The formulas for word of mouth ROI are getting complicated. it is the natural cycle. As our investment in WOM-based communications goes up, our need for metrics to justify that investment goes up. Will there be a neat "GRP-like" definition for "engagement" and it's impact on business? Someday. I have been reading the Measuring WOM document from WOMMA's research summit last year. There is some great stuff in there. Some that is overly complex and over my head (admittedly when we all start talking about regression analysis I get a little catatonic). We will need to explore this complexity before we arrive at the simpler version. Simple is harder than complex.
Sean O'Driscoll from Microsoft has a great post describing a way to think about community ROI. (Thanks to Online Community Report).
He has a more holistic view of community's impact on business. Here's where he starts:
"In an earlier post, I claimed that web 2.0 has the potential to impact all 3 primary functions of a business (what it builds, how it sells/markets and how it supports), so I guess it only makes sense I use these general categories for structuring the ROI discussion. "
He breaks down his modeling of ROI into three broad categories: Support, Sales and Marketing, and Product/Program Devleopment. He offers a wealth of suggestions. For instance, his segment on Sales and Marketing he talks about data on Sales (obvious), Affinity/Loyalty/Satisfaction and the imapct on Image/Brand measured via sentiment analysis.
But his summary addresses my challenge: complexity.
"The one pitfall I would point out is not to get "drunk" with the wealth of ROI model options for community. The failure of this I think is trying to explain/pitch too many ROI benefits and the listener gets lost in your story - remember, you have the curse of knowledge. Also remember, you are probably NOT in the community business...community is more likely a means not the end (obvious exceptions out there). So, stop pitching community and start pitching the ROI benefits!! Online success rate!! Satisfaction!! Cost model improvements! Product improvement! This your listener will understand way better than RSS, Wiki, Forum, etc, etc, etc."
It's a start of a good way of thinking about it. I can't wait till we get to the other side of complexity.
link to original post