An ROI for Social Media: Customer Service Online Communities

Natalie L. Petouhoff, Ph.D. By Dr. Natalie Petouhoff

There's a lot of buzz right now surrounding social media, Twitter, Web 2.0 — and whether there is any business value. My gut said there was... but having a Ph. D. in engineering, I knew that hypothesis needed to stand-up to testing. I began talking to customers, the brave souls who have ventured down the social media path, about what they were observing. None had calculated an ROI, but they could share with me their observations — their benefits, their costs and the risks. I looked for trends.

My goal in taking a stab at an ROI was to breakthrough the conversation around “Does social media provide value to the enterprise?” For the people who use it, it's so clear that social media has value, but what seemed to be missing is filling in some of the blanks around the business value. I wanted to stimulate other thought leaders to brainstorm, to co-create and forward the field. And I wanted to make sure I wrote a model that wasn’t based on theory, but actually worked in the real world.

After studying and speaking to dozens of companies as well as vendors (they are listed in the report) we felt we had gathered enough data. I built the model, tested it with a real company's data and modified it, tested it and modified it till it represented what companies were experiencing.

The conclusion? The authors of the Cluetrain Manifesto got it right. The things they wrote about 10 years ago have come true. Most important to companies is that that balance of power is in the hands of the customer.

My goal was to give companies the ability to begin the conversation around how one might quantify the value as well as to provide the ability for them to justify it.

Love to hear your thoughts, your ideas. If you are implementing social media, love to hear your stories. We are working on a best practices piece as well as case studies — they tell the story of exactly how particular companies implemented social media.

If you haven't seen the report or the spreadsheet, here's the link:
The ROI Of Online Customer Service Communities

You can reach me at npetouhoff@forrester.com or @drnatalie