Many participants in the collaboration / Enterprise 2.0 world offer Kumbaya-style enthusiasm without showing concrete evidence of business value. As an antidote to this substance-free clamoring, Forrester analyst Natalie Petouhoff developed a data-driven framework that systematically measures business-oriented ROI in collaboration communities.
Natalie's report, The ROI of Online Customer Service Communities, presents an ROI model, discusses the business value and benefits, offers concrete examples, and raises a host of implementation obstacles and success factors.
In contrast to less substantive Enterprise 2.0 discussions, where creating good feelings is the dominant theme, this research adopts a more structured and analytical approach. Although Petouhoff focuses narrowly on customer service communities, many of her conclusions are easily adaptable to other Enterprise 2.0 collaboration deployments.
Organizations generally measure ROI by adopting a model that includes specific metrics and applies value to particular results. The best models consider realistic costs based on deep understanding of the problem, solutions, and risks.
Accomplishing these goals is particularly difficult for Enterprise 2.0, because the benefits of collaboration are inherently difficult to measure. In large part, these difficulties are precisely why so many Enterprise 2.0 adherents discuss good feelings and Kumbaya rather than quantified business value.
The report overcomes these obstacles because the conclusions derive from analytical research into large, mature customer service organizations that have adopted community as part of their offerings. In this case, data overcomes conjecture.
Following an explanation of the Forrester ROI model, the report summarizes several key benefits of online customer service communities:
Next, the report summarizes the costs associated with building these communities. The report categorizes costs as follows:
Grouping costs this way aligns the framework with typical IT project lifecycles. Gaining accurate understanding of any IT-related ROI requires examining costs and risks associated with technology, people, and process.
This chart summarizes the primary costs:
Beyond costs and risks, the report describes a detailed set of analytic assumptions around investment horizons, project size, and deployment best practices.
THE PROJECT FAILURES ANALYSIS
Few observers have yet articulated a framework of failure for Enterprise 2.0 projects, reflecting the relative immaturity of Enterprise 2.0 projects and processes. Exploring Enterprise 2.0 failure is high on my priority list for future blog posts.
Although Natalie's research is strictly on customer service communities, it identifies five critical success factors that are generally applicable to many Enterprise 2.0 projects:
- Paradigms shift; so must you. Customer service professionals must find innovative ways to engage with “social customers” via emerging social media technologies.
- Identify the five worst fears early in the process. Categorize the uncertainties into buckets of costs, benefits, and risks and learn from best practices that most social media fears are unfounded.
- Focus on improving the customer experience. The most critical step is designing customer experiences first, and then making the subsequent technology choices to enhance the customer experience, not destroy it.
- Strategize, strategize, strategize. Determine what you want to accomplish with the community and stay on point.
- Choose a vendor wisely. Make sure to interview both the vendor and its client list. And don’t limit your interviews only to the reference-able customers the vendor provides.
I asked Natalie to summarize what she learned in the course of conducting the research:
One of the biggest issues with social media and corporate America is whether there is an ROI. That's why I decided to spend the time to investigate whether or not there is an ROI. For those of us who are actively participating in social media, there is an intuitive sense that there is. But intuition doesn't go that far when dealing with corporate executives. I looked at the traditional issues customer service faces and whether adding an online community could lower those costs and/or increase revenue, margins and profit.
My intuition was right. Not only does social media provide the necessary information to transform customer service, it is the first tool/application that I've seen in all my years of being in the business world that -instantly melts away the resistance, the politics and the lack of interdepartmental collaboration required to transform the whole company. Not only do I see social media as a major business transformation tool, but it brings out the very best in human nature.
With the down fall of several critical industries at the end of 2008 - the insurance, banking and real estate, its time that business isn't conducted as usual. Its time the voice of the customer is incorporated into every aspect of the business and that business are held accountable to deliver on their promises. Social media does that and more. I'll be publishing a best practice research report as well as ten case studies that go into the detail of some of these phenomenon that I have witnessed. It's a really exciting time to be in business. Change is in the air.
I also asked Paul Greenberg for his opinion. Aside from being a fellow ZDNet blogger and author of CRM at the Speed of Light, Paul is respected as the "Godfather of soul CRM:"
Natalie undertook something that has been very difficult to even ascertain, much less systematize. She successfully describes an approach to social customer service - the use of communities and social media to not only improve agent based and other forms of customer service but even to figuring out how customer communities can support each other. This is an important piece and moves forward the effort to figure out not the what of social CRM but the "how."
My take. Enterprise 2.0 technologies will continue to create opportunities for improving work processes and generating high ROI across a range of business functions. However, despite future promise, the market remains immature and needs validation through further research.
This Forrester report offers an excellent foundation for anyone interested in measuring the success of Enterprise 2.0 collaboration communities. I believe this report will quickly become a model for other research efforts in the field.