It is not always possible to collect data on purchase frequency or the average order value. In this situation, we would instead determine whether customer spending per year has changed. Are members in the community spending more than non-members? Has this figure increased since joining the community? Is this a result of the community? This follows the same process we have outlined in Chapter 8.
Step One: Measuring Changes in Customer Spending
There are three ways we can measure changes in customer spending. The first is to compare current spending as members join against benchmark spending habits after members have been active in the community after a defined period of time. This can be achieved in several ways.
- Create a survey (or poll) which members can complete when they join the community, asking them to estimate their current level of spending with the organization over the past year. A follow-up survey can then be automatically scheduled in six to twelve months’ time to measure the increase or decrease in spending since members have joined the community. We need to average the before and after spending habits of all community members.
- Sample method. A better method is to take a sample of 100 to 1000 members and benchmark their current level of spending in the community when they join. This works best when members use an email address to buy the product and then use the same email address when participating in the community. We can then develop an average level of spending from these members.
- Direct analysis. The best method (and least common) is to use our database to track customer spending when a member joins a community and measure the increase or decrease in spending after six to twelve months. This will show the specific difference as a result of the community.
Once we have benchmarked the level of spending of each month’s members as they join, we then want to use the same method to follow-up in order to track the level of spending six to twelve months later.
Community ROI Template
You can follow the calculations on this sheet or in the images below.
This shows a breakdown of current spending, an increase in spending and difference between non-members and newcomer figures twelve months later. This shows us how much spending has increased since members have joined the community. At this stage, we can create an average or we can leave each cohort as a unique group.