FreshNetworks Blog

Next week I’m speaking at the Marketing 2.0 Conference in Paris. A great two-day conference discussing and learning about the successful use of social media tools for marketing. From social networks to mobile marketing, online video to online communities, we’ll be hearing from some of the most experienced practitioners (both from agencies and clients) across Europe and beyond.

Last year, I attended and particularly enjoyed the sessions about building a blogging culture at Nokia, why word of mouth is an outcome and not a strategy and best practice ideas in word of  mouth marketing. This year, the agenda is again packed with some great speakers and sessions. With the exception of my own, the ones I’m most looking forward to are:

• Conny Kalcher from Lego talking about why social media is important for brands – in particular understanding more about how Lego use customer segmentation to enhance the insight and innovation they get from their online communities
• Rolf Skyberg from eBay talking about the lessons learnt from running their disruptive innovation team – and how social media impacts on and inputs into product development
• Simone Brunozzi from Amazon on cloud computing and marketing 2.0
• Nicolas Beauchesne from YouTube and Frederic Bellier from DailyMotion on how to market and position brands in online video
• Rashmi Sinha from Slideshare presenting a case study on sharing content in a B2B environment
• Tony Pham from Slide and Stefan Lechere from Netvibes on using widgets and personalisation to help empower brand advocates

I’ll be blogging next Monday and Tuesday from the event and you can find all our posts at Marketing 2.0 2009,

Our post a few days ago on measurement and ROI in social media, Social Media ROI: Measuring the unmeasurable, prompted a fair amount of discussion. The main thrust of the post, and of the presentation it highlights, is that in order to measure ROI in social media, you need to have a clear and reasoned understanding of what it is you’re measuring and why.

When building ROI models for online communities at FreshNetworks, we follow an approach that includes the following four steps

• Identify what success looks like in the online community
• List the success metrics you can measure
• Ignore things that might be a distraction
• Track and measure your success metrics ruthlessly

It isn’t rocket science, and social media ROI really shouldn’t be. The tricky part of the process isn’t measuring and tracking the metrics, but identifying what they should be in the first place. This is the stage that needs time and focused effort. But in some cases a very clear success metric can be identified.

One such case is of social media activity as a fundraising tool for not-for-profits. Here the measure of success if usually the cost effectiveness of the fundraising – they want to raise as much money as possible using as little resource as possible. And they are in a great position to compare the cost and effectiveness of a number of different methods.

One great resource for those in this industry is frogloop‘s Social Network ROI Calculator. This is a fantastic resource that calculates in a degree of some accuracy the ROI that not-for-profits can get from social media campaigns. As frogloop say about the calculator:

You can use this tool to calculate an estimate of cost and return on investment for the recruitment and fundraising efforts of your staff in social networking sites like Facebook or MySpace. It works sort of like an online mortgage calculator. Just enter the starting assumptions in the yellow boxes below and the tool calculates results automatically.

The tool does require a lot of information but it is a comprehensive tool that delivers real and analysable ROI data for not-for-profit social media campaigns. Taking staff costs and a range of data on email acquisition rates, average donations and activities in social networks, it can calculate in quite some depth what the ROI story might be.

Go to the ROI calculator for social network campaigns

Of course, the problem with complicated models like this is that they are suited only to certain circumstances. This calculator would not be appropriate for all not-for-profit campaigns, but where it is it’s a great resource.

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Some more reading

• Social media is here to stay… Now what? (vator.tv)
• Recession resistant: 95% of social media marketers will maintain or increase social media spending (socialmediatoday.com)
• Marketing on the Web: How to Profit From Social Networking (jonggunlee.tistory.com)

Ratings and reviews are having a massive impact on our online behaviour. They are great for shoppers and great for retailers. But they are also a little bit evil. This is the first of a two-part blog about ratings and reviews (a general introduction). Click to read part 2: The lies behind online ratings and reviews.

The Growth of online ratings and reviews

There has been explosive growth in sites offering customer ratings and reviews across the web. Ratings and reviews are an excellent way to build a sense of community on a website, to improve customer service and increase loyalty. They have also proven to be a great way for retailers to increase sales.

A key part of their growth stems from the escalating importance of Word-of-Mouth (WOM):

• Trust in a “person like me” tripled to 68% in 2008 v’s 2004 (Edelman, 2008)
• 84% of consumers now trust user reviews more than critics’ reviews (MarketingSherpa, 2007)
  

Furthermore, their presence has driven a significant change in behaviour – Most of us are now using online ratings and reviews before making purchasing decisions:

• “76% use online reviews to help make purchase decisions” (Forrester Research, 2007).
  
• 78% say consumer recommendations are the most credible form of advertising (Nielsen, 2007),
  

What retailers have come to realise is that their customers trust each other more than they trust the brand. So providing that your products aren’t junk, it’s far better to let consumers advocate your products to one another than to attempt to persuade them by shoving marketing messages down their throats.

The result? Retailers have been adding ratings and reviews to their websites. and they have:

• helped customers make better decisions
• increased sales
• reduced the number of returns because consumers were able to make a better buying decision

Concerns about negative ratings and reviews

Despite all the evidence, we at FreshNetworks still run into uncertainty when discussing ratings and reviews with online retailers. Especially amoung UK-based retailers, there first reaction is often nervousness.

“Surely people only write a review when they’re really annoyed about something. So if we allow reviews we’ll end up with loads of nasty comments…”

It’s an understandable concern, however it’s baseless. When it comes to online reviews for products consumers are far more generous than you might think. Assuming ratings are on a scale from 1 to 5, we’d expect 2.5 to be the average score for reviews. With this in mind, it’s rather impressive that the average score across the web is actually more like 4.3 (BazaarVoice, 2008).

Even if you do get negative reviews, there is strong evidence that negative reviews are good for retailers – preventing returns and giving more credibility to websites. Woot is a great example of this.

Ratings and reviews in the transaction process

Ratings and reviews are often the best way to incorporate the benefits of the social web into transactional websites. If you’re moving consumers towards a purchase then you want to keep them focused and on the critical path. Offering user videos or photos or support conversations could provide a potential disruption.

Ratings and reviews however, offer a neat way of incorporating social elements into a transaction whilst supporting the desire to buy without taking consumers off the critical path.

Ratings and reviews are also a quick and simple way to entice customers into engaging with your brand online with minimal effort.  As a result they can act as a great way to start building a sense of online community around your brand or e-commerce offering.

However they really are only the start of a thriving community. Beyond reviews and comments you can build deeper engagement if customers are talking about how they use products, or about the features or innovations they’d like to see in future products (MyStarbucksIdea.com sinnovation community is a great example of this).

That’s the brief introduction. Read more in part 2: The lies behind online ratings and reviews

This week we are turning our attention to the telecoms industry for our series of online community examples. If you have industries you’d like included in future weeks please vote in our poll or contact me on Twitter.

Online communities in the telecoms industry

There are not as many examples of good online communities for the telecoms industry as in some of the other industries we have covered so far in the series. Part of the reason for this is that the nature of the industry is one that facilitates communication – they don’t provide content but allow people to communicate over their networks or using their products. Therefore many example of their use of social media are actually of them allowing people to communicate in social networks and on other sites. This means that you miss out on the benefits that online communities bring and is a shame – as the great examples below show the ways in which they can really support brands in the telecoms industry.

Telstra’s nowwearetalking

Telstra’s nowwearetalking has attracted some criticism in Australia as being too evidently a PR vehicle, but it is a good example of how a telecoms firm can build and run an online community and begin to have a different dialogue with shareholders and others with an interest in the firm.

The online community was originally built to provide a new dialogue with shareholders at Telstra, many large firms struggle with shareholder engagement and nowwearetalking was a way of overcoming this. The site also aims to increase the level of public debate across Australia on the future of telecommunications. Telstra want to engage and interact with their shareholders and also to discuss and debate bigger issues in the industry. For both of these an online community is a good solution.

Whether nowwearetalking has achieved these aims is not clear, but what is clear is that the online community is a great example of how to combine activity on the community and also on other sites – a hub-and-spoke model. Alongside the blogs and discussions on the site, there are videos on YouTube and podcasts to download. Telstra are engaging both on their own community and also distributing content across other social media domains. This can be a very successful strategy – you engage with people where they are and also provide a place for them to come to that you manage.

Sprint’s Buzz About Wireless

Support forums can  be a great way to build a community, and there are a number of great examples of these in the telecoms industry. Sprint’s Buzz About Wireless is a particularly good example. The site is designed for people to share experiences and ideas with each other, rate and review services and also to ask and answer questions in the forums. This is predominantly a support forum, but it provides a number of other ways for people to interact which both creates a fuller experience for members but also allows people to engage in the way appropriate to them at any given time. Sometimes you will want to ask a question or answers ones that have already been raised; other times you might just want to look at and rate ideas.

What makes Buzz About Wireless really work, however, is the forum area. Support and problem solving is an important component of customer service in the telecoms sector and one that many firms spend large amounts of time and resources on. What Sprint have done is to build an online community that takes away some of these time and resources. Rather than  Sprint answering questions and solving problems, they provide a space where consumers can answer each other’s questions and solve each other’s problems.

The power of this should not be overlooked. Even a community of modest size could have a real impact if its members are motivated to respond to and answer problems. A community the size of Buzz About Wireless must have a large impact indeed. What Sprint need to do, and what they do do, is to provide different ways for people to engage but also to encourage people to support each other and answer questions. In a support forum it can be advantageous to create different user types to both reward people who answer a lot of questions, and also to highlight the potential weight and importance of any answers they give. A community like this needs a lot of work to get the planning and strategy right, and the success of Buzz About Wireless suggests that Sprint did just this.

T-Mobile’s Sidekick Wiki Community

Where online communities can support telecoms providers is to allow people to extend and enhance the experience they have of using their service. For mobile providers this can be a case of providing people with a place to discuss their handsets to to share advice and tips about using them, or content created with them. This is what T-Mobile did with their Sidekick Wiki.

The Sidekick Wiki site has been running since 2006, and is an online community where Sidekick owners can exchange ideas about using and customising the handset, solve each other’s problems, share tips on how to make the most of the equipment. The site is a Wiki and over the last three years has grown to include a vast quantity of content. All created by users, with the only noticeable presence from T-Mobile in the forums where they help to answer questions, and on the homepage and in the news sections where they provide an office T-Mobile presence. The rest of the site is what a Wiki is at its best – a customer-curated experience of ideas and experiences.

This online community shows how telecoms companies can add real value to their equipment and products, and also how they can extend the life of and interaction with them. Many people will move from one mobile handset (for example) to another quite quickly. This will be either because they want the new features, want to keep up with the latest trend or, in many cases, because they feel they have got all they can out of their existing handset. Sites like the Sidekick Wiki are designed to constantly show how you can get more from your handset, making you retain it for longer and so increasing customer loyalty and decreasing switching.

See all our Online Community Examples

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Some more reading

• Is Social Media an Industry? (mashable.com)
• Social Media ROI: Measuring the unmeasurable? (socialmediatoday.com)
• Experiments in Social Media Marketing: Apple vs #Skittles (brilliantthinking.net)
• Youth Marketing Statistics: Mobile social networking in US up … (jonggunlee.tistory.com)
• Social media is here to stay… Now what? (vator.tv)
• 10 Great Reasons To Start Your Own Social Community Site (raunchyjohnson.com)

Image via Wikipedia

On Friday we posted about an experiment running on one of our online communities, comparing paid and organic search strategies. This is just one of the ways that our clients measure the ROI of their online community – by increased traffic from organic search or significant savings on their paid search bills.

Measuring ROI is an important topic in social media, all the communities that we build at FreshNetworks have very clear ROI cases. We spend time during the planning and strategy phases working on the objectives of the online community and how we can measure this. This may be increased sales, a specific number of new ideas generated for the business, increased retention rate, traffic to an ecommerce platform, savings in market and consumer research spending… The areas where online communities can contribute to business objectives can be vast and depend on the specific needs of the business. Time spent working on this is time well spent.

That’s why this week’s Required Reading is a great presentation on Social Media ROI from Egg Co. I particularly like the way that they break down an ROI measure into a Success Metric and then into a Goal. This is very similar to the way we work with clients at FreshNetworks, and the examples in the presentation show how this approach to ROI can show the real impact social media can have.

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Some more reading

• Social media is here to stay… Now what? (vator.tv)
• Five ways to use an online research community in 2009 (freshnetworks.com)
• Should We Even Consider ROI in Social Media? (kylelacy.com)
• 10 practical questions about Social Media (webnomena.com)
• What is the value of listening to social media channels for your organization? (beth.typepad.com)
• Is 2009 the year of social media & return on investment? (socialmediatoday.com)