evan hamilton: how to find the roi of community management
TRANSCRIPT
COMMUNITY MANAGEMENT ROI
In 20 minutes
ME•One of you•7+ years•Flock, UserVoice, ZOZI, Coursera•Community Manager Breakfast•Not a math whiz (so don’t be intimidated)
@evanhamilton evanhamilton.com
ROIRETURN ON INVESTMENT
Spent $10, made $15. ROI = $5
TODAY
1. Why this is important2. Finding your goals3. Metrics & analytics4. Navigating ROI in your org5. Kittens
Everyone leaves able to start measuring basic ROI.
WHY THIS IS IMPORTANTSaying “this is hard” is lame.
(Thanks to Loree Draude of Google AdWords for the inspiration.)
WHY THIS IS IMPORTANT
■“Well, do you really NEED that hire?”■“I know you’ve been here for two years, but I’m not sure we have the budget to give you a raise.”
■“No, I don’t care about engagement! Put a bunch of product links in there and sell some stuff.”
■“Well, I have an MBA and you don’t, so...”■“We have to cut costs, so you’re going to be part of the sales team now.”
■“The new CEO would love a runthrough of what exactly it is that you do for the business.”
Eventually, the hammer will land.
SO WHY DON’T WE SHOW ROI?•It IS hard!•There ARE benefits beyond measurable ROI•Junior people•Companies unwilling to measure
A NOTE ON THEORIES"PEOPLE are experience rich and theory poor. People who are busy doing things don't have opportunities to collect and organize their experiences and make sense of them."-Malcolm Gladwell
#1: KNOW WHAT THE GOAL IS•Not “engagement”•End of the day? It’s about the bottom line.•Retention or acquisition.•Keep asking until you get the answer.•Q: What's the goal?
•A: To increase loyalty•Q: Why do we care if customers are more loyal?•A: They visit our website more frequently•Q: What happens if they visit the website more frequently? •A: They buy more of our products.
Example via Feverbee: http://bit.ly/1K584be
#2: KNOW WHAT TO MEASURE•Engagement is important•Health metrics vs ROI metrics
#2: KNOW WHAT TO MEASURE
•RetentionCommonly measured:
•Churn less, use product more•Be more likely to spend more money•Cost less to retain
•Acquisition•Be more likely to sign up/purchase•Be more likely to upgrade•Drive new leads
#3: METRICS & ANALYSIS
Data Geek Disclaimer: Yes, this is correlation, not causation.
#3: METRICS & ANALYSISVery simply, you’re just going to compare.
Photos via: http://bit.ly/1Jh0Tvs & http://bit.ly/1KNsN0a
#3: METRICS & ANALYSIS
•Define “active”•Pull list of active members•Too many? Get a systematic sample: every nth user
First, you need a sample of active community members.
#3: METRICS & ANALYSIS
•Same method to get same number of customers who aren’t in community.
Next, you need your control group.
CHURN LESS, USE PRODUCT MORE“Members of our community will be happier and thus use our product more, meaning we make more money (off ads, monthly SaaS fees, etc).”
Churn = (customers at start of period - customers at end of period) / customers at start of period
CHURN LESS, USE PRODUCT MOREChurn = (customers at start of period - customers at end of period) / customers at start of period
March
January
=/ 66%
-January
March
January
=/ 33%
-January
Churn Rate
Churn Rate
CHURN LESS, USE PRODUCT MORE•Good news for SaaS companies•Same with product usage
MORE LIKELY TO SPEND MORE“Members of our community will be happier, and thus more likely to purchase more items from us.”
Lifetime Value = average order value X number of repeat transactions X average retention months for typical customer
MORE LIKELY TO SPEND MORELifetime Value = average order value X number of repeat transactions X average retention months for typical customer
x 3 x 4|
x 4 x 5|
= $120/yr
= $300/yr
$10$15
Transactions
Transactions
Months
Months
CASE STUDY
“People who were active in the Salesforce community in the last 3 months spent 2x more than people who were not active.”
Erica KuhlSr. Director of Community
YOUR ORG DOESN’T TRACK THIS?
• Surface-level indicators: NetPromoter Score & Customer Satisfaction• Survey-based; no product info necessary.
Be the first & be a superhero.Or: Get simple.
CASE STUDY
COST LESS TO RETAIN“Members of the community will help each other with common issues & questions, so we don’t have to spend money on it.”
forum cost / deflected support contacts
COST LESS TO RETAIN
•Exit survey: Did you find a solution?•percentage solved x total visitors = “deflected contacts”•cost of forum efforts / deflected•cost of support / calls
forum cost / deflected support contacts
COST LESS TO RETAINforum cost / deflected support contacts
Solved
x
/Responded
= 50%Deflection Rate
50%Deflection
Rate
500Visitors
per Month
/$2000Forum Cost
per Month
= $8Cost per
Deflection
800Calls/
Emails per Month
/$8000Support Cost
per Month
= $10Cost per
Call/Email
250Deflected
MORE LIKELY TO SIGN UP/PURCHASE
•# signed up / community visitors (Pro Tip: Google Tag Manager)•# signed up / normal website visitors
“Members of the community will be more likely to try our paid product.”
MORE LIKELY TO SIGN UP/PURCHASE# signed up / visitors
33%
=Visitors
Signups
/Conversion
Rate
66%
=Visitors
Signups/
Conversion Rate
CASE STUDYJennifer Sable LopezDirector of Community
SEE? YOU CAN DO THIS. It’s not rocket surgery.
•Find your equation (they exist)•Get your two samples•Compare community to non-community•Divide cost by results, adjust until profitable
Easy, right?Ok, now the bad news.
CONTROL GROUPS
•Community members already love you.•Correlation vs Causation•But correlation is an ok starting point.
I’ve been cheating.
Photos via: http://bit.ly/1Jh0Tvs & http://bit.ly/1FmOw17
CONTROL GROUPSCausation
Photo via: http://bit.ly/1L7DBqJ
•Look at before/after joining community•Holy grail: A/B testing
#4: GETTING MANAGEMENT BUY-IN & RESOURCES
•Common challenge•Vicious cycle
GETTING DEVS TO HELP YOU•Overall: Be nice•Strike during lulls•Ask them if they can teach you
GETTING MANAGEMENT TO BOTHER•Jealousy•COO/CFO/Finance•Analytics consultant•Hack v1 yourself
IN CLOSINGGo do this.Be taken seriously (by your company and your friends).Get piles of job offers.
Icons CreativeCommons ShareAlike Licensed: http://bit.ly/1FeScji & http://bit.ly/1K6ED8L & http://bit.ly/1cUTmGi & http://bit.ly/1HegidB
