How to measure and express the ROI of your online community

by Alison Michalk December 05, 2022

A vibrant online community is a clear advantage for any business or organisation that wants to make an impact. However, getting the internal support, funding and resources you need for effective community management could hinge on whether you can confidently express that impact and determine your organisation’s return on investment (ROI). 

Let’s explore why communicating value and ROI matters and thoughtful approaches you can implement now.

Communicating value will lift a weight from your shoulders

The fact that community managers are struggling to communicate value was a key learning from the Australian Community Managers State of Community Management Survey 2021. When asked to name challenges, the highest percentage of respondents said ‘Communicating ROI’ (23 percent) while the third most common response was ‘Ineffective measurement’ (21%).  

Focusing on ROI can be hard in the community management sphere for a few reasons including lack of adequate analytical tools, technical expertise and time. The ACM survey found most community managers who do measure ROI, do so on an ad hoc basis (23 percent).

While it’s not simple, being able to understand and articulate ROI is a powerful way to garner internal support for strengthening your online community. Communicating value to your business or organisation helps you:

— Keep people aware of the value that is being created for target audiences; 
— Gain recognition for your community as a key marketing/engagement/customer experience initiative within the business/org; 
— Ensure the community’s sustainability long-term.

Finding ways to work with the tools you’ve got, and getting into the habit of consistently measuring and sharing the value of your community is a wise move. But, where to start?

Get clarity on what stakeholders care about…

Before you can convince anyone of the important contribution your community makes — and argue for more support — you must be measuring its performance in some way. 

Spend some time up-front considering what kind of results might appeal to decision-makers/stakeholders in your organisation. You might need to initiate conversations with people you’re looking to influence about what’s valuable to them.

Another way to frame your results is by aligning to high-level planning documents. How can you demonstrate that your online community’s success supports key strategies and goals that the entire organisation is working towards?

That makes it easier to hone in on what you need to measure and plan ahead for how you’ll turn outputs into useful expressions of ‘value’. ROI typically emphasises revenue gained, costs saved or costs avoided. However, for purpose-driven organisations, social impact may be just as important.

Then measure accordingly

Metrics and ‘value’ are clearly not the same, but starting with quantitative data is an important part of being able to build an understanding of where your community is making an impact. Qualitative data is also critical to getting a balanced picture of how people experience your community and the actions they take as a result (outside of your community).

Some of the core measurements community managers use to gauge value include:

Metrics and KPIs such as the number of visitors/participants, how active people are (including the rate of new active members), how quickly the community size grows, how many people convert to become a member/customer/event attendee, the volume of interactions/engagement, the reach of content and SEO rankings. 

Leads, sales and revenue gained through engaged community members. This might also include referrals, reviews or case studies generated by community members that support sales. If you have methods that let you see sales attributable to your community, you can also get a sense of customer lifetime value (LTV).

Engagement and loyalty which can be guided by metrics but typically requires in-depth assessment of qualitative factors too. For instance, you might use sentiment monitoring tools or discussion ratios but also dig deeper through manual analysis to understand the tone of conversations and quality of interactions. Similarly, processes like Net Promoter Score gives you a glimpse of loyalty but qualitative comments from people help flesh this out.

Content performance including the traffic and downloads on an owned site and the amount of user-generated content (UGC) produced and shared. Did UGC lead to broader exposure of your brand in media not related to your community? How does UGC reduce your organisation’s content generation costs?

Call/Support deflection based on the extent to which your community members answer questions or resolve issues for other community members, reducing your customer support team’s work and the amount of effort involved in managing the community.

Product development informed by community feedback. Were there features or innovations that arose from community input? Were you able to conduct market research by engaging your community? In what ways did your community help inform go-to-market messaging, event planning or help you find topics/speakers for your webinars, podcast or blog. These time-saving benefits can be associated with reduced costs to your team.

Many community managers also focus on ways to measure the positive social/behavioural changes that result from community membership, and the knowledge transferred as a result of the community’s interactions. These typically require more in-depth manual analysis of outputs achieved beyond the community, or direct feedback from participants.

Examples of how to express ROI

Bringing value back to financials is often more compelling for leaders, so keep that in mind if they’re your target for ROI reporting. 

For instance:

— Can you express effort saved (through a positive community, issues resolved, or user-generated content) in terms of the hourly salary that would have been incurred if you’d had to employ someone? 

— Can you use cost of acquisition from other marketing activities as a benchmark to ascribe value to enquiries generated via your community? 

Get creative in how you present non-financial ROI benefits. For instance, storytelling is more memorable: can you showcase quotes or develop short case studies from people who have converted from an online community to a member/customer? Or you could showcase how an existing customer whose love for your product/cause has been deepened through access to your community, leading them to become a strong brand advocate.

ROI’s relationship to better community management

Evolving community managers’ ability to measure their work, and communicate the value delivered, is a clear area for improvement across the profession. 

ROI reporting is not just a way to ‘grease the wheel’ internally. Understanding the impact of your community also helps you assess spend on managing communities, such as:

— Mitigating reasons for declining value/health, e.g. has the group’s size become unwieldy with more negative conversations, where an investment in more moderation might help? 

— How additional investment could be used to keep your community healthy at various stages of maturity— e.g., launch new sub-groups or exclusive paid offerings? 

Capturing and communicating the value of online communities is an essential part of community managers’ work in keeping communities thriving. 

If you need help with measuring your online community’s impact, setting objectives, measurement and community health get in touch.