It’s Time To Focus On Generating A Positive ROI For Your Online Community

Many community professionals are measured and rewarded by their ability to increase activity.

But the gap between activity and value is wide and growing.

The tasks which best boost activity (e.g. controversial discussions, less challenging interactions, and games/quizzes/events) don’t create more value…they just create more activity. You incur extra costs managing that activity.

Thus increasing activity tends to boosts costs more than value.

If we exclude advertising-supported communities, only a tiny percentage of interactions generate anything resembling value. You can see these in the following table:

Online Communities ROI Table

A table showing the ROI of online communities

You might have a community with millions of members participating in thousands of discussions, but how many of those discussions help you?

It’s probably not many, but we can increase that number.

Increasing Valuable Behaviors

Let’s imagine your goal is customer retention (for example).

What is likely to lead to retention?

Loyalty? Yes, but what causes loyalty? Three things stand out:

1) Perception of brand value compared with competitors. This is when you sincerely believe the company’s products/services are better. To increase this members would need to ask questions in the community and receive good, quick, responses from the brand. They would need to read and accept information about the brand’s products/services. Those are two very specific behaviors (asking questions and reading information)

2) Acceptance and attachment to the brand group identity. This is when you believe in the company’s mission and feel close bonds with other customers. For this to happen members need to make genuine friends and connections with other members. That means personally getting to know other people. Specifically this means introducing themselves to other members, having private discussions, and disclosing personal information about themselves. Again these are 3 specific, distinct, behaviors.

3) Switching costs. If you lose something tangible or intangible by switching, you’re less likely to switch. They would have to answer questions to earn points or status which afford them discounts on the product or credibility among the group.

Now we have 6 very specific behaviors which we can measure and try to encourage to increase retention rates.

  • Ask questions about the products.
  • Read information about the products/services (and mission)
  • Introduce themselves to others.
  • Participate in private discussions.
  • Reveal personal details to others.
  • Answer questions to build credibility.

This doesn’t mean we need to stop members broadly doing what they want.

It does mean we need to focus on also persuading members to perform the behaviors that generate value.

Changing Behavior

There are four key tools to change members behavior.

1) Building social norms around those behaviors.

2) Persuading members of the value of those behaviors.

3) Simplifying the behaviors you want members to make.

4) Better rewarding these behaviors.

Let’s take just one behavior, asking questions about the product.

How can we proactively encourage members to do more of that?

At the moment, members don’t do it for many reasons. They can’t think of questions to ask, they’re worried what others might think of them, or they don’t see the benefit of doing that.

Let’s use the norms, persuading, simplifying, and rewarding framework here:

table 2

These are all relatively simple ideas for just one single behavior you want to encourage. You might do some of these by accident already, but imagine how powerful it would be to deliberately plan activities around these sorts of behaviors.

You could do the same for another behavior, perhaps introducing themselves to others.

table 3

You came come up with far better ideas I’m sure, but the framework should help.

The goal is to be deliberate in getting more members to perform the behaviors which deliver the value you need.

If your goal is activity, that’s easy enough to do. But you will only end up increasing the cost without seeing results. If your goal is value (which it should be) you need to take a different approach.

Look at the table above. Decide the behaviors you need members to perform. Then persuade members (emotively) to perform those behaviors, build social norms around those behaviors, simplify these behaviors, and reward those behaviors.

Comments

  1. joel galbraith says:

    Ugh, a frustrating week. We (under my excellent community manager, @cwilson’s, leadership) have been working for months building a case for a new community platform, identifying user stories and criteria, painstakingly comparing vendors, justifying it, and securing budget. Just when it was about to be a done deal, some challenges surfaced and resources are being diverted away to higher need projects. The reason? “Your department is low risk.”

    The work we are doing in our woefully inadequate (and manual) community platform is deemed sufficiently adequate–and even outright successful! I can’t decide if we’ve fallen victim to our own success, or if I’ve fallen down as a leader in communicating the value of our team to the organization (communicating our ROI)…or both. I’m still licking my wounds, and hopeful that funding may come available again next year. In my disheartened state, I can’t yet turn back to the drawing board and the ROI tools to revisit and sharpen our ROI proposition for management.

    While we’ve been focused these many months on justifying the need (and price tag) for a new platform, I fear we’ve been neglecting the work that brings real value and results that is clearly laid out here in Rich’s article.

    At the moment, I’m accepting any sage wisdom and words of encouragement.

    (We’re in the non-profit, higher education, faculty/professional development space, and I struggle to clearly communicate ROI.)

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