Two trends have emerged in recent years. One is the belief that the ROI of a community cannot be calculated to a specific metric. This supposes that many of the benefits are intangible and hard to define. If two members meet in the community and become best friends, what is the value of that? What is the value of building a sense of community among members?
If two members meet in an online community and become best friends, what is the value of that?
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The second trend is a broader confusion between return, profit, and return on investment (ROI). The return is the value created as a result of community activities. This usually means revenue generated or revenue saved. For example, the community may be shown to generate an additional $2m in product sales via increased retention rates.
The benefit of calculating the return is to show the business value created by the community. The drawback is that it neglects the investment required to ascertain this benefit. If a community generated an additional $2m in sales but cost $4m to set up and manage, this wouldn’t look so good.
Profit is easier to understand. It is simply the return less costs. If a community generated $2m in additional revenue and incurred $1m in costs, the profit generated is $1m. Most of the measurements of value we uncovered highlighted either the return or the profit generated.
Return on investment is a different metric altogether.