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How to calculate the ROI of customer communities

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19th Feb 2013
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Setting up a customer community on your website brings a wealth of advantages to businesses, from co-creation to lowering support costs to acquiring new customers, but proving the value and ROI to CMOs and CFOs is not easy.

To get the initial funding and keep support coming for an owner community, you must be able to clearly measure and communicate this, says Forrester analyst Zachary Reiss-Davis.

In his new report, The ROI of “Owner” Communities, Reiss-Davis provides a framework to estimate the ROI of your community, based on three qualitative benefits:

New lead generation: How many new leads or prospects come to your company each year because of your community, multiplied by your average deal size and overall lead close rate.

Increase in lead close or conversion rate: The effect your community has on your overall lead close rate, multiplied by your average deal size.

Deflection of support calls: How many potential support calls get answered by the community, multiplied by your average cost per call.

Whilst not part of the formal framework, Reiss-Davis also calls on businesses to focus on an additional two “softer” quantifiable benefits:

Improved products and solutions via ideation: Product improvements informed by soliciting ideas for new features and product direction via your community.

Increased customer satisfaction with your company overall: Increases to your company’s Net Promoter Scores and similar metrics because of their positive experiences in your community.

Businesses must then account for community managers, IT and development resources and platform costs, he said.

To illustrate how these factors come together, Forrester created a reference model of a successful owner community implementation for a B2B company with an average deal size of $100,000 and 2,000 qualified annual leads.

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What do you think? Is this framework likely to help measure the ROI of your customer communities. 

 

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