Interesting: Chloe Stromberg and Charlene Li at Forrester Research are looking at return on investment from public-facing corporate blogs (via Cybersoc). The results won't be out til the end of the year, but the analysts share their approach in an article in Computerworld:
We will have interviewed nine Fortune 1,000 firms that have external blogs. These include a mix of some traditional consumer-facing firms, some technology companies and some traditional B2B firms. We're using Forrester's Total Economic Impact model to help measure the impact of technology investments, and we have done interviews with five thought leaders -- analysts, consultants and strategists in the blogging space.
Li also talks about another report she's working on related to social networks:
I'm working on a report right now that looks at how companies can create their own social networks or tap into them. We're where we are with social networks now where we were with blogging two years ago.
She's right about where we're at with social networks today. The value of forums has been abundantly demonstrated. Blogs are getting there too. But I think we're all still looking for those blue-chip examples of companies who have successfully deployed pure social network applications for their customers, partners, or employees. Message Edited by JoeCo on 12-26-2006 09:05 PM
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There's an Interesting piece by René Algesheimer and Paul M. Dholakia in the November issue of Harvard Business Review on research the have conducted at eBay in Germany. I've seen internal numbers like this for many years, but there's been very little empirical research to date to back up experience in the field.
Lurkers and community enthusiasts bid twice as often as members of the control group [i.e., non-community members], won up to 25% more auctions, paid final prices that were as much as 24% higher, and spent up to 54% more money (in total). Enthusiasts listed up to four times as many items on eBay and earned up to six times as much in monthly sales revenues as the control users. The findings on first-time sellers were even more impressive: Compared with the controls, almost ten times as many lurkers (56.1%) and enthusiasts (54.1%) started selling on eBay after they joined and participated in customer communities. The increased buying and selling activity of enthusiasts and lurkers generated approximately 56% more in sales during the year that our experiment ran than in the previous one. With a take rate (the fraction of sales that eBay earns as revenue) of 10.3% and a gross margin of 82%, eBay earned several million dollars in profit from the increased trading behavior of the community participants in the experiment.
I'm looking forward to seeing the full results. Thanks to Jim Cashel for passing this link along. Message Edited by JoeCo on 11-21-2006 09:26 PM
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Over the past month, a number of people have chimed in on Jakob Nielsen's October 9 AlertBox on the "90-9-1 rule" for participation in social networks and online communities. If you missed Nielson's piece, he posits that in any community, 90% of participants lurk, 9% are occasional participants, 1% contribute most of the content. There's not much new in Nielsen's piece, or in the commentary around it -- maybe because 90-9-1 is just another way of talking about what has elsewhere been described as the the power law of participation, or the long tail, or even the Pareto principle. The fact of unequal participation isn't really debatable, though why it is, what it means, how we should feel about it, and what we should do about it are all worth thinking about. (I'll discuss this in the context of customer communities, although the same lessons apply to employees, partners, associates, colleagues, etc.) Why is it? W e often hear about unequal participation in the context of online applications, but it's a fact of life for any kind of social organization. You know this if you've ever volunteered, or served on a committee, or been part of any group that sets out to accomplish something. Some people do more work than others. It's just that online, it's more noticeable and more measureable. What does it mean? It means, first of all, that you should set reasonable expectations for participation from the get-go. Among other things, i f you accept 90-9-1, y ou can look at your target population and tell if y ou have sufficient scale to succeed . (If you're planning to get started with a group of only 200 users, for example, you're flirting with failure.) What it does not mean, by the way, is that participants are unrepresentative of your customers as a whole. I had the chance to test this a couple years ago, when I conducted a series of focus groups for a US Fortune 500 company. We had complete purchase history on each participant, and conducted a survey to get demographic and other data so we could compare across other dimensions too. The results confirmed my own experience over many years: community participants were as diverse as customers in general, in terms of demographics, preferences, and profitability, and as a group were almost identical to the customer population as a whole. (On the other hand, when we broaden our scope to look at all community members, contributors and non-contributors included, we find that they are more loyal, more profitable, and buy more than the average customer. But this is another subject, which I've been writing about for a number of years.) How should we feel about it? The same way we feel about gravity -- it's inconvenient sometimes, handy at other times ... and nothing that we can effectively alter. But here's some consolation: unequal participation is less unequal than it may appear. The reason? The composition of the active 10% changes over time. Today's participants and non-participants go through cycles of high activity, low activity, and no activity as their interest, time, and other factors allow. (J. P. Rangaswami makes this same point, while reminding us of his own earlier and excellent attempt at a 90-9-1-style breakdown.) What should we do about it? Nielsen is right-on here, stressing the importance of making participation easy and of recognizing and rewarding good contributions via effective reputation systems. As DrumsNWhistles notes, these principles are evident in Web 2.0 apps like Digg and Flickr. As well, I would add, in Lithium's products, and soon on any application that wants to thrive on the next-generation Web. Message Edited by JoeC on 11-24-2008 09:25 AM
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As the guy who runs community management at Lithium, I deal with
people at all levels and roles in our customer organizations. Because
of that, I'm always looking for good, non-technical ways to describe
technical concepts and trends.
A good example is Web 2.0.
By now, many non-technical people have heard of it, but they have no
idea what it means to people like them. That's why I thought this
graphic on rojo.com was interesting:
One of the things I like is that it includes a dimension often
missing from the discussion: scale. This not just a different Web.
It's also a much, much bigger one.
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I guess I'm a sucker for a good social network diagram. A couple weeks back, I read an article about Cornell professor Jon Kleinberg and his analysis of interactions on social networks. Using data from the LiveJournal blog network, Kleinberg sought to find out what makes some networks grow, and others fail. Below is a picture Kleinberg drew to depict community and group formation inside a social network. Click on the image to get an annotated version that explains the circles and lines in the diagram.
This is one example of a "visualization": a way to depict an online community or network in graphical form. It reminded me of other ways people have tried to depict online groups. The best-known examples are probably the scatter plots and treemaps Marc Smith and his colleagues at Microsoft Research have popularized in their analyses of Usenet Newgroups. I also like some of the experiments Francis Lam created during his Master's work in MIT's Sociable Media Group.
Other people have focused more on the micro level. Here, Lilia Efimova depicts the relation between two bloggers over the course of three years.
Back to Kleinberg: what did he find out about how communities form? As he details in his paper, he and his colleagues discovered that having a friend in a community increases your likelihood to join, and that having two friends inside increases your chances even more. However, the effect rapidly diminishes as the number of friends increases beyond two. Two, it seems, is the magic number. Message Edited by JoeCo on 11-17-2006 08:50 PM
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