How to Calculate the ROI of Online Communities

By Richard Millington

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ROI People

Many organizations develop an internal online community to improve how employees collaborate. But what does this collaboration mean? Does it mean employees share more information and improve performance, or does it mean they waste less time? It can be both and we need to measure each separately here.

An internal online community can save time by improving how information is stored, tagging experts other staff can approach for information, reducing duplication of effort, and reduce the amount of time spent communicating internally.

Internal online community time saves: improve info storage, tag experts, reduce duplicate effort/time on int. comms

 

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For example, one survey determined that the average employee spends 38 minutes looking for each document. Similar amounts of time are likely to be spent searching for experts who can answer a pressing question.

In addition, information shared by email or in person is not captured for others to access and save later on. This often leads to staff repeatedly asking the same question or duplicating work which has already been performed elsewhere. A community can reduce the need to ask these questions.

To measure time saved, you need the following metrics:

  1. Time active community members spend looking for documents, experts, internal communications and on work that has been completed elsewhere each week (in minutes).
  2. Time non-active staff members spend looking for documents, experts, internal communications, and on work that has been completed elsewhere each week (in minutes). Both active and non-active members can be determined via sampling or a survey.
  3. The number of active members in the community (one visit in previous 30 days).
  4. Average salary of staff members in the community.

Community ROI Template

You can add these metrics into this spreadsheet or follow the process below.

Step One: Determine Time Saved Due To The Community

First, we wish to measure time saved as a result of the community. To calculate this, we need to know the total number of minutes saved through superior document management or locating experts (documents or experts searched for multiplied by the time saved per document or searching for an expert), reduced duplication of effort, and time spent communicating internally.

There are two methods to calculate this. The first is to ask staff in a survey to estimate how much time they spent looking for documents, experts, or getting answers to questions before the community compared with today. The second is to compare staff who don’t use the community with those that do use the community and compare the difference. We will assume we’re using the second method here.

This can be achieved via a survey method in which staff are asked to estimate how much time they spend looking for information each week before the community (or each document and the number of documents they look for), and compare this with the amount of time they spend looking for information using the community. We can then identify the average answers of each of these and calculate the total time saved per active member per week.

If staff in the community estimate they spend on average 338 minutes looking for documents, experts, communicating internally or working on tasks that have been completed elsewhere before, and non-members believe they spend 540, this is a difference of 202 minutes saved per active staff member per week.

However, we also need to exclude the amount of time staff spend in the community each week from the number of minutes saved. This can be taken directly from community analytics data or via an estimated response in the survey.

We can now also calculate the amount of time spent per year by multiplying the time saved per member by 52 (weeks) and then by the number of active members in the community.

screenshot-2016-09-02-11-32-20

This shows that, on average, the community saves 63 minutes per staff member per week. With 297 employees active within the community, this leads to a total of 972,972 minutes saved per year. Now, we need to determine the value of this time saved.

Step Two: Determine Value of Time Saved

Now we calculate the total cost of staff members using the community. This will include not just salary costs, but also benefits and total overheads assigned to an individual staff member (usually as a percentage of all salary costs). If the average employee costs the organization $95,450k per year, this would break down to approximately $46 per hour (or $0.76 per minute).

If the community saves a total of 898,128 minutes per year in the community, this breaks down to a total cost saving of $744,152 per year in staff time.

screenshot-2016-09-02-11-34-28

Summary

  1. For internal communities, it is critical to measure staff time saved each week. This can be in the form of time spent looking for documents, experts, on internal communications, or completing work that has been done before.
  2. Run a test comparing the time spent on these tasks of community members vs. non-members (survey, sampling, or analytics).
  3. Determine the time saved per member per week and then use average salary and number of active members in the community to calculate the cost saving per year.

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