Noticing several people start to talk about ROI from communities, social networking and collaboration. Dave Hersh of Jive Software submits:

“I’ve been getting a number of reporters asking about the ROI behind an application like Clearspace lately.
My general response is that it’s a fool’s exercise. Trying to determine
if the savings and revenue increase are worth the expense is like
trying to measure whether the view from atop Everest was worth the
climb — it’s exceedingly hard to measure and it should be painfully
obvious.”

Matthew Lees also has a piece written up on measuring success of online communities. He mentioned in a discussion that a lot of organizations are not asking for serious ROI since there is an executive who in their “gut” believes this is the right thing to do.

Selling to IT organizations for 15+ years I know that most IT folks have been conditioned around documenting the ROI for any project before they purchase it. In fact due to the “willy nilly spending of 2000”, many companies now have a rigirous IT project justification process where any buyer has to submit all this information, and it goes into a committee which decides if they should proceed or not.

I suspect Dave’s has been talking to IT pubs like InfoWorld, Information week etc. whose users demand ROI (which has led to a new magazine in itself – Baseline Magazine). So, my suggestion: if you want to get written up in IT pubs, you ought to have a perspective on where the ROI might be based on previous customer input.

Else you can always target the business teams that need collaboration internally like Customer support team, or Sales engineering team, etc. bypassing the IT folks if you provide a hosted on-demand solution. Then the ROI question is less frequent.

Here are some examples of where ROI might exist for specific collaboration projects in our experience:

1. Sales engineering organization: Reducing time to obtain key information that lies in other SE minds, which reduces time to closing a sale, which is monitored by productivity gains.
2. Customer support collaboration: Reducing number of cases by allowing support personnel to collaborate with one another and provide documentation quicker. This reduces the number of cases opened, showing up as reduced headcount and lower cost of customer support.

What do you think? Where have you seen some experiences of ROI in collaboration and communities?

1. Cisco buys Tribe, acquiring the assets of the 8 person company according to Nytimes.

2. Reuters will launch a MySpace like community for financial people.

What does this mean?

1. Hype cycle starts NOW. If brand names like Reuters and Cisco are buying into social networks, then the beginning of the gold rush is officially NOW!

2. Social community investments are NOT being driven by ROI need or business justification, just Myspace envy

3. There has to be a better way to monetize the community “eyeballs” if so many folks are beginning to spend money on this.

Case study overview: Mid-sized technology company, over 400 members in their innovation community, primarily early adopters from their customer base and selected partners. The community has been run for about 7+ months now and has been “moderately” successful.

Why moderately? Metrics that were set initially were pretty agressive – create a new subline particle product (in an adjascent market) within 1 year that can be a potential $50 Million business in 3 years.

Reviewing other metrics, they are pretty successful: Page views, message interactions, offline community building, etc. are all “up and to the right”.

Keeping metrics aside for a second, if you ask the question “What is the burning desire for the members of the community to participate?” – (hence the image at the top BTW) we get one very interesting answer:

Great discussions were a result of great questions asked by the community members that prompted a passionate response. Great iscussions were the “burning desire” for the erudite crowd of their participants.

So we dig further: What were the questions and can we categorize them. Here are the categories we came up with:

1. Hypothetical questions: These are best used to test and explore. If someone has a hunch to go down the path for further discussion:
E.g. What if ….? or How come this…. and not…?

2. Elaborating questions: These take something the community all together knows and can extend beyond to foster imaginative behavior:
E.g. What does …. mean? What’s missing from ….?

3. Provocative questions: These challenge your conventional wisdom and also are meant to push people. Done right they tend to be the longest discussion threads. Take my own example at future of communities.
E.g. Are we really sure…? Is there a point ?

So to get better discussion in your community, what types questions are being asked?

Most people have been told that in several studies
only 90% of your community members are lurkers, 9% contribute something
and the remaining 1% really account for most of the action. There are
several angles that have been discussed about this in great detail. Still the question that we deal with on a daily basis is:

“Given limited time and resources, where do you spend your time to increase participation?”

Here are some approaches:

1. Focus your efforts on the 1% and help them by making it
easier to contribute. Compelling argument: Focus on the what you do
best, is an approach that many have heard from several experts. Phil Wainewright
suggests that you focus on those who are motivated to contribute. Its
also easier to help people that want to help you. The real challenge is
metrics that matter at times tend to be skewed by this group of
enthusiastic participants who might sometimes intimidate the 9 or 90%.

2. Attempt to increase participation among the 9%: Compelling
argument: Any incremental uptick will get you a more engaged audience.
This is the marketing person’s dream come true. I remember hearing an
entrepreneur pitching me his new idea 5 years ago on mobile phone
accessories. There are going to be billion phones – even if I get 5%
that’s a huge market. The trouble is our experience most of the 9% is
of a different mindset and profile than your 1%. Hence getting them to
participate is not materially different from the sample size.

3. Get rid of as many of the 90%. Compelling argument: They
are not significantly enriching the community, but just parasites, so
go forth and look for the next 1% types – or the “alphas” in your user
community. The disadvantage of this model is that if your target
addressable community is of a low number, the lurkers are really needed
to justify the investment in the community.

4. Do a little of everything aka “peanut butter approach”:
Compelling argument: Try several things at the same time and keep what
works. Trouble is if you have the community being Sue’s night job and
David’s “part time assignment” or Anil’s “opportunity to excel”, none
of them really want to do everything. Also a “controlled experiment” is
a lot harder to run in this case.

5. Do nothing but understand and accept, plan accordingly.
Compelling argument: Before you scoff at this consider how little we
know about these things just yet and letting “things take their course”
may not be a bad option. But for the MBO-driven, metrics oriented, get
it done culture we have this may clearly not be acceptable in some
companies.

You may ask: What does this have to do with your comments or future of communities: Your comments are valued and I thank you for them!
I have a hunch that unless we get participation to be more encompassing and device good methods and means to make it better, the future — plurality of the masses will just be an empty promise.

Some examples:

1. Focus your efforts on the 1%:

Real life example: We run a “innovation” community for a large Tech company. Most of the invitees to this private community are architects who have been hand picked
to get their opinion on future direction of the products. Even in this
community of 80 people, the 90-9-1 thesis applied. So, after a marathon
3 month effort to get suggestions and product feature requests and
prioritization, we found out the adoption among the 80 architects was
low. Why? Well most of them disagreed but did not want to tell the
community. So the features that were requested by the vocal 1% did not
apply to many of the others.

2. Attempt to increase participation among the 9%

Real life example: There were over 11,000 registered users in
one of our communities catering to customer support for a enterprise
software product. To get the rest of the participants to help others,
we opened a “sub community” within the main community for invited users
where the level, type and frequency of questions was less intimidating.
Turns out these questions for the 1000+ people were answered 7-10 days
earlier in the “main stream community” – but the sub committee felt
more engaged.

3. Get rid of as many of the 90%.

Real life example: One of our communities is a social network
of several thousands. After the first 9 months they instituted a policy
to “purge” or inactivate their lurkers. Trouble was as soon as they did
that the partners complained that the CPM (click metric for their ads)
was too high to justify their community size.

4. Do a little of everything aka “peanut butter approach”:

Real life example: A client that runs a support community had
an outreach effort to help all the community members participate more.
They did an analysis on spend per group and found out at the end that
the “bang for the buck” was better concentrated at one place – the 1%.

5. Do nothing but understand and accept, plan accordingly.

Real life example: A prospect was watching our numbers
(metrics on their proof of concept community) for 3 months and said
“let’s watch the numbers for a year before we make any dramatic
decisions”. Turns out the community had enough time to “self regulate”
and also had some of the 1%’ers motivate the 9% over time.

Your turn: What approaches have you tried and which have worked or not?

Some types of communities are very obviously closed to a selected audience alone and others tend to be fairly open or public based on several criteria. I have often been asked about what the criteria would be to determine when a community would be private versus public. Here are a few categories that we have consistently leveraged:

1. Valuing quality over quantity: There are several reasons why you want the sample size of your community to be large enough and representative enough for you to make decisions regarding future direction. In most cases we have found that due to several reasons, more opinions are not necessarily different opinions. More of the same skews your percentages, but you might infer the wrong things based on the outcome of a community agenda. When you value getting enough of the right data instead of as much data as possible go for a private community.

2. Resource availability: More community members equals more resource requirements (staff, hardware, software, etc.). There is no simple way to get over this fact. If you have a pilot project to test out with a limited objective or specific outcome within a defined time, go for a private community. If resources can be appropriately accounted for public (accept all communities give you more leverage)

3. Growth into adjascent markets: If you can plan an account for a social network to GROW into new markets for your products and services (adjascent spaces) by building a community and migrating their needs to new products, then go for a public community.

4. Brand alignment: Many companies we have spoken to have a strong need for “controlling and managing” their brand. If so, a public community provides fewer options for this: since you risk being looked at as a police state. If your brand definition and acceptance has ability or the risk profile to morphe over time choose public communities.

5. Monetizing metrics: Most independent communities are primarily monetized by ads – keywords and sponsored. The more the traffic, the more the chances of ad revenue. Public communities enable you to reach larger audiences. On the flip side a private focused community usually gets greater CPM since the audiences is filtered and culled.

Here are some very useful links from other bloggers on their tips for adoption of communities, social networks and collaboration:

1. Christopher Carfi talks about Prerequisites For Setting Up A Business-Driven Web 2.0 Effort
This includes: Why, Who, Where, When and How.

2. Larry Cannell talks about his five tips for gaining Enterprise 2.0 adoption.

3. Jake McKee wrote about six best practices for companies who want to interact with existing, grassroots communities at Community Next.

Much has been written by several people on the JetBlue saga of apologizing for their cancellations. They actually took out full page ads detailing it on NY Times.

“The advertisement appeared in newspapers in New York, Boston and
Washington, D.C., said Bryan Baldwin, a spokesman for the airline. It
will be repeated on Thursday in several other cities affected by
canceled flights, he said. In total, it will run in 15 cities and 20
newspapers.”

“He refused to say how much the advertisement would cost the company.”

I can tell you if they ran it in 15 cities and 20 newspapers how much it exactly cost them – WAY TOO MUCH.

Instead if they would have consistently had an online community of their fliers, linked to their website which among other things can also be used to get closer to their fliers, will also allow their passengers to “socialize” with one another before the flight and after – (let me tell you I have met many an interesting personality on 11B, on the way from JFK to SFO) they would make raving fans of their already happy customers.

Not to mention they would have known who exactly to apologize to and hence made it less of a big issue.

Here is the ROI:
The best part of it all, building and managing this community I am sure will cost them a lot less than the full page ads.

I had a great discussion with Jack Vinson of Knowledge Jolt on the intersection of Communities and Knowledge management. More on that in a seperate post, but here is an idea that I had after our discussion on how to motivate community members to help others.

He mentioned about a company UOP (a Honeywell company, in the manufacturing segment, has been around since 1914) where there was a serious problem due to many years of hiring freezes. A significant percentage of their employees had reached retirement age. UOP wanted to capture the knowledge, skills and best practices (know how) from these retiring employees so the company would benefit going forward.

Each new employee was assigned a mentor to learn from. The key difference was that to the retiring employees this was positioned as “Leaving a legacy”. The program had an excellent success ratio and over 70% of the retiring employees felt engaged and helped with the effort.

How can you apply this to your community? Why not find your own motivating positioning for your participants and have the tenured community members help the newer ones. Find your own “leaving a legacy” positioning, and you will find that it encourages more participation than paying $20 starbucks cards like one of our clients did before we discouraged that practice.

Disclaimer: This is a vendor white paper. I am NOT paid by them, dont have any business relationship with eModeration either. But I consider Tamara Littleton a friend and community pioneer in the field of moderation.

The paper, Six Techniques for Safer User Generated
Content Campaigns, details techniques for creators of UGC sites to protect both
their brand reputations and their users; while creating a site that is fun and
engaging for users.  It makes
recommendations on how companies should: create guidelines on acceptable
consumer behaviour; filter content to avoid offensive, litigious and
hijack-marketing submissions, and how to deal with these submissions; support
moderation techniques with technology; enlist users to help with the moderation
process; create visible moderation actions to discourage users from abusing the
site; and develop usability test plans for moderation.

You can review the whitepaper, as did I and find some really good nuggets.

Thanks to Malini for pointing this to me.

Seth points us to dnscoop. Interesting, but I have seen something similar over 6+ months ago at Small business hub.

Or HAVE I?

Here are the similarities:
1. Both grade your website on standard metrics – google pagerank, how long your site has been around, etc.
2. Both give you an indiciative measure of effectiveness of your website / domain.
3. Both are GREAT lead generation tools.

Here are the differences:

1.  A website grader
tool is not as COOL as a scoop

2. The number at the end – a grade VERSUS money has
different compelling motivations

3. The audience (small business owners) versus web 2.0 prospectors
have different profiles and reach on the web – i’ll bet there are more web users that want to learn the “value” of their website than how “effective” it is.

4. dnscoop is VIRAL because its cool, Website grader is
serious because it’s a business oriented tool

How this applies to communities:

1. “Right position” your community to the audience, based on their likes, dislikes, use patterns and fit it into their lives.

2. Leverage the trend and lets face it – “do something cool for your audience, that will give them more than what their daily lives are apt to give them.

3. Either one engages your audience by asking them to give a little and get a lot in return – what community members and all of us want.