How to Calculate the ROI of Online Communities

By Richard Millington

ROI People

Process Costs

Process costs are the non-staff/technology costs incurred in the day-to-day running of the community. These vary considerably by the community, but may include:

  • Event costs. Many online communities host online and offline events. The cost of online events might be negligible, but the cost of offline events can range significantly from a few hundred dollars to millions of dollars. Many larger community events have spun off into their own businesses for the organization.
  • Content creation. Creating high-quality content may incur costs in the design, acquisition of images, promotion, or acquiring rights to specific material. Larger online communities tend to create more comprehensive and professionally developed material. Creating this content can involve fees ranging from copywriting, video production, etc.
  • Content licensing fees. Some online communities license content from other channels to provide fresh content. These content licensing fees become an ongoing, recurring, cost of the community. This is an increasingly rare practice due to recent updates in search which punishes duplicated content.
  • Member acquisition programs/advertising. Member acquisition programs are joint partnerships, sponsorships, advertising, database acquisition, or any paid activity that involves acquiring members to join the community. These are also increasingly rare in modern community building efforts.
  • Member incentive programs. Member incentives programs are typically related to competitions and rewards (often financial) for joining or participating in a community. Occasionally, these also relate to free products or services if members perform an action (e.g. refer a friend).

Note the line between a one-time and a recurring cost can be blurred here. Therefore, we have not distinguished between the two in our spreadsheet package. A member acquisition program or incentive program might be run to launch a community or used throughout the community’s existence if it proves successful.

Process Costs One-time

  • Member acquisition programs/assets
  • Event costs
  • Online and off-line outreach programs
  • Member incentives
Ongoing

  • Member acquisition programs/assets
  • Event costs
  • Repurposing existing assets & new content creation
  • Licensing fees for outside content
  • Online and off-line outreach programs
  • Member incentives

A sample of typical costs incurred by an enterprise platform can be seen below. Your costs for each of these may vary significantly.

screenshot-2016-08-31-11-54-04

Summary

  1. Process costs can consume a considerable amount of the organization’s budget.
  2. Process costs increase as a community grows. For example, developing more professional content.
  3. The link between one-time and ongoing costs is blurry. We have not distinguished between them here.

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