How to Calculate the ROI of Online Communities

By Richard Millington

Chapter 16  LinkedIn  Google Plus
ROI People

Only one or two people will care about the ROI of your community (CEO/CFO/financial people). A couple more might care about the profit (your boss’ boss, your boss). Maybe a dozen or so will care about the return (you, your boss, your peers).

But every stakeholder will care about value.

When we talk about communicating ROI or getting internal buy-in, we’re really talking about creating a positive perception of community value. You will probably never be asked to produce an exact calculation to prove the ROI of your community. But you will almost certainly need to demonstrate value to multiple stakeholders.

'Communicating ROI or getting internal buy-in' is really about creating a positive perception of community value

 

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Do not assume that value is a financial metric. Not every stakeholder cares about return or profit. The reality within most organizations is more complex. Financial success matters, but it’s a small part of a larger story.

What if your boss most cares about looking smart and innovative in front of their boss? Financial metrics aren’t as interesting as citations from news publications citing how innovative the community is.

What if they care most about the needs of members? Financial metrics aren’t as interesting as positive testimonials and collected stories of member sentiment.

What if they care about their budget being reallocated to other departments? They want financial value, but they also need ammunition to prove the community delivers better outcomes than other specific departments.

Every stakeholder will have a slightly different interpretation of value. Their interpretation will also be influenced by what other stakeholders think. Financial value is just one component, which comprises the total perceived value of the community. Financial value is tangible, unbiased, and scientific. But stakeholders are prone to all manner of biases and illogical conclusions. Do not rely upon any financial value metric to establish a positive perceived value in the minds of stakeholders. Instead, understand what perceived value means to each stakeholder.

Each stakeholder has a different interpretation of value, which is also influenced by what other stakeholders think

 

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The question isn’t how can you best communicate the ROI or profit. You can do that by email. The question is how can you best create a positive perception of value. Financial metrics matter, but they sit in the background to a much bigger picture.

DIVIDING IT UP

Communicating value can be divided into four key areas:

  1. Who should communicate value. The credibility of the sender is often more important than the message itself. You might not always be the best person to send through value. It might be better to find someone with the stakeholder’s ear or a high level of credibility to deliver the message.
  2. What value to communicate. Different stakeholders wish to see different outcomes from the community. We need to understand these outcomes before we communicate progress on these outcomes. Not all outcomes will be explicit, plus we also need to understand implicit outcomes (e.g. what isn’t being said).
  3. When to communicate value. Data produced at the wrong time will be quickly forgotten, ignored, or outright rejected. Communicating at the right time plays a major role in how we form the perception of value. You need to know the best time to communicate value.
  4. How to communicate value. Raw metrics alone will not suffice. We need to understand how opinions are formed and the role we play in helping form those opinions. Opinions and beliefs are based upon facts, emotions, and experiences. We need to work at multiple levels to shape a positive perception of value.

Summary

  1. Financial metrics are one part of the community’s perceived value.
  2. Different stakeholders have different perceptions of value.
  3. We need to understand who should communicate value, what value they should communicate, when they should communicate value, and how they should communicate value.

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