FreshNetworks Blog

We’ve written in the past about how to measure ROI in online communities. It’s a subject we return to often with our clients at FreshNetworks. The online communities that we build for them all tie into over-riding business aims, and so measuring the impact is important. We can, of course, measure specific insights that they get from the community, the benefit of  the qualitative information internally, the benefit that support communities have or any uplift in sales from the community. But there is a holy grail in online communities and indeed across social media – measuring ROI at a granular level; identifying influential members, recognising that these may not be those who post most.

In previous posts, I’ve suggested that what we need to do is develop a weighting that could be applied to individual members showing how important and influential they are. An analysis of the quality (not quantity) of their connections and of their connections’ own connections. A difficult and time-consuming task. And one that Google may have solved.

The latest edition of Business Week reports that Google has a patent pending on technology that measures influence in social networks. It apparently measures both the direct influence people have in terms of volume of connections, but also how successful your posts and feeds depending on how many people open, read and forward them.

The new technology could track not just how many friends you have on Facebook but how many friends your friends have. Well-connected chums make you particularly influential. The tracking system also would follow how frequently people post things on each other’s sites. It could even rate how successful somebody is in getting friends to read a news story or watch a video clip, according to people familiar with the patent filing.

It will be intriguing to see how this technology develops and what Google use it for. The measurement of influence online is of critical importance to brands, marketers and advertisers alike. Brands want to know how influential people who talk about their brand are, or how influential the people in their online community are. Marketers want to find these influential people and focus on what they are saying and what brands are saying to them. Advertisers can use this information to help target ads across social networks.

Of course, there must also be a benefit for Google. Given that their attempts at running their own social networks have not had the same success in sheer numbers as the likes of Facebook, MySpace and Hi5, Google is looking for other opportunities to capitalise upon this growing trend. They’re doing what they’ve done to the web – they don’t provide all the content they just offer a great way to search and prioritise it. So Google could become the Google of social media.

Some more reading

• So How Do You Measure ROI of Online Communities?
• Social Media ROI: Be Careful What You Promise (Part Two)
• Facebook Grows, but Where’s the Profit?

It’s been another week of gloom in the business press. European airlines facing tough times, questions about the sale of banks and falling profits on the high street. Times are undoubtedly tough. Brand are facing a problem with this growing uncertainty about the economic outlook. A report out this weekend suggests that over two-thirds of British families are reigning in their spending and a similar pattern is being faced across Europe and North America.

In times like this, brands need to work harder to make sure they attract and retain consumer spending. Getting close to and understanding your customers is even more important than ever. You need to ensure that you understand what they want and that you are at the forefront of their mind when making a purchase. Sustainable engagement is critical – more than just a need for good marketing campaigns, brands to to build and maintain sustainable relationships with their customers. And they probably want to do this without spending too much money.

So in the interests of helping brands face the credit crunch and come out the other side, here are five recommendations from the team at FreshNetworks of how you can use social media to help make the most of your opportunities in the current climate and to engage your customers in a sustainable way.

1. Add product reviews to your site

If you have your products listed on your site (whether it’s an e-commerce-enabled site or not) you really should have a place for customer reviews. A rating mechanism (scoring the product out of five, for example) would be a good start, but allowing people to write reviews is best. Many firms worry about doing this and doing it openly, but reviews tend to be more positive than not (the typical score given out of five is 4.3) and the presence of reviews (be they positive or not) are reassuring for customers. In fact, a study done by FigLeaves showed that by adding reviews to their site increased conversions to sales by over 30%.

2. Involve customers as soon as possible in your decision making

You can’t afford to make a wrong decision, but you might not want to delay getting your new product or process to the market. It’s important to involve your customers to make sure that you are going in the right direction and that you are meeting a need that they have. It’s often said that the brightest people don’t work for you and some of the biggest companies recognise this by working with their customers in online research communities – testing ideas with them in real-time. Checking your plans with them as you are developing them, or watching what customers think, do and say so you can adapt your product for them. In a recent online research community that we ran for a global telecommunications firm, the community let them see the language their customers used to talk about their product and feed this into their marketing and advertising.

3. Reward your customers

Customers want to be passionate about your brand. Whatever it is you sell or do, there will be customers who care about you. You need to reward them. You need to be as passionate back to them. This is where social media can really come to the fore. Letting them be the ‘first to know, first to see, first to do’ is a great way to reward them. Create a community and release new product information to the community members first. Let them interact directly with senior staff and enter into an exchange with them (as shown by Gordon Brown in Ask the PM). Making your customers feel like part of the organisation is the best reward they can get. And using social media is the most effective way of letting them feel this.

4. Equip your advocates to amplify word of mouth

Your most passionate advocates should be doing your marketing for you. We know from research from McKinsey and Forrester Research that people are more likely to trust ‘people like me’. If you can equip your advocates with information (such as the early access to new product information proposed above) and maybe let them take it to their own social networks through widgets then you can get them to do your marketing for you. You can amplify the word of mouth by giving them information to talk about and help them spread the word about your product.

5. It’s okay to ‘join the conversation’ but you need to listen and respond

Whilst there has been a lot of talk of ‘joining the conversation’, people often don’t say what this means. If you are to truly engage your customers, you need to create a space where you can have an open and frank exchange with them. You can tell them things about your product, your brand, your intentions and developments. You can also listen to them, about their life, their thoughts on your product and the place your product plays in their life. This is a powerful exchange to create and an area where real engagement develops. What will make it a success if feedback. When you listen to your customer make sure you tell them what you think, what you are going to do based on their thoughts, and also why you might not do anything. This two-way feedback is what makes online communities work.

Some more reading

• ROI measurement + Items = YES you can measure Social Media ROI
• Understanding Gartner’s “Generation Virtual”
• The Credit Crunch – What Next?
• Financial chaos does not rule out economic recovery
• Now is the time to seize power from the markets
• What is next in debt crunch?
• Online shopping and the credit crunch

Charlene Li gave an excellent talk on the new Forrester book Groundswell. While I could write about it here Nancy White’s visual is even more powerful. As they say, a picture says a thousand words…

See all of Nancy’s photos from the Community 2.0 event here.

Forrester released a report on this issue last week (see here) and their answer is “Yes, but high costs mean that firms with big budgets lead”. This may be true and if it is then it’s more to do with the nature of using online communities for research. They mean building an ongoing relationship with a group of people than needs to be actively managed at all times. This is then available for the brand to dip into for research or to track.

The real issue here seems to be the shift from a project-based approach to research buying and running an ongoing research resource (which obviously has an ongoing cost). At FreshNetworks we think the benefits of using online communities for qualitative research are huge. We wrote our own white paper on the issue earlier this year (see post here). The depth and quality of insight you can get by building real communities with stakeholders can be incredible and the real value comes from the other benefits of building a community like this.

Traditional market research is very transactional. People answer a survey or attend a focus group. Using online research communities, brands can really engage with people. Involve them in their research, feedback to them and incentivise them not with the cash of traditional methods, but with the knowledge that their input is making a difference. Critically, and this is the really exciting bit, traditional market research depends on you know what questions you want to ask. With online communities, the community can tell you what you need to ask. And that’s probably something much more important and relevant to you!

Thanks to Social Media Playground for a post this week about the Forrester Research Marketing Forum 2008, and in particular the discussion about engagement being the new key metric for businesses to know and understand (see post here).

Forrester put forward a model for measuring engagement based on the “Four I’s”:

• Involvement: KPIs including site visitors, time spent, page views
• Interaction: the volume of contributions to blogs, UGC, reviews
• Intimacy: survey-based measures of consumer attitudes, perception and feeling about the brand
• Influence: the weight of the consumer, how likely they are to recommend the brand or be advocates

These measures taken together can then be used to understand and assess the levels of engagement a customer has with the brand. For us, the interesting element here is the Influence measure – this seems to take the metric out of being a simple measure of how one customer engages with a brand to be a measure of the value of this engagement. A highly engaged customer who is also highly networked is of more value than one who is less well networked.

When you think of word of mouth and advocacy, this becomes a much more valuable measure!

Download an excerpt from the Forrester paper here.