This is one of those practices that is more art than science. I was having a conversation with Sean O’Driscoll, a a leading community consultant, about this issue. Some types of communities lend themselves very well to calculating a hard ROI. Customer support communities are a great example of how this works.
First, you make a bunch of assumptions:
- How many support cases for a given period of time?
- How many cases do I solve using the community versus relying on traditional customer support? The cases would be solved through customers helping each other, finding answers to questions previously asked or problems solved, etc.
- How much does it cost to create content for customer support? How much can you expect your customers to create for you?
- What is the loaded cost of solving a case through a support community?
- What is the loaded cost using the customer support organization?
Do a little math, and voila, your official unofficial ROI. This use case lends itself very well to investing in a tool to foster a customer community.
How about an internal collaboration community? I don’t think the math is much different. However, the costs are more difficult to estimate and the results are harder to measure. Here is one example. We are seeing some really good traction with sales organizations. The types of variables you consider when modeling this could be:
- Time spent bringing new account executives and sales support personnel up to speed i.e. cost of knowledge transfer (there is also a significant cost when people leave sales organizations and their expertise isn’t captured in a usable way)
- Time spent researching technical and strategic issues with prior sales efforts and customers
- Time spent communicating in silos where relevant information should be shared across the organization
- Quality of sales deliverables increasing likelihood of closing business
- Leveraging the expertise of the whole organization for specific pursuits and opportunities, and future ones that are similar
The list goes on. All these variables taken individually probably don’t amount to something quantifiable. Taken as a package, I suspect they represent significant return on the revenue production and expense reduction.
Short of a formal consulting project, which may be the right thing to do given your circumstances, it is very hard to quantify. However, with enough traction and community adoption, I don’t think you need to put a formal measurement process in place; it will be there.
What do you think?
February 7, 2008 at 4:00 pm |
I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.
Allen Taylor
February 7, 2008 at 8:16 pm |
well, I certainly think this is a great starting point. The trick is the willingness to bow wave up investment in a few key areas knowing you can de-invest in other less scalable models as the projects mature. This is where many projects stall…if you want ROI in 90 days (which is the scope of most business scorecards) then you are in trouble. You’re unlikely to see it that quickly – you have to take the longer term view.
This is a big part of the focus for the working I’m doing now. Thanks for the conversation.
sean