15
Gold in Them Hills
Administrator or community manager. Every community has a manager. This is often a part-time commitment from someone who has other responsibilities in marketing, support, or product management. Moderators. If you are using Lithiums moderation services or have a full-time internal moderator, this recurring cost is easy to calculate. If you are using part-time internal moderators (such as asking support agents to contribute a portion of their time to monitoring the community) use your best estimate of the time spent on this task. The time online metric in the Lithium solution can help you quantify how much time individuals are spending in the community. Working with customers who have established communities that are considered successful by them and their customers, we see the ratio of financial benefits to costs varying greatly, from 2:1 (thats a 200% overall return) to 10:1 and up. As mentioned in the discussion around deflection, if support agents are seamlessly working on cases and community threads you may be better off separating out their answers from customers rather than performing complicated calculations at this point. Support costs for community escalations. In our experience we have found that only a tiny percentage of community users ever need escalation-handling. If you feel that its important to include, estimate a recurring cost for community issue management. Super-user program administration. In most communities, a small number of users answer a large percentage of all questions. Successful communities usually have programs in place to recognize and support these super-users with various rewards, including gift certificates, free admission to conferences, and free products. The costs are usually small, but make sure you are capturing whatever you spend, plus the cost of management time related to super-users.
Setting ROI Expectations

The two most popular questions we get are: How soon will we reach positive ROI on our investment? And, how will overall benefits compare to overall costs over the long-term? The answer to both is a resounding It depends. You will reach positive ROI very soon Working with real customers, we have been surprised (and so have they!) to find companies reaching positive ROI on their initial community investment in as soon as a few months, when the communities still felt very new. This is because the startup costs for communities are relatively small (and indeed larger communities that require more upfront work may take a little more time to reach positive ROI). Your mileage will vary Working with customers who have established communities that are considered successful by them and their customers, we see the ratio of financial benefits to costs varying greatly, from 2:1 (thats a 200% overall return) to 10:1 and up. There are many reasons why a particular communitys return will be much larger than another, including how well you can capture accurate metrics, so rather than shooting for a particular number or ratio lets reaffirm a few critical

14 of 15
Gold in Them Hills
success factors. Size matters The communities with the larger user bases have the largest returns. This is because the indirect deflection savings are enormous for large communities, even if the success rate of using the forum is relatively low. So if you have a small user base either work to increase it or be content with a more modest return. Follow community best practices The most successful communities, without exception, follow a small set of best practices (for some of those practices, see our whitepaper entitled Online Support Communities: Best Practices and Deployment Tips for Reducing Costs and Increasing Overall Customer Satisfaction). For instance, successful communities carefully cultivate and reward community participation. Get better metrics We find that the largest obstacle to creating successful ROI analyses is not that theres no ROI (there almost always is!) but rather that support organizations have a hard time coming up with accurate, reliable data. For instance, many organizations simply do not track success rate for forum usage. We hope that we have inspired you to capture a few key pieces of data on a regular basis, starting with success rate.
Conclusion
This paper was created based on the complementary expertise of Lithium and FTWorks, combined with the real-world experience of Lithiums customers. Whether you are building the business case for a proposed support community, or assessing the ROI of an established community, this paper provides you with a robust framework for conducting your analysis.
About Lithium Technologies

Lithium is the leading provider of Social CRM solutions to power enterprise customer networks. Lithium solutions combine the power of online customer communities with the broader social web and traditional CRM business processes to inspire customers to innovate, promote, and support on the companys behalf - measurably improving marketing and sales, accelerating innovation, and increasing customer satisfaction. Lithiums platform is proven in high-volume, growth environments and provides the security, analytics, APIs, and multi-language support that enterprises demand.
About FT Works
Lithium is the leading provider of Social CRM solutions to power enterprise customer networks. Lithium solutions combine the power of online customer communities with the broader social web and traditional CRM business processes to inspire customers to innovate, promote, and support on the companys behalf - measurably improving marketing and sales, accelerating innovation, and increasing customer satisfaction. Lithiums platform is proven in high-volume, growth environments and provides the security, analytics, APIs, and multi-language support that enterprises demand.

15 of 15

Gold in Them Hills: Computing ROI For Support Communities

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Gold in Them Hills: Computing ROI For Support Communities

Uploaded by

Copyright:

Available Formats

Gold in Them Hills:

Computing ROI for Support Communities