Community Managers Must Deliver ROI: Commandments For Surviving a Recession

I’m a former community manager, and many of my friends are currently in this role, and I want to make sure they are armed with the right knowledge to succeed during hard times –I know some of them may get laid off.

Community Managers are at risk of being let go
During a recession, we know that marketing, sometimes new media and unknown expenses get cut. Unfortunately, to some, the Community Manager role may sit in all three of those areas of scrutiny. Although I’ve been tracking quite a few Community Managers working at enterprise class companies, they must quickly learn to measure, and demonstrate ROI or risk getting cut.

Community Managers must educate stakeholders and management.
Measurement depends on which objective they are trying to solve, so I’ll break it down into specific objectives and tasks. During incidents the community manager should report in real-time to key stakeholders. Secondly, they should provide weekly updates that can be quickly scanned in 30 seconds to community managers. Each month, they should provide a detailed report, and initiate a 30-60 minute meeting with key stakeholders to discuss changes.

Among these changes they should measure:

Improvement in marketing efficiency
Community Managers should measure increased speed from word of mouth or marketing awareness, the best way to measure this is time from awareness to close –or spread of WOM. This could also include increase understanding of customers (listening) for marketing research, or warning stakeholders about potential detractors before they become real issues. Unfortunately, these metrics aren’t valued as much as the next two, so focus accordingly.

Reduction in support costs
The bottom line is always important to business, so if you can measure a decrese in customers going to physical stores, emailing account reps, or calling the support center as they instead rely on community to help self-support themselves, you can start to put dollar costs on this actual community savings.

Actual improvement to sales
This matters most. Community Managers should start to measure how clicks from community directly impact ecommerce, go to product pages (perhaps if you’re B2B) or to affiliate marketing to demonstrate how community interaction increases revenue. If you can demonstrate this (like Dell’s million dollar sales in Twitter) tout this loudly to management.

Conduct additional research
If you’re like most companies, layoffs are coming, therefore Community Managers must educate the powers that be the value that they offer when it comes to customer service and support. Rather than focus purely on the role that they have, they should demonstrate the overall of the community –then discusss why a role is needed (like a physical store manager) in order to keep it running smoothly. Consider running quarterly surveys that measure Net Ratings or customer satisfaction, and don’t forget to quote qualitative responses from community members themselves, there’s nothing like a pure customer testimonial about why they are customers.

If you’ve other tips for Community Managers during a recession, leave a comment below.

Update: Bill Johnston has some additional tips you should read, he also left a comment below.

  • http://www.intel.com/go/vproexpert Josh

    I highly recommend remaining relevant to the biz goals, over-communicate on wins and educate the leaders on how communities matter.

  • http://redplasticmonkey.wordpress.com/ Bill Johnston, Forum One Networks

    Hi Jeremiah – Thanks for raising the issue.

    I posted about this in late 08, and I recomended:

    • Focus on Defining / and Reporting Value
    In order for your community strategy to be sustainable, you need to be able to articulate value back to the organization. This value has to be articulated, at least in part, in the cultural language of your organization. In some organizations, it’s all about impact to customer loyalty, it some organizations, this value is growing an audience (member registrations). You will likely wind up with a report that is a mosaic of quantitative and qualitative sources. We’ve studied this issue in the Online Community Research Network, and you can see a report excerpt here:

    Online Community ROI and Revenue Techniques

    • Reach Out to Other Departments (CSR / Marketing / Support)
    Online Communities offer value to almost every department in the organization, from HR (recruiting), to Support (call avoidance), to Marketing (awareness / reach), to the Product team (feedback, customer led innovation). Now is the time to reach out to other teams and create cross-organizations ties, and involve other teams in community building and engagement activities.

    • Show the Cost of Not Participating
    One way to show value back to management is to paint a picture of not having a community or community engagement strategy, and the associated costs and losses. These hypothetical costs can range from increased awareness of competitors to decreased customer satisfaction and loyalty.

    • Be Honest About Your Strategy
    Take a look at the community touchpoints and programs you are engaging in. Are there a few that have little or no participation? Are there features that score consistently low on your community research? Now is a good time to look at shedding these features and programs that are not creating value for your community. This is also an opportunity to involve the community in continuing to shape the experience and ongoing direction. Lastly, are there features or programs that you are struggling to maintain, that would be better served out in the community ecosystem? For instance, a particularly strong, independent Facebook group for your brand that you have been struggling with, or a user group that has a competitive feature on their site? Let it go.

    • Stick Together
    The worst feeling in trying times is feeling alone and isolated. If you and / or your team don’t have peers at other companies to talk to and share strategies and tactics with, start making those connections now. There are lots of meetups (like my Online Community Roundtable), conferences and organizations (like the social media club and the online community research network) to help support you.

    Full post here:
    http://redplasticmonkey.wordpress.com/2008/10/03/online-communities-surviving-and-thriving-in-a-downturn-part-1/

  • http://www.web-strategist.com/blog/ jeremiah_owyang

    Bill these are all good, I’ve updated the post.

    Also, there’s a Community Manager Facebook group folks should look to (in terms of your last bullet on ‘sticking together’

    http://www.facebook.com/group.php?gid=3553055120

  • http://www.lithium.com Joe Cothrel

    For people running communities, here are a few things I recommend to get started on ROI:

    1) Collect some data from other companies. I grabbed these a while ago from different analyst reports and articles:

    http://www.willpate.org/2007/05/15/online-community-success-and-roi/

    Put together an ROI story for your company using these metrics and pass it around. When people argue about the numbers (“Our cost per resolution isn’t $12″), get them to supply the real numbers and use them to improve your model.

    2) Ask the people who run your company’s customer surveys to add a question about community use. That will allow you to see how community users compare to those who haven’t used the community. And/or, run a survey yourself in your community and ask about your users’ purchase and support history. Use this data to tell a story about how every registration, every visit, every view, and every post to your community adds something to the bottom line.

    3) Begin to figure out how you can do a real ROI analysis in the future. That means tying community data to customer data and/or other web data — meaning you’ll need to forge some partnerships with the people in your organization who own that data. In some organizations, there’s someone who can take the email addresses from your registration database and give you back all sorts of useful info about the value of your community members. That would be a good thing to do. Better would be to have that information continuously by integrating your community with those other systems. But you gotta start somewhere!

    Joe Cothrel
    Lithium Technologies

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  • http://www.BryanPerson.com Bryan Person

    Jeremiah:

    A very timely post. One of the steps I’m taking at LiveWorld (where I’m the “social media evangelist”) is creating a simple spreadsheet that tracks my leads, particularly at physical events that I attend and that we using marketing budget for.

    A rudimentary calculation — and one that doesn’t necessarily account for relationship building that may prove to be more fruitful in the long term — is total cost of events (conference ticket, travel/lodging costs, etc.) / divided by number of leads generated. That gives you a cost per lead!

    Surveying our customers is a brilliant idea, too, and one I’d like to implement shortly.

    Bryan | @BryanPerson
    LiveWorld

  • http://beth.typepad.coim Beth Kanter

    Brian’s comment made me wonder about the follow up analysis and communication of the results to decision-makers after you have those numbers. What happens if your cost per lead for your community is higher than other marketing channels?

    With nonprofits, they look at numbers, but also have to look at how the technology supports their overall mission of service both in the short term and long term. So, while some activities don’t necessarily “bring a profit” — they have to quantify and qualify outcomes or changes (positive) on the people served.

    Numbers are important, but how you package and tell the story behind the numbers is also important and how you communicate that to decision-makers sharpening knives.

    ROI Story Telling Techniques for nonprofits. Perhaps they not all are translatable to profit driven endeavors and not sure if these hold water in a recession.

    * A well prepared ROI analysis incorporates both the numbers and non-financial factors into a concise and informative presentation

    * The purpose is to demonstrate concrete value.

    * The ROI analysis should present the key issues, numbers, and facts while spotlighting the investment’s contribution the organization’s mission and people served.

    * ROI numbers, no matter how compelling, may not speak for themselves. They need context. That’s where the survey data can help – and also getting a specific and compelling story to make the numbers come to life.

    * Clever storytelling is one of the quickest and most effective ways to gain understanding

    * Creating effective stories to share the numbers also takes understanding your audience — what do the decision-makers care most about? Understand how and where to place stories and numbers for the most impact.

  • http://www.ImpactInteractions.com Mike Rowland

    What I find interesting about this topic is the general disagreement of the relevance of ROI in the discussions of community and social media experts. Just yesterday our team attended a webinar where a ‘measurement’ expert didn’t have a really good handle on not only why ROI calculations are important to communities, but how to do them with the data available. Others in the Social Media space blog frequently that ROI is either tough to do or not relevant.

    At Impact Interactions, we believe that ROI is a crucial element of the community building and management process. You must start building your framework before the community even launches, then refine it over time. But you cannot use just the metrics from your community, you must align them with additional data from within the organization (CRM records for B2B for example).

    For B2B support clients, we measure technical questions answered by members as a cost avoidance measure to demonstrate the scalability of the community versus call center costs. We supplement it with survey data on customer satisfaction, purchase influence, and information utility. It all adds up to a large ROI.

    For a marketing focused B2B community, we built a framework that demonstrated the influence that the community had in influencing sales of multi-million dollar contracts. We mined the transactional data and compared it with the CRM records to develop a pattern of influence on sales velocity, lead generation, and sales.

    For a B2C automotive parts company, we compared sales transactions from the companies e-commerce database with community transactions to find the ROI for the community. It also reinforced the powerful notion that community members were buying more frequently than non-community members and that each purchase transaction was larger than those of non-community members.

    For a B2C subscription based service, at Participate.com we demonstrated that community members churned at a rate 50% lower than non-community members, resulting in millions of dollars of revenue and profits.

    Each of these clients had an ROI on their community of over 100% once their communities scaled.

    It is not hard to develop the ROI framework, but it does take time and relationships within the organization to get the appropriate data. If you are a community manager, you need to build a network outside of the community area in your organization in order to align the community’s analytics with your organization’s focus and goals. Only then will you be able to tap into CRM or e-commerce databases to validate your framework.

    We have some basics on B2B ROI in presentations available for free in our Social Media Resource Center on our website. Please feel free to visit and download the presentations. In our introductory deck on Impact Interactions, we have quotes from Cisco, Mercury Interactive, and ATT on their ROI from their online community efforts. Here is the link: http://www.impactinteractions.com/social-media-resource-center.html

    What Jeremiah has posted is absolutely spot on. But is up to you as a community manager to act. In this environment, you cannot afford to have your community (and job) viewed as a soft application that doesn’t produce tangible, measurable results.

  • http://www.mzinga.com/en/Community/Blogs/Mike-Pascucci/ Mike Pascucci

    It is very important that a Community Manager highlights the “wins” that have resulted because of the Community offerings that a company provides.
    Community managers need to be the “Internal Evangelist” for these companies. Let everyone know what is happening, and develop an internal communication process to distribute any and all information about your Community. As Jeremiah mentions above the community manager can live in numerous departments, which could be a blessing, as well as a curse.
    Whether it is the direct feedback that resulted in a more efficient product/service, the lowering of support costs, or the ability to create brand loyalty….ROI means something different to everyone.

    Mike P / @nhscooch
    Mzinga

  • http://www.nattergalen.com Scott Hammond

    One thing I’m seeing more of is companies firing their community manager and asking them to work on a contract basis instead of as an employee. By 1099-ing the employee they clear them from the company benefits plan, 401-k and equity options, and avoid payroll taxes. The company can also choose to modify the amount of work they are paying for on a week to week or month to month basis instead of paying a static salary/benefits amount. So it works well for the company (and since we provide community managers on a contractual basis we aren’t complaining here at Nattergalen either) but to an employee who finds themselves suddenly needing to pay COBRA fees for health care, pay their own income taxes and fund and manage their retirement solo it can be a really stressful transition.

  • http://dberkholz.wordpress.com/ Donnie Berkholz

    When trying to justify the awareness-to-close to your business, you can make analogies to things they understand like the length of time inventory sits in the warehouse before being sold. It’s money you don’t have because it’s sunk into people who haven’t bought your product yet.

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  • http://www.davehaber.ca Dave Haber

    Thanks for the post, Jeremy.

    In light of some new data that emerged on eMarketer indicating that marketers aren’t measuring their social media results, I’ve posted brief overview of ways to measure social media success.

    http://www.davehaber.ca/interactive-objectives-blog/2009/9/23/measuring-social-media-success-fail.html

    All the best,

    Dave

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  • Matt at Intelestream

    Insightful piece and important not just to save jobs, but also to sustain ongoing confidence and value inherent in new media marketing.

    The points mentioned, such as calculating word-of-mouth generated marketing, reduction in support costs and overall sales improvements are paramount to selling new media to stakeholders. There are a few other suggestions I think are noteworthy of the point.

    It can be challenging to calculate the bottom line value of new media, and those employing those methods. However there are areas in which companies will improve that may not be as obvious, including increased customer satisfaction and brand equity, measurable through surveys and phone banking; enhanced market intelligence which also equates to better forecasts and financial management; and better defined product development based on customer needs and feedback.

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