How to Calculate the ROI of Online Communities

By Richard Millington

ROI People

Calculating Return of Customer Acquisition

One of the most underused benefits of an online community is customer acquisition. Very few organizations use their community to attract new customers. Most prefer to increase the retention rates or advocacy. However, a community can be a powerful tool by which to acquire new customers.

A community can improve customer acquisition through lead generation (lead identification, advocacy, improved NPS score, increasing search engine traffic, increasing the quantity or price of the ads served through the community) or via lead conversion (decreasing lead conversion time, the number of visits to lead, or the number of leads to customers).

We have to make a big assumption here. The assumption is that the customers we acquire and convert through our community would not have been acquired through any other method. You could test this, but for now let’s assume this is true. If these customers would have been reached anyway, we would instead classify this as a cost saving (hopefully) compared with other methods.

The reality is often more nuanced with both additional revenue and saved costs being a factor. However, this will require a balancing model (i.e. assigning percentage weights to the percentage of leads that may have been acquired through either method and adjusting the values accordingly. This is a deeper model than we wish to cover here).

Methods of Measurement

The methods used to measure each of the additional revenues are shown below:

Customer Acquisition

 

Attracting new customers to the business

 

 

Lead generation.

# of leads generated by activity

  • Lead identification
  • Customer advocacy
  • Net Promoter Score (NPS)
  • Search engine traffic and search rankings.
  • Reach/Mentions
Lead conversion

% of leads who convert into paying customers

  • Lead conversion time
  • Visit to lead %
  • Lead to customer %
  • Assisted buy and sell

We shall discuss the various methods over the following pages.

Chapters

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