The 7 Benefits of Online Customer Service Communities
A new Forrester Research report highlights the return on investment in social media communities.
Posted Jul 11, 2009
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It's no longer much of a shock to see that social media is changing the way many companies are thinking about their customer relationships. (In fact, CRM magazine devoted its entire June issue to the topic.) Significant questions remain, however, about how to prove social media's worth: What's the return on investment (ROI) that companies can realize by utilizing social media?

A new Forrester Research report, "The ROI of Online Customer Service Communities," at least hopes to shed some light on the issue for contact centers, using its Total Economic Impact (TEI) methodology to examine four areas:

  • Benefits—how much a company could benefit from customer service online communities.
  • Costs—the amount an organization will have to pay in both hard costs and resources for the communities.
  • Risks—how uncertainties could change the total impact of the communities on the business.
  • Flexibility—namely, how the investment could create future options for the business.

Natalie Petouhoff, senior analyst at Forrester and author of the report, says that, up until this point, she hadn't seen any documents she could even use as a guide in terms of ROI for social media in general, much less customer service. "It seems to me that if you look at the community, at what customers are saying, everything you ever want to know about the company to make it better is there," she insists. "That has to provide value."

Consequently, she spoke with 20 companies currently utilizing online customer service communities -- including InfusionSoft, Intel, iRobot, Lenovo, Sprint, and Verizon -- to gather their experiences and find commonalities. In the process, Petouhoff identified seven key benefits:

  • reduction in agent-assisted interactions;
  • reduction in agent-assisted email;
  • increase in first-contact resolution;
  • increase in agent productivity;
  • increase in product ideation;
  • boost in relevant Web-site content and reduced search-engine optimization costs; and
  • improved customer retention and customer lifetime value.

While Petouhoff says she expected cost savings, the rise in product ideation was a surprise. In the study, she writes that customer service departments are rarely responsible for product ideation, but the nature of leaving commentary in the online community lends itself well to the process -- and can lead to other benefits. "You wouldn't think 'customer service' when we went down this path," she says. "But because the ideas are in the community, interdepartmental collaboration can take place with them. As a result, customer service has an opportunity to step up to the plate and be an extremely valuable executive player."

The study also elucidates the costs typically incurred when deploying online customer service communities, divvying the expenditures up into start-up and recurring costs in three categories: people, process, and technology. At the outset, companies can expect to lay out money for the following:

  • community Web-site design and single sign-on;
  • integration to the contact center, knowledge management, FAQs, search, marketing management, and sales management system;
  • training;
  • a project manager;
  • a community manager;
  • technology support resources;
  • marketing and launch promotion activities; and
  • planning and policies.

"People are always questioning and saying they don't have the money for this," Petouhoff says. "If you look at the actual costs for conventional customer service applications, [enterprise resource planning], CRM...it's usually between a half million to $10 million in addition to implementation. When you look at a software-as-a-service community deployment, you're looking, at the most -- including people, process, and technology -- a half million dollars."

Besides cost, Petouhoff says, many companies are most afraid of possible legal implications when considering an online customer service community. "There is fear that employees are going to say [some]thing that embarrass[es] the company or get it in trouble," she adds. "One of the key things is that you need to make sure when you take ownership of this initiative to invite all the key stakeholders to the table. This is not something you need to invent for yourself. There are more than 100 companies that have done this, and worked through issues with legal, corporate, public relations." In the end, she says, "community vendors have the best practices."

According to Petouhoff, a conservative-model TEI analysis summary for an online customer service community deployment in a small-to-midsize contact center can realize an ROI of 99 percent and payback of the initial investment in less than 12 months. She stresses that there are many factors that individual businesses must take into account as they try to calculate ROI -- the Forrester report provides a spreadsheet template that can deliver a more-personalized prospectus for a given company.

So what does this all mean for customer service? Petouhoff says that that this is just the beginning of an overarching return to a focus on the consumer. "Cluetrain Manifesto said 10 years ago that there would be a revolution that puts power back in the hands of the customer...and that revolution would be Web 2.0," she recalls. "Now it's here: We have applications, mindsets, and customers who are doing this now. It's no longer just a fantasy or an idea."

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