If you don’t have time to develop complex formulas to calculate the value of your community, we’ve created a free spreadsheet package to do this for you.
It’s accessible to each of you for free today.
This simplifies the process of calculating return, profit, and ROI into a much easier process of collecting and dropping in relevant metrics.
You can download it, duplicate it, adapt it, rip it apart and customize it entirely to your community. Have fun.
We’re nervous, excited, and proud to launch this free resource today.
This is a 40k+ word guide to help you:
- Understand the value your community creates.
- Guide you through the process of creating and calculating that value.
- Identify the specific steps to measure that value.
- Communicate that value to your stakeholders.
Establishing and proving value is the most pressing challenge we have to tackle every single day.
This guide will hopefully equip you with some tools and techniques to face down that challenge.
Not every method will work for you. But you should be able to make real progress in understanding the multitude of ways your community creates value and how to communicate that value to others.
The fate of our industry hangs upon the ability of each one of you to prove that the work we do creates a lot of value.
I hope you like it. Please share it if you can.
p.p.s. A huge thank you to SAP for their sponsorship, support, and expertise on this project.
Think about how a community influences purchase decisions.
- It establishes and reinforces social norms within a peer group (e.g. ‘people like me drink coffee like this’). If those social norms involve you or your products, you win.
- It shapes the environment to encourage the behavior (e.g. ‘I can find better information on home-roasting coffee beans here than on Google’ or ‘It’s easier to buy in bulk or through subscription here’). If the community makes the behavior easier, the behavior will happen more often.
- It increases the perceived value of the product (e.g. ‘I didn’t know this coffee was organic or home-roasted by an independent retailer, I’m going to buy it more frequently’). If the community encourages people to better understand the value, they might buy more of it or remain as a customer for longer.
- It rewards the buyer and incentivizes further purchases (e.g. ‘by buying this coffee I can find a peer group of people who love coffee as much as me’). People are rewarded for their purchases.
If your community is designed to increase sales and you’re not doing one of the above, then what are you doing?
Your community was likely created to achieve a single, major, goal.
You’re likely pursuing that goal as effectively as possible.
The danger is ignoring secondary benefits. These can add up to a significant amount. On some occasions, they surpass the main benefit of the community.
Very often when we need examples, we’re stuck on a problem, or looking for inspiration we might ask the question in our community. This might save us an hour or more of searching online. If we do this 2 to 3 times per week and estimate an average staff cost of $100, that’s $300 per week in time saved (or $15,600 per year).
A few months ago, we tested LinkedIn ads for recruiting a staff member. The cost was around $1.5k to put together a list of 60+ applicants. This week we published a job advert here. We also posted it in our community and via a few social networking channels. We’ve now found some very strong applicants. I imagine we recruit a few staff members per year (say 3 to 4). This could be a cost saving of $4.5k to $6k per year.
When a prospective client contacts us, we usually invite them to our community to prove our methods work. I’d imagine this has helped us assure an extra 1 or 2 clients per year. The profit from these might range from $40k to $150k. Let’s assume a low-end return of $80k per year.
Our community is built on Discourse and involved a tricky migration. We often field requests from organizations looking for help to move to a Discourse community. I’d attribute around $10k in revenue from Discourse-related requests per year .
We might see a complex problem shared in our community we believe we can solve. If this turns into a client who wouldn’t otherwise have hired us, this might add another few consultancy projects per year. Let’s estimate a low-end value of $120k per year.
The community also exposes us to challenges our audience faces. We can see what people talk about without us prompting them. We often identify challenges people face. Some are quite common others are unique and complex. This changes our focus for training programs, consultancy projects, and topics of future events.
If we’re launching a new course, we can solicit the feedback of members early on to improve the course. We can collect useful testimonials from members. We can share information about the program in the community, provide discounts to members to incentivize signing up etc…
We could also calculate the value of first-time traffic generated via increased search results, or have the ability to test research and new ideas in the community to determine what really works. We could calculate the value of answers to questions from course participants in the community (and involving others).
All things considered, we might be able to conservatively attribute some $250k+ in value per year to the community.
None of the above was the reason we created the community, they are all secondary benefits.
But the thing about secondary benefits is you need to proactively pursue them. You need to use the community for recruitment, save on research time, generate more traffic, identify more leads, convert leads to clients, identify opportunities etc…
…is when you can still do something to change the outcome.
Don’t worry about the meeting with your boss tomorrow. Like most meetings, the outcome has been decided before you enter the room. No amount of psychological jujitsu is going to change her mind at this stage.
The time to worry is when you can change the outcome.
You should worry when community stakeholders go quiet, when you notice enthusiasm has diminished, when priorities are shifting to other areas, when your budget hasn’t increased this year, when your emails aren’t getting replied to as quickly, when you hear a rumour or a remark about the community on the grapevine, or when your boss or colleagues leave.
These are usually moments when you can still influence the outcome.
You can still rebuild relationships, identify what impresses stakeholders, collect emotive stories, uncover real reasons behind diminishing interest etc…
These are the moments when you can still make a difference.
I’ve been following a branded community for 5 years. It’s six years old. The two creators write about its success for marketing publications. They also speak at their industry’s events and publish their thoughts on the company blog.
I wonder what makes them consider this a success?
Based on the 4 comments in the past 3 months? Based upon the absence of mentions on any social platform? Based upon negligible traffic on Alexa or Compete?
All community articles are peer-authored (i.e. paid for). There is no visible place to interact with other members. Even the sign-up button is hard to find.
It’s almost certainly a failure (and an expensive one too). My guess is the creators know this. They have access to the data. They know no-one is participating, no-one is sharing their content, and no-one is signing up. But by this point they can’t change things. They’ve built up the illusion of success (internally and externally) and now it’s impossible to change strategy to drive success.
Their boss might know this too. But at this point she’s given so much public support that a critical about turn is impossible.
In the meantime, they keep faking it. More blog posts. More speeches. More published ideas in their trade journal. The bigger the lie….
This isn’t the first community where people spend more time trying to prove it’s a success instead of finding the strategy that will make it a success. Most of us can find at least one metric that will suggest a community has succeeded
As a result many minimally active communities are proclaimed a success by community. But this locks you into the same strategy and to working on a failing community for months (or perhaps years) of your life.
Just because it’s relatively easy and tempting to fake success, doesn’t mean you should do it. You don’t want to spend years of your life locked working on a struggling community.
Don’t look for metrics to prove your community is a success. Find the strategy that will make it a success.
Like members, stakeholders are irrational, emotional, creatures too.
Their emotional states will determine the level of support you get for your community.
The biggest mistake we make is relying upon facts. Facts aren’t persuasive.
If you want to get more support, you need to amplify certain emotions.
How do you want a stakeholder to feel about the community?
What kind of emotions are going to get you the kind of support you need?
Look at the emotional wheel below for a second.
What specific emotions are you trying to amplify in every communication with stakeholders?
A few examples:
- Excited. The community is taking off. Activity is rising. The results are coming in. They can’t wait to see what happens next.
- Worried. The community isn’t taking off. They’re going to have to explain to their boss why it’s not working unless they invest in more resources.
- Confident/Safe. Things are going as planned. No surprises. Steady results. They feel smart they made a good decision to invest. They feel safe and secure.
- Jealous. Other communities are doing better in their field. They need to explain to their boss why it’s not working.
The kind of emotion you want to amplify has a big impact on what you measure and how you communicate the outcomes of the community.
If you want the stakeholder to be excited, then be excited. Randomly send through updates with exciting news/milestones achieved. Highlight the new top influencers that joined. Embrace the variable reward mechanism here. Send through unexpected surprises and benefits.
If you want the stakeholder to feel confident or safe, then show how things are going as planned. Provide the facts with context. Be consistent and showcase consistent results.
You will find communicating with any stakeholder becomes much easier once you identify what emotion you need to amplify.
Several organisations let go of multiple community staff members (and friends) in the past three weeks.
Each organisation had previously claimed the community was successful and very important to them. So, what gives?
Two things. First, just because your boss or CEO says they believe in the importance of community, doesn’t mean they do. At least not enough. Community activity is often several layers removed from clear value.
It’s no surprise the most thriving categories of branded communities are those closest to clear value (customer service, employee knowledge sharing, and emotional support).
Second there is a difference between a positive ROI and a positive enough ROI. A positive ROI is >0%. But a positive ROI alone isn’t enough when the budget axe falls. You need an ROI that trumps other departments (HR, sales, customer loyalty etc..) or the axe falls upon you.
Community staff are let go because the community isn’t generating value or the value isn’t believed.
Your biggest priority today is to identify and spend time with each stakeholder to identify what they wish to see from the community. What would make your boss’ boss job easier or make her look good? Stay close and communicate with stakeholders every week. Mapping out stakeholder objectives is critical (and will never be on your job description). This process builds stronger, useful, relationships too.
Second, influence the community behavior towards those objectives. Lots of activity and lots of members isn’t enough to justify value anymore. You need to influence the community towards specific behaviors that matter. Directly connect what stakeholders want (innovative ideas, greater retention, self-identifying leads) to behavior members need to perform.
So begin today mapping out stakeholder objectives and directly connect them to member behavior. Make sure stakeholders also make this connection.
Getting internal buy-in isn’t your boss saying the community is doing well. It’s you getting more resources and surviving budget cuts. Harsh, but true.
Visiting a client 3 years ago, the community manager complained about a lack of support. The numbers had been moving in the right direction for months, but still the support was lukewarm.
We spoke to her manager. He was surprised to learn the monthly numbers were up. He received the monthly reports (along with monthly reports from several other departments on the same day) but rarely glanced at them. When he did, he couldn’t recall the figures a few hours later.
Multiple spreadsheets of numbers will do that to a person.
If your metrics aren’t going well, sending metrics in a monthly spreadsheet on a Friday afternoon with the email subject “Monthly Community Metrics” is a smart (short-term) career move.
But if your community numbers are moving in the right direction, the monthly report is the very worst place to show it. Don’t hide your success behind a raw spreadsheet of numbers.
1) Provide context. I don’t know if having 1500 community managers in our community is good or bad. But having every 1 of the top 4 community managers there sounds far better. I know that having 9 of out top 10 customers actively engaged is probably a good thing. I don’t know if 23,000 members is good or bad, but the population of a small town certainly sounds good. Don’t send through raw numbers, make those numbers mean something.
2) Show trends. If the trends are heading in your direction, never send through raw numbers. Create a graph that shows the trend line. Better yet, use the current trend to predict future trends “if we keep growing at this rate, we’ll reach…..”. Let the audience taste the future success.
3) Capture stories. Capture stories of positive sentiment and how it helped your business. Let people visualise specifically how the community helps the members and the organisation.
4) Highlight milestones. Even better, send through regular milestones. You can use milestones relatively loosely here. Your 100th member helped, your 10,000th question, reaching call deflection parity with customer service line (or half or one quarter of that).
I don’t know about you, but if my community is going well, I want to make sure everyone knows about it. Don’t bury the metrics in monthly reports. Make it really easy for your boss to understand it’s going well. Provide context, showcase trends, capture stories, and highlight milestones. Every message they receive about the community should scream its success.
However your boss says they want to see reports, go beyond it when things are going well. Your community is counting on you.
If you’re wondering what metrics to collect and how to display them, here’s a simple rule.
If your boss is asking you for data to prove your worth, it’s already too late.
Your boss will ask for metrics when she isn’t sure the community is delivering value. By that point, her mind is usually made up and it will take something extraordinary in the metrics to change her mind (and if that extraordinary thing existed, it would likely already have been noticed already).
This works on a simple consistency principle.
Once we’ve formed an idea, we accept evidence that supports that idea and ignore evidence that doesn’t.
The best time to present data is when that idea is being formed. Waiting for your boss to ask for evidence that the community has value is a sure-fire way to sabotage your career.
Do it right now.
But understand that metrics without context are meaningless. Is 1300 active members good or bad? Who knows? But we know that number going down is bad and going up is good.
Add emotional spice to those metrics. Frequently share the good stuff. Collect sentiment stories and regularly share them so people feel good about the community. Share new milestones achieved. Share when you’ve held a successful event. Use Evernote and tag every good story you have to share.
How and when you present metrics are as important as what metrics you collect. Few bosses want an exact value, but they need a rough idea. The best time to present metrics and display stories is when they are forming that idea.
I once hired a copywriter to increase a client’s newcomer to registered member conversion rate. It was a (expensive) test. The copy he produced was stunning. Big promises, free resources, every psychological technique and inbound marketing technique in existence was incorporated.
The conversion would have shot up, the participation rate would have plummeted. All the free offers in the world wouldn’t get people to participate.
This is the problem with measuring (or being measured by) a single metric. You’re motivated to subvert all the resources available to you to make that metric go up. But these are complex systems we’re working with. Changes in one area affects other areas in unpredictable ways.
If you’re only being measured by registered members, hiring a copywriter to write this sort of copy that decreases the total level of activity is the logical course of action.
If you’re only being measured in total number of posts, it makes sense to say controversial stuff, start fights, initiate wordplay games, and share gossip.
If you’re only being measured by value only, it makes sense to spam members with discounts until they buy etc…
Perhaps we’re all smart enough to stay away from the extremes above, but the logic is still there. In any situation where there is a choice, the choice will favour what’s being measured.
Communities aren’t unique here. If a CEO is measured by the increase in share price each year, they’ll subvert every resource available to them to make that price go up each year (with predictable consequences).
This works for every metric you can think of. Imagine your metric is monthly active users. It makes sense to spend most of your time on having as many unique contacts with as many members as possible to encourage them to visit once. You can build up entire volunteer teams to help you.
The problem is these things work on a curve. Eventually sustained growth requires more than just a numbers game of contacts / members or big promises to newcomers. It requires word of mouth, depth of discussion, taking time to build a strong sense of community etc…
Part of the problem is simplicity. A single metric keeps everything simple for you and your boss. But it’s also just as likely to keep your community from reaching its potential and lead to its own demise.
If you’re managing a community team (or just managing your own community), have the discussion with your boss, colleagues, or even just yourself and set at least four targets.
We’ve found these work well:
1) A growth-related target. This is a target related to the number of new members each month. Use any proxy figure you like (unique new visitors, newly registered members, first-time participants etc…).
2) An activity-related target. This is the total number of posts, posts per active members, average time on site, page views per member or anything that indicates whether members are actively participating.
3) A sentiment-related target. This is a target related to the sense of community, how members feel about the community, or general satisfaction with the community. Polls and surveys work well here.
4) A value-based target. This is a target related to the value the organisation gets from the community. Call deflection, increase in retention rate, time saved etc, any return-based metric.
Setting four targets prevents anyone from subverting the other three to achieve a single aim.
If you prefer to track a single target to measure, feel free…just insist it must be achieved without any major declines in any of the other three.
When I was 15, I had an arch nemesis. Let’s call him Mark.
We both wrote about video gaming tournaments. Only he got the best scoops. He got the special access to VIPs. He got let into the ‘players only’ areas of tournaments. He got asked for his opinion by mainstream publications when they wrote about the topic. I was the better writer, he was the better journalist.
I earned a good part time income, he sold his gaming site for just over a million bucks.
The difference was relationships. He was fantastic at building them. I showed up the day of a major event, he showed up a few days early and hung out with everyone (organisers, security, gamers etc…). I locked myself in my hotel room to write up my stories, he wrote his in the thoroughfares – complete with the annoying interruptions from friends and acquaintances.
You get the idea. The difference between us was relationships. He spent about half of his time and maybe a third of his revenue building them. He flew to places to meet people. He visited the top gamers at home to do interviews. He bought people drinks. He showed up every day and helped others.
In 2013, I took a month-long work trip around the world. I went from London to Dubai to Australia and then across the USA and back to the UK. I had dozens of meetings, coffees, breakfasts, lunches (sometimes two on the same day) with community professionals, friends, event organisations, platform vendors etc…
I can probably trace around $500k in revenue to relationships established (and solidified) during this trip over the following years. The next year (2014) I spent a few weeks travelling through the USA again. There was no clear purpose of the trip. Yet the trip yielded a future employee, a new idea for our courses, and a couple of new clients (eventually).
And this is the problem. If you’re doing this work, you understand the value of relationships. Yet because this value is so difficult to quantify, we don’t invest anywhere near as much time building them as we should. Even when we do establish a relationship, we don’t maintain it.
When there is budget to spare, it goes towards more staff or better technology. But the best results will usually come from radical relationship building. Your best members, future staff, new ideas, and great feedback is going to come from the relationships you’ve literally invested in.
Travel more. Host meetups in different cities. Segment your mailing list by location and meet people everywhere you go. Bring new groups together and start regular meetups. Take people out for food and drinks. Hear their stories. Look for trends and new ideas. Identify possible future super users. Post photos of meetups with members in the community if you like. The cost of doing this is miniscule compared to the possible benefits.
If you think this only works externally, try it with your colleagues. Host a weekend barbeque and invite your team. Set-up a regular coffee or lunch with your boss or acquaintances from random departments in the organisation. It’s a lot easier to get support for your ideas when people already know and like you.
Don’t forget the bible neither.