May 27, 2009 Social Media Club

The ROI of Social Media: Customer Service Communities

Natalie L. PetouhoffSenior AnalystCovering: Social Media, Customer Experience and Customer Service

Forrester Research

2Entire contents © 2008 Forrester Research, Inc. All rights reserved.

The #1 Customer Service 2009 initiative should be

social media.

3Entire contents © 2008 Forrester Research, Inc. All rights reserved.

• Why is social media important to customer service?

• Using Forrester’s TEI Methodology to Calculate ROI What are the benefits of online communities?

• What are the costs of online communities?

• What is the ROI of customer service social media?

Agenda

4Entire contents © 2008 Forrester Research, Inc. All rights reserved.

Why is social media important to customer service?• It’s…

– Twitter

– Online communities- Lithium, Helpstream, Jive…

– Facebook, LinkedIn, MySpace

– RightNow, Parature and nGenera

• It’s not just a…

– Forum

– A wiki

– A blog…

• It’s a community that interacts with each other on an ongoing basis

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Customer disdain, social media and customer service have…

•… formed a perfect storm that is super charging change

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What is a Customer Service Online Community?

Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester report

• Online communities have evolved from “bulletin boards”

•Today they are “posts” in the form of forums, blogs, and chats.

• Updated “posts” sent via email or RSS syndication subscriptions

• This instantly distribute new information to EVERYONE

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Who’s got an online community? B2C…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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Who’s got an online community? B2B…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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Verizon…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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iRobot…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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myFICO…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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Intel…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

13Entire contents © 2008 Forrester Research, Inc. All rights reserved.

• Why is social media important to customer service?

• Using Forrester’s TEI Methodology to Calculate ROI

• What are the benefits of online communities?

• What are the costs of online communities?

• What is the ROI of customer service social media?

Agenda

14Entire contents © 2008 Forrester Research, Inc. All rights reserved.

TEI™ is Forrester’s ROI methodology

Costs(Impact on budget)

Benefits(Impact on business)

Flexibility(Options)

RISK

Total Economic

Impact

Uncertainty• Impact of “assumptions”

Benefits• Quantified value• Defined metrics

“Options” created• Are there new opportunities

the future?

Cost• People• Process• Technology

Source: August 4, 2008, “The Total Economic Impact™ Methodology: A Foundation For Sound Technology Investments” Forrester report

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Assumptions• Multiple customer service goals• Attracts super users• Engages community to be honest about their opinions• Company is interested in community’s opinions…• Small to medium sized call center• Three year time frame for analysis• Has federated search• Allows agents to have access to the community

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

16Entire contents © 2008 Forrester Research, Inc. All rights reserved.

• Why is social media important to customer service?

• Using Forrester’s TEI methodology to calculate ROI

• What are the benefits of online communities?

• What are the costs of online communities?

• What is the ROI of customer service social media?

Agenda

17Entire contents © 2008 Forrester Research, Inc. All rights reserved.

Benefits(Impact on business)

Examples of benefits

• Cost savings

• Reduce call volume

• Reduce email volume

• Increase agent productivity

• Increase in FCR

• Reduce SEO costs

• Revenue improvements

– Increase customer lifetime value

– Increase product ideation

– Increase lead conversion rates

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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There are many benefits of Customer Service Online Communities…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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The answers are in the community

Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester report

• Customers solve each other’s problems• Less or no interaction from a company.

• Customers read posts • Fewer call to the contact center

• And agents use the community-enhanced KM database

• Reduces their call time• Provides more satisfying answers.

DSL provider

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First Contact Resolution (FCR) goes up

Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester report

• FCR affects• Customer satisfaction• Purchase reprobability• Good word of mouth…

My question

was answered

!!!!!!!!

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Customer advocates create more value

Source: February 2008 “Redefining High-Value Customers” report.

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“Bad word of mouth” gets handled!

• Do the “ostrich” or… • Handle it…

• Alert executives • Quickly post a resolution to the community• Avoid

• Brand damage and • Increased call volume…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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Invest in turning customer informants

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

• Even informants can be turned into advocates:

• Use a built-in system to recognize, rank, and reward users

• Acknowledge their suggestions

• Thank them for helping customers

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What about the rest of the company?

Source: January 21, 2008, “The Economic Necessity Of Customer Service” Forrester report

•Product Development•New ideas coming from communities can save product development millions

•Product Q&A•Get solutions that can’t be found any other way

•Marketing and Sales•Now promoting a product that was designed with customer input.

25Entire contents © 2008 Forrester Research, Inc. All rights reserved.

• Why is social media important to customer service?

• Using Forrester’s TEI methodology to calculate ROI

• What are the benefits of online communities?

• What are the costs of online communities?

• What is the ROI of customer service social media?

Agenda

26Entire contents © 2008 Forrester Research, Inc. All rights reserved.

Costs(Impact on budget)

Examples of customer service online community costs

• People

– Training

– Staff

• Process

– Marketing of community

• Technology

– Community website design

– Single Sign-on

– Integration to contact center

– Platform subscription fee

– Analytics

– Reporting

27Entire contents © 2008 Forrester Research, Inc. All rights reserved.

Start-up costs of customer service online communities…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

28Entire contents © 2008 Forrester Research, Inc. All rights reserved.

Recurring costs of customer service online communities…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

29Entire contents © 2008 Forrester Research, Inc. All rights reserved.

• Why is social media important to customer service?

• Using Forrester’s TEI Methodology to Calculate ROI

• What are the benefits of online communities?

• What are the costs of online communities?

• What is the ROI of customer service social media?

Agenda

30Entire contents © 2008 Forrester Research, Inc. All rights reserved.

The ROI of online customer service community is…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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The TEI of online customer service community is…

Source: May, 2009 “The ROI of Online Customer Service Communities” Forrester report

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Where to begin?

• Take the self-assessment• Evaluate your organization• Compare to best practices • Get alignment

Source: January 13, 2009, “Forrester Customer Service Innovation Framework and Self-Assessment ” Forrester report

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Join the social media revolution

Source: April 6, 2009, “How to Win Funding for Your Customer Service Project ” Forrester report

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Thank you

Natalie L. Petouhoff

+1 310.919.8467

npetouhoff@forrester.com

www.forrester.com

To Get the Slide Deck, go to:

www.forrester.com/socialmediaclubla

35Entire contents © 2008 Forrester Research, Inc. All rights reserved.

Research in this presentation

• July 2009, “Social Media Best Practices for Customer Service: Case Studies”

• May 2009, “The ROI of Online Customer Service Communities”

• April 6, 2009, “How to Win Funding for Your Customer Service Project”

• January 13, 2009, “Forrester Customer Service Innovation Framework and Self-Assessment”

• January 21, 2008, “The Economic Necessity Of Customer Service”

36Entire contents © 2008 Forrester Research, Inc. All rights reserved.

Research in this presentation

• Why Talking To Your Customers Is Ruining Your Business, August 29, 2008

• August 4, 2008, “The Total Economic Impact™ Methodology: A Foundation For Sound Technology Investments”

• July 2, 2008, “Customer Service: A Keystone Of Your Corporate Revenue Strategy”

• February 4, 2008, “Redefining High-Value Customers”