How to Calculate the ROI of Online Communities

A community may (and should) require both full-time employees and a percentage of other people’s time to succeed. This is a cost that needs to be included within the investment. This can be a difficult cost to identify. For example, it is difficult to know the salaries of staff involved, the % of time they spend on the community, and the total cost of the employee (benefits, hardware, etc.).

These costs will generally include full-time employees and support from existing members of staff. For example, this might be the full-time cost of a community manager and then a % of her manager’s cost to manage this staff member.

Staff costs will include:

• Community managers/management. An organization will typically retain the services of an online community manager (or devote a % of a staff member’s time) to grow and manage the development of the organization’s online community. This job requires proactively driving the level of growth and activity within the community.
• Moderator/moderation costs. Larger organizations will often employ the services of a moderator or moderation team to quickly remove material that may be harmful to the organization, other members, or create an unpleasant atmosphere, which would limit future contributions to the community. Specific moderation companies offer to moderate communities on behalf of their clients. This might range from $20 per hour to hundreds of thousands of dollars for more advanced software.

• Legal. Creating an online community may entail legal considerations for which internal or external counsel may be sought. This might include support in writing privacy and usage documents, reviewing supplier contracts, compliance with local laws, and understanding potential liabilities. This might also include dealing with possible legal issues as they arise.
• IT. Developing an online community will also likely incur costs from staff involved in managing the current IT system. This may be in integration with existing systems, maintenance, preventing security risks, or support in developing unique features.
• Much of the staff costs will also involve management. The percentage of time managing the community, coordinating efforts, and ensuring the successful operation of the community will vary depending upon the community size. This is likely to be a significant percentage of the manager’s time and efforts.

Finally, there may be additional costs from third-party consultants. These costs might include:

• Third-party consultant costs. Developing an online community is a new concept to many organizations. They, therefore, seek outside guidance in developing the community strategy and ongoing support to ensure they meet best practices. This might be a one-off cost or a recurring cost.
• Training staff. Organizations often decide to train their community managers to successfully manage their online communities. These costs can range considerably from a few hundred dollars to a few thousand dollars, depending upon the number of staff being trained and the level of customization required. This can be a one-time or ongoing cost.

We have included a breakdown of a typical consultancy client’s costs below: