Community Strategy Insights

The latest insights on community strategy, technology, and value by FeverBee’s founder, Richard Millington

Communities, ROI And Misplaced Enthusiasm

Richard Millington
Richard Millington

Founder of FeverBee

Many companies benefit from developing communities, but a greater number wont.

They don’t have the resources to develop a community, nor sell a product/service that’s worth building a community around. 

A few simply wouldn’t be able to gain a positive ROI if they did.

I worry people mix the 19% increase in purchases figure here with a 19% ROI. We can all agree there is a big difference. 

If members purchase 19% more of the product/service, and your service costs $5 a year, that’s an extra $0.95 per participating member. A community with 33,000 active members would bring in $31,350. 

This wouldn’t cover a community manager’s salary, let alone the platform expense, overheads, and other opportunity costs. Worse still, 33,000 active members isnt easy. It’s going to take a few years. 

However if your products/service costs $1000 per year, an extra $190 per active member, per year really adds up. A community with 33,000 active members now brings in $6.27m per year. Even with 1,000 active members it’s worth doing. 

That 19% figure (one of many) isn’t the starting whistle for all companies to develop communities, it’s a warning. If your feasible audience size multiplied by the service/product fee wouldn’t generate a positive ROI, don’t develop a community. 

So let’s be optimistic about communities, but not overly so. That helps nobody. 

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