How do you put an ROI on Customer Loyalty?

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I had a great discussion with a Fortune 50 Consumer products company Sr. Manager of Online Community. She is responsible for 17 of their 50+ communities. She is part of a “shared services” team, which supports 11 of their consumer brands.

Each of their brands has put a toe into online communities, (some more than just a toe) with some private communities, others visibile public ones. The brand managers of each of these communities are typically looking for customer feedback, brand innovation requirements, product specific data analysis, allowing customers to share information among each other etc.

The discussion was around justification of her online communities. I have heard this from many customers but in different formats:
1. How does one justify online communities to senior management?
2. Where is the ROI in customer loyalty?
3. How do you put a business case together for an online customer community?
4. What metrics can I point to to show that our online community is making us money or cutting costs?
5. What metrics should I be tracking to ensure that I can correctly report back the tangible benefits of communities?

Now when it comes to function specific communities – e.g. Customer Support communities; there are very relevant metrics – # of support calls, cost of phone based calls, # of calls handled in self service, reduction in support personnel even though there was an increase in # of customers etc.
Even when it comes to developer communities, there are similar metrics such as queries answered, new problems resolved, etc.

But when it comes to online social communities the ROI is a lot fuzzier. # of users, Most active users, Page views per user, Amount of time spent on community, are all good metrics; but useless for most part to address the main challenge – how to justify in real $ terms the value of the social network community.

We will start to address this in the future posts, but this is meant to be food for thought.