Measuring the ROI of social CRM: No easy task

Transcription

1 Editorial Tip Measuring the ROI of social CRM: No easy task As more organizations invest in social channels, the question of value becomes increasingly important. In social media, ROI alone may not tell the value of the effort, and benefits to the business from the customer service approach to social CRM could be gauged by a variety of factors. Read this article and uncover how to measure the real value of an investment in social CRM. Sponsored By:

2 Editorial Tip Measuring the ROI of social CRM: No easy task Table of Contents Resources from Infor Sponsored By: Page 2 of 9

3 By Sue Hildreth, Contributor, SearchCRM.com As more enterprises wade into social channels like Facebook, YouTube, Twitter and the like, their executives must ask: Is this worth it -- not just the time and money but the risk of failure? After all, there are plenty of anecdotes of companies heading onto Facebook or Twitter only to find themselves ambushed by angry customers or embarrassed by an unwary employee's poor answer to a customer question. So the question of value is a real one for any business project. But in social media, like many new areas, ROI alone may not tell the value of the effort. So how can the value of an investment in social CRM be measured? A 2009 Forrester report, The ROI of Online Customer Service Communities, noted that value or benefits to the business from the customer service approach to social CRM could be gauged by such things as the reduction in call volume or volume, increase in productivity per agent, increase in an average customer s lifetime value, lead conversion rates, and an increase in product idea generation. Ray Wang, formerly with Forrester and today a well-known social media analyst for the Altimeter Group, believes businesses need to judge social channels by usage as well as other types of outcomes. For instance, businesses might compare customer retention rates over the course of a year between the customers who were active in an online forum or had gotten customer service through Twitter vs. customers who had no activity in the company's social channels. If the customer satisfaction or retention rates are higher in the group that uses the social channels, one could assume that having a social media initiative is returning tangible value to the company. "My approach has been to use usage plus outcomes to measure, because we know there is a deferred benefit with social CRM," Wang said. "You can measure your social channels on a weekly basis and do quarterly reports on how we improved customer satisfaction or how we got a reduction in churn or here's indications of up-selling." Sponsored By: Page 3 of 9

4 The value of one complaint viewed by 1,000 prospects irobot, a company in Bedford, Mass., which develops robotic devices for the home consumer and government market, measures the success of its online CRM efforts by the fact that 97% of customers using irobot s online support are able to solve their own problems. There has also been a 30% reduction in phone calls. To measure the success of social channel projects such as monitoring and engaging customers on Twitter, the customer service team is looking at things like the potential dollar impact of a single negative -- or positive -- customer comment. Maryellen Abreu, irobot s director of global technical support, notes that a typical home consumer spends around $200 with the company. So if that one person complains on Twitter or Facebook, and 1,000 prospective buyers view it, there could be a $200,000 theoretical loss involved if one assumes that 100% of those prospects would actually have bought a Roomba. The key is figuring out what percentage of the viewers do, in fact, turn into customers. Our customer base is an educated one, and they often do searches online before they buy, she explained. So those thousand hits on a negative posting could all be potential customers. Abreu also tracks the percentage of angry complaints from all channels, including Twitter, and which ones are resolved positively. The percentage of complaints that can be turned to a positive response is in the high nineties if we re able to reach out to them, she said. Abreu uses Google Alerts to keep tabs on what s being said about the products, and RightNow Technologies Cloud Monitor to quantify the types of posts, both negative and positive. That enables her not only to have a measure of customer satisfaction and information on the types of problems commented on but to start putting dollar figures on the negative and positive comments. Sponsored By: Page 4 of 9

5 However, Jacob Morgan, a consultant at Chess Media Group and author of the book Twittfaced, notes that while ROI is important, it isn t always the best measure of a social media effort s contribution to the company s bottom line, especially in the short term, when start-up costs must be factored in. Morgan suggests using metrics that indicate return to the company, but he advises against looking for short-term ROI on a project that is, in reality, a long-term effort. For instance, if customer satisfaction ratings began to increase among those who were members of a company's online community, a business might consider that an indication of value returned. Last year, we were pretty hell-bent on this notion of ROI and we wanted to focus solely on ROI, Morgan said. But over time, as we spoke to more and more companies in this space, we came to the conclusion that if they re not getting a specific dollar amount back from a project, but they are [meeting] a specific business need or objective, then that is just as important." Social metrics: A mixed bag Allen Bonde, managing director at Evoke CRM Partners in Franklin, Mass., suggests using multiple types of metrics to gauge the value of any online social CRM effort. The metrics I d use are those used in general in the Internet world -- usage metrics, signing people up for premium content, and then blending those with more outcomes-based metrics such as customer satisfaction, or the percentage of calls handled in the online community vs. the call center, Bonde said. Some of the measures that Morgan and others have used to gauge a social channel s contribution to the enterprise include metrics in customer service, marketing, sales, and product development: Sponsored By: Page 5 of 9

6 Customer service: Increase in customer retention Customer satisfaction ratings improved Service calls deflected from call center to online forum Reduction in overall customer service costs Marketing: Product- or company-related postings Positive product comments, reviews Visitors following link from social channel to online store s URL Visitors referred to website from online friend Sales: More sales leads with expressed interest or need Increase in referrals Reduce cost per lead acquired Key social influencers identified and engaged (invited to write a blog, for instance, or otherwise participate in a company s online community) Overall increase in online sales and/or online customers Sponsored By: Page 6 of 9

7 High response rate to coupon or promotion offered on Facebook or other social channel Increased purchasing from social channel visitors vs. regular online visitors Product development: Product defects caught New ideas for future products or services generated via contests or crowd sourcing, in which online groups brainstorm and then vote on best ideas Responses to online surveys to vote on new product features or upgrades Other types of return on investment aren t so easily calculated, such as the public relations value of publicly handling a corporate scandal with skill and grace in front of 2 million online spectators. Many things are financial, but many are not," Bonde said. "When people are playing catchup in a market like this, the ROI takes a back seat to urgency, time to market." Sponsored By: Page 7 of 9

8 rounded corner / print version REVOLUTIONIZE EVERY INTERACTION WITH EVERY CUSTOMER, EVERY TIME. rounded corner / inner shadow Epiphany significantly increased wallet share through better understanding of customer behavior and improved cross-sell and up-sell activities. Financial Services Company End of Gradient You have contact with your customers every day, on the web, by phone, by mail. But are you making the most of every one of those touch points? rounded corner / no inner shadow You need customer experience management tools that help you: Use analytics to target the right offer to the right person at the right time. Synchronize cross-sell and retention programs across multiple touch points, data, products, and offers. Improve the quality of your customer data every time you touch it. Double or triple your offer-acceptance rates and cross-sell revenue with Infor CRM Epiphany solutions. Implement customer-driven marketing campaigns that deliver high-impact offers during every sales or service interaction. Find out more at or by calling Always scale proportinally Copyright 2010 Infor. All rights reserved. Drag mask from this edge to prevent chaning the gradient and curved corner

9 Resources from Infor Taking action on analytics: Using data for customer loyalty and retention Seamless customer conversations: Driving intelligent interactions in the contact center Continuous Customer Dialogues About Infor Infor has become the leading provider of customer analytics and relationship management software by rewriting the rules. Analytical CRM software from Infor does more than just track customer interactions it helps you formulate insights that can increase leads, retention, and revenue. By utilizing the power of Infor CRM Epiphany, you can help your customer-facing staff with detailed recommendations and coordination during every customer experience. Sponsored By: Page 9 of 9