measuring the roi of social crm: no easy...

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.

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SearchCRM.com Editorial Tip

Measuring the ROI of social CRM: No easy task

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Editorial Tip

Measuring the ROI of social CRM: No

easy task

Table of Contents


Resources from Infor



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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 email 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."



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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.



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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:



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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



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• 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 catch-

up in a market like this, the ROI takes a back seat to urgency, time to market."

Always scale proportinally

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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?

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 www.infor.com/crm or by calling 1-800-260-2640.

Copyright © 2010 Infor. All rights reserved. www.infor.com

REVOLUTIONIZE EVERY INTERACTION WITH EVERY CUSTOMER, EVERY TIME.

“Epiphany significantly increased wallet

share through better understanding of

customer behavior and improved cross-sell and

up-sell activities.”

Financial Services Company



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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.

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