How to Calculate the ROI of Online Communities

By Richard Millington

ROI People

Social Return

Not every organization building a community has a clear profit-motive in mind. Many non-profit organizations, for example, define value created by the community as anything that helps the organization to achieve its goals.

This might include:

  1. Social Return on Investment. Social return is the unique improvement in the lives of the organization’s stakeholders as defined by its mission. This might mean increasing their capacity to handle their challenges, influencing public policy, or taking collective action. Social return is often referred to as the critical metric for all non-profit activities.
  2. Capacity Building. Capacity building (or community capacity building) is increasing the group’s (or stakeholder’s) ability to handle their environment and achieve their goals. While this term is primarily used for international development, we believe it also applies to all stakeholders. For example, if an organization dedicated to supporting people suffering from cancer helps members feel happier, healthier, or more informed, this is a clear social return. An online community can be created precisely to provide stakeholders with access to better information, emotional support, or collective resources.
  1. More informed decisions. An online community may improve the level of awareness or knowledge of a particular issue among its stakeholders. This sharing of knowledge would lead to beneficial impacts for their members. An online community dedicated to providing information about an illness might create a community to spread and share the best sources of information. This allows members to make more informed decisions about their treatment and health.
  2. Social support. An online community may build a support network for victims of circumstance. This provides a place members can turn to for advice, help, and comfort. This may directly improve the happiness or life satisfaction levels of the organization’s members. It may help members in difficult situations.
  3. Social Impact (SI). Social impact is the extent to which an online community has influenced the broader environment of stakeholders. This should be connected to a long-term change, not a short-term impact. For example, this might mean influencing public policy or collectively creating something of value (e.g. building a school). It might also mean stopping something bad from happening. This might occur through collective action such as fundraising, protests, or influencing key stakeholders.
  4. Collective action. Collective action occurs when a group coordinates activities to achieve a social impact bigger than they could each achieve alone. An online community might help a group achieve the maximum possible impact. This might be through collecting signatures on a petition, staging protests, or crowdsourcing money or knowledge to achieve goals.
  5. Eliciting donations and fundraising. An online community can increase the number of donations by allowing peer to peer fundraising, showing the social proof of other people donating, and setting targets that others can achieve. This is common through projects such as Kickstarter.

Social Return List

Social Return

Improving the lives of the organization’s stakeholders

Capacity Building

Increasing the ability of stakeholders to handle their environment

More informed members

Social support

Better social structure

Social Impact

Influence change on a broader social level

Petitions

Protests

Crowdsourcing knowledge/revenue

Donations

Eliciting donations from community members

Peer to peer fundraising

Social proof

Challenges and milestones

Summary

  1. An online community can help an organization by increasing the customer lifetime value, acquiring new customers, reducing marketing costs, improving operational efficiency, or delivering a social return.
  2. A community might have more than one objective. However, there should be at least one priority objective for creating the community which is agreed by all stakeholders.
  3. While the community might have one objective, do not ignore additional benefits. There are multiple value streams that increase the value generated by the community.
  4. The terminology varies wildly by industry and even between individuals within the same industry. It’s important to understand what terminology your executives are using and how the community matches the organization’s long-term goals.
  5. You should be able to clearly define in your stakeholder’s terminology how the community generates value for the organization.

Chapters

Share

 LinkedIn LinkedIn

 Google Plus Google+