How to Calculate the ROI of Online Communities

By Richard Millington

ROI People

PART ONE: What Is The Value Of An Online Community?

The biggest fear lurking in the back of the minds of many community professionals is ‘the value question’. What is the value of the community? What is the return on investment (ROI) of your community? Why should your organization continue funding the community? Why do you need more resources?

Community isn’t alone here. PR, advertising, and even cleaning professionals are also asked to demonstrate value. How you answer this question will determine whether you get the resources you need, whether your boss and colleagues take you seriously, whether you keep your job or get the raise you richly deserve.

Your answer creates a perception. Is community a fluffy, feel-good activity where members sit around chatting about TV programs they watch? Or is it a valuable tool that keeps customers and identifies leads before your competitors even get a chance? Your answer will create and shape that perception. You probably need a much better answer than you do today.

Purpose of this Project

The purpose of this project is to establish the mentality, processes, and practice by which individuals responsible for internal and external online communities calculate and communicate the value or ROI of their efforts.

This isn’t going to be easy. In fact, the difficulty has led some community professionals to embrace the notion that value is self-evident and proof is irrelevant. Others have experimented with varying metrics such as the return on engagement (ROE). A smaller group have worked to establish proven, statistically valid, processes to demonstrate value and return on investment.

Our first goal is to better understand ROI. What is it and how is it used? ROI is one of many ways to establish value. Despite the attention given to ROI, it’s probably not the best way for you to prove value. We want to identify the problems we face in calculating the ROI and the many ways a community delivers value to an organization. We have also tried to structure these with clear links to one another. This is a huge improvement upon our previous ROI template.

Our second goal is to identify the specific processes we can use to measure the value of each of these community benefits. This comprises the bulk of the book. This section delves deep to explain what data we need, how we collect that data, what metrics we look at and what factors we need to understand to calculate value.

Our third goal is to determine the investment required to create and manage a successful community. We use a total cost model, which includes investments caused by the community but are often not directly attributable to the community.

Our final goal is to understand the best practices in communicating the value of the community. The goal of communicating value can vary between securing support and resources, making informed decisions, or boosting our own credibility and self-esteem. Raw metrics alone will not be persuasive here, so we have to go deeper.

Online community professionals have long been dogged by the belief that our work doesn’t deliver enough value. Sometimes, these accusations are true, sometimes they aren’t.

Our goal isn’t to reinforce a sacred view that communities do or don’t generate value. Our goal is to identify how to calculate and communicate value.



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