A Useless Platform

September 26, 2011 Comments Off on A Useless Platform

Last week I spoke at the eVirus conference in Vilnius, Lithuania. The dominant theme was Facebook. Namely, how can we build a community on Facebook?

My answer is pretty simple.

Don't build a community on Facebook.

Do you want to base your community efforts upon a platform over which you have no control, which has one of the lowest response rates in history, where most of your updates wont been seen by the majority of your audience, where few individuals meaningfully interact with each other on branded pages, with little demonstrable ROI, and where the owner can shift the ground beneath your feet at any moment without warning?

Sure, Facebook has some uses. You can build an audience pretty quickly. However, it's almost impossible to get this audience to meaningfully interact with each other on the platform. As a community platform, Facebook lies somewhere between awful and redundant.

Just ask yourself, how many times do you visit and interact with others on a branded Facebook page? I suspect it's not often.

Facebook might be the easiest and most popular option, but it's far from the best option. 


Click here to download a free 90-page ebook on developing successful online communities for organizations.

Ace The Community RO| Question

August 23, 2011 Comments Off on Ace The Community RO| Question

Imagine you sell skis.

You build a community for skiers. Not just any skiers, but novice skiers.         

You leverage your relationships with customers to develop a small community that rapidly grows into a large community. It’s a welcoming crowd. They discuss how they got into skiing, they share tips and trade product advice. You begin arranging events for your skiers, who also invite their skiing buddies to join. You let top community members try out new products.

Now it’s really starting to grow.

You let skiers provide feedback on the latest models; you drip information to your community first (causing more people to join to get the latest news before their friends). Your events start becoming quite big too. You invite top skiers to talk to your customers both online and offline.

You create a branded ski just for community members that proves popular. You provide an option to provide customized skis (with the member’s name on). You create beginner-level customized content and reviews of courses for novices. Hundreds are sharing their experience, advice and novice anecdotes. You create a book of these stories and it's shared across the web.

Then your boss cancels the community because the click through rate from the community to the product site was low.

Insane, right?

You can’t measure the value of a community purely through clicks. A sense of community, lifetime customer loyalty, referrals to the community and can’t be measured through clicks. The easiest measurement isn't the best. At the very least, those familiar with your company will know to visit the site directly to make their purchases instead of going through the community

Now you could blame the boss for this tragedy. S/he should recognise the value of the community. But, how can they? They’re not the experts, they’re relying upon their own experience to make these judgements. It’s your fault. You didn’t establish boundaries, expectations, or means of measuring the community when you began.

You need to establish a means of measuring the community’s benefit to an organization, even if it’s using a sampling method (members –vs- non-members of similar backgrounds).

You need to build and collect your evidence. Whenever someone questions the value of community, you need to ace that question. You need to provide an impressive amount of data and anecdotal stories that will blow them away.

Even better, don’t wait for the question to rise to prove the value of the community. Proactively study the community, collect data and present that information. Don't even let the question arise. 

Note: We will be studying ROI in depth as part of the Pillar Summit's Professional Community Management course. Click here if you want to be told when you can enrol for the course.

Measuring An Online Community: Master your data to gain an unfair advantage

June 8, 2011 Comments Off on Measuring An Online Community: Master your data to gain an unfair advantage

You have a truly remarkable advantage over offline community builders. You can track every single action your audience makes. You should know exactly what stage they are at in the membership life cycle process and which stages need to be optimized.

I'm always amazed by the number of organizations and community managers which have either a) No strategy for the community beyond maintenance or b) A strategy built upon guesswork and assumptions when the data is so close at hand.

You shouldn't be guessing what is or isn't working in a community. You should be religiously gathering and analyzing what the data. You should measure the following:

  • New visitors. This shows whether your outreach is successful. Always compare it to the previous month and six months ago. You should also analyze where these visitors arrived from and track how many of each progressed into active members. You can also track the success of each different source of members (where does the best quality traffic come from?)
  • New visitors to new registered members. This shows whether your website is optimized for converting a curious visitor into a member and whether you're attracting the right sort of visitors. You can go further and measure their progress through each stage of the registration form.
  • % members which make a contribution. This shows whether you are converting those that register into participants within the community. If this is low, you might be just collecting lurkers. 
  • Members active within the past 30 days. This shows whether you are gaining or losing active members. When this number starts to drop, you have a serious problem and a limited amount of time to correct course. 
  • Contributions per active member per month. This is an activity per member ratio. If this drops, members are less engaged in the community and could lead to more members leaving. This might also show if a small number of members are dominating the discussions. 
  • Visits per active member per month. This shows how often members visit the community. The less frequently members visit, the more likely the contributions will drop and the number of active members will depart. This may also show the popularity of events held in the community.
  • Content popularity. Each piece of content can and should be measured. How many people read it, how many responded to it. This will indicate which content items are most popular and which should be discontinued. 

 

You should also use sampling to understand the following:

  • What % of newcomers remain members for more than a month. Select 10 newcomers from three months ago and analyze their journey through the community and specifically where they dropped out of the process. Did they make a contribution? Did they not make a second contribution? You can adjust and tweak your community for this. 
  • Speed of replies to discussions. How quickly are discussions receiving a reply? The faster the responses, the higher the level of social presence within the community and the greater the level of participation. 
  • The % of newcomers which initiate a discussion. This highlights whether newcomers may be unmotivated or intimidated to start discussions. 
  • Language and tone of voice. What language do members adopt when they address each other? Is it formal and polite? Is there friendly banter? Is there a sense of familiarity? This will let you know what stage the community is in.
  • Sense of community. Ask members every year to participate in your specially modified version of the sense of community index
  • Number of volunteers. This will indicate the number of people moving on to the highest levels of engagement within the community. Low numbers usually limit the scability of the community.

Each piece of data will tell a story. If the number of active members is decreasing but the level of contributions continues to rise, it might indicate a core group is dominating discussions and other members are unable to break into the circle. As a result you might provide core members with a separate place to chat, or work to break newcomers into the group or talk directly to group members about the problem. 

Create a spreadsheet and a graph showing all this data. Update this monthly. Watch for numbers that dip and take a corrective course of action. 

When you gather data you can set objectives, strategy and targets for each of the areas of community management (growth, moderation, relationships, activities, content etc…). 

In practice, if you notice the number of volunteers has dropped, you can set a relationships strategy to focus on fewer bring and offer opportunities to be involved in areas of the community they are passionate about. 

Additional Resources

Free Online Community Management Resources On The Web

May 25, 2011 Comments Off on Free Online Community Management Resources On The Web

There are a lot of free resources available on the web to help newcomers and experienced professionals become better Community Mangaers. 

Below are a selection of my favourites. 

 

Reports & eBooks

The 2011 State of Community Management Report

Rachel Happe and Jim Storer of the online community roundtable research a variety of approaches to community management from the top companies and compile this outstanding report on the topic.

Howard Reingold – The Virtual Community

One of the first books on the topic of virtual community and still one of the best. It includes many of the basic and advances rules for communities uncomplicated by modern technology. 

The State of Online Branded Communities

Last year, social engagement firm ComBlu studied over a hundred branded online communities and released a report looking at the overall trends in the sector. Whilst some of their communities lean towards the faux side, there are enough examples here alone to download the report.

The ROI of online customer service communities

Forrester compile one of the first formulas for measuring the ROI of customer support communities. If you need to justify such a community to your boss, make sure you read this first.

The Forrester Wave Report

This is the most comprehensive overview of premium community platforms on the market today. It ranks each enterprise company by category and merits on specific service and software issues. You will need to give Lithium your details to download a free copy, but it’s just about worthwhile.

eModeration White Paper – Communities of Purpose

A short paper mostly about creating the desire for people to participate. It collects quotes from a variety of prominent community authors. Useful for those creating a community that is action-orientated. 

Deloitte – 2009 Tribalization of Business Study

This is one of the best studies undertaken of organizations that develop online communities. It’s getting a little dated now, but still shows up some surprising facts about what organizations develop communities and their frequent lack of success in doing so. We're still waiting for the 2010 study.

Lithium – Community Health Index

One of the most best efforts to date of putting together a meaningful measure of community health. 

Radian6 – Building & Sustaining Brand Communities

Not overly specific to brands, but some great ideas here about building a community, making the case for a community and the resources needed for the community.

Jono Bacon – The Art of The Community

Jono's free eBook about developing successful online community. Reflects on both the technological and psychological aspects of building a community. Slightly heavy on the open-source/collaboration element, but a perhaps the best community specific book out there so far. 

Forrester – The ROI Online Support Communities

A good read (available free on the link below) of Forrester demonstrating the value of online support communities. The numbers might not be perfect, but they demonstrate a pretty good grasp of the material.

 

Websites & Assocations


Blogs

 

Academic articles

McMillan and Chavis (1985) Sense of Community.

Always first in my list of recommended reading to others. This article fully outlines the key concepts of developing a sense of community amongst members and how each elements interrelates with the others. 

Robin Hamman (1997)- Introduction to Virtual Communities Research and Cybersociology Magazine Issue Two

This is a great overview of community definitions and summary of the debate about the definition of a community. It is also applied to online communities. Despite it’s age (14 years old!), it’s as relevant today as it was when first written.

Moore and Serva (2007) Understanding Member Motivation for Contributing to Different Types of Virtual Communities: A Proposed Framework,

Moore and Serva propose 14 types of motivation, some of these are verbalized from previous studies, some of these are introduced afresh. Many overlap. There is probably an easier way to synthesize this information. They later narrow this down to four parent concepts. These are interllecutalism (collaboration, knowledge, wisdom), Benefaction (Altruism, Empathy, Reciprocity), Egocentrism Egoism, Egotism, Reputation, Self-esteem) and Emotionality (Emotional support, Self-expression, Belonging, Power). They found egocentrism as the highest motivator followed by benefaction and emotionality.

Williams and Cothrel (2004), Four smart ways to run online communities (Sloan Management Review, 2000)

This is a simple and readable text on developing online community tactics. This is also useful for providing a simple definition of online communities.

Bughin & Zeisser, (2001) The Marketing Scale Effectiveness of Virtual Communities

A surprisingly good early paper exploring the economics side of what communities has to offer. They concluded that communities do encourage greater loyalty, but economically it still didn’t generate many benefits . These economics have now changed. More people are online, social is big internet business and it’s cheaper than ever to develop a community.

Pitta and Fowler (2005) Internet community forums: an untapped resource for consumer marketers

A more recent paper examining the benefits of marketing through internet community forums.

Iriberri and Leroy (2009) A Life-Cycle Perspective on Online Community Success

This is a fantastic overview of the key success factors for online communities.

Ridings and Gefen (2004) Virtual Community Attraction: Why People Hang Out Online, JCMC 10 (1), Article 4

A great read that combines both academic research, examples and motivational theory to produce some interesting results.

Ardichvili, Page and Wentling (2003) Motivation and barriers to participation in Virtual knowledge-sharing communities of practice, Journal of Knowledge Management, 2003; 7,1

A perspective on internal online communities and analysing why some people participate more than others. The major motivations were when the organization naturally shares, when the knowledge belongs to the organization rather than the individual and when the individuals feel the need to establish themselves as experts.

Wang and Fesenmaier (2003) Understanding the Motivation of Contribution in Online Communities: An Empirical Investigation of an Online Travel Community, Electronic Markets, Vol 13, No 1.

A surprisingly good paper on motivational theory and its relevant to participating in online communities. Clearly, efficacy, affiliation, status and power all feature prominently.

Sugiyama and Rothaermel (2001) Virtual internet communities and commercial success: individual and community-level theory grounded in the atypical case of TimeZone.com, Journal of Management 27

This was the pioneering study of its time and is still almost as relevant today as it was a decade ago. It introduces many of the key concepts we still use today. This includes over-management, community size, stability, monetization and developing a sense of community. I recommend this one above the others.

Sangwan , S (2005) Virtual community success: A uses and gratifications perspective

Another very interesting perspective on communities. Sangwan identifies three major motivations; functional (information), emotive (social, personal and self-expression) and contextual (entertainment and host). Sangwan concludes that in knowledge-based communities functional needs override the other two. Sadly this study has again fallen victim to both major problems. The users self-report their answers, “we want knowledge” and doesn’t differentiate between joining and participating.

Andrews, D.C (2002) Audience-specific online community design, Communications of the ACM, Vol 45, N. 4 

Another excellent paper looking at community design from a demographics and needs perspective. Andrews offers many practical suggestions for developing a successful online community.

Barab, S.A, MaKinster, J.G, Scheckler, R. (xxxx) Designing System Dualities: Characterizing An Online Professional Development Community 

A continuation of Wenger’s thoughts on designing a platform through its dualities. These are the inevitable conflicts in designing a platform that must be tackled. Suggest that the emergent approach works best.

Baym, N.K. (2007) The new shape of online community: The example of Swedish independent music fandom, First Monday, Volume 12, Number 8 – 6 

An excellent discussion on the evolution of some communities to be less dependent upon a single platform. Suggests, using a single example, that many communities can flourish without a single platform of discussion and that definitions of communities which are platform-reliant are false.

Stanoevska-Slabeva, K. (2002) Towards a Community-Orientated Design of Internet Platforms

A great overview of early (and still relevant) literature on the topic of community platforms, along with a strong case for building community platforms within existing sites (as opposed to building new platforms entirely).

Arnold, Y. Leimeister, J.L, Krcmar, H. (2003) CoPEP: A Development Process Model for Community Platforms for Cancer Patients, Community platform engineering process

A simple paper stressing the need to have an iterative process for developing an online community. Grow the community to meet the needs of the users, not the pre-defined needs of the organization.

Porter, C.E. (2004) A Typology of Virtual Communities: A Multi-Disciplinary Foundation for Future Research, Journal of Computer-mediated Communication, Vol, 10. No. 1.

Constance puts together an excellent typology of communities based upon their purpose, place, platform, interaction structure and profit model. This is worth skimming through if you’re interested in different ways of categorizing communities and previous literature on the topic.

The Most Successful Type Of Branded Online Communities

April 9, 2011 Comments Off on The Most Successful Type Of Branded Online Communities

…are customer service communities.

You can find dozens on GetSatisfaction. Lithium does a great job of these too. There are thriving customer service communities throughout the internet. You can find them on O2, Skype and most tech/communication-based products/services.

Most community managers for organizations work in customer-service based roles. 

These communities are easy to start. You need a product/service that people have problems with (or have questions about), provide an online platform to ask those questions and incentive others to respond with their answers. It's a cost-effective alternative to a call-centre. It's a clear ROI.

But these communities are limited in potential. Most people join the community to resolve a problem and then don't return. The audience rarely develops a true sense of community. A handful of experts usually account for most of the activity.

There is amazing potential to be unlocked from developing a community. Improving customer service is an easy option, but it's not always the best option. 


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Adding A Community Twist

March 19, 2011 Comments Off on Adding A Community Twist

Local newspapers do this often. They take a national news story and give it a local twist. This usually meant finding someone it affected locally.

Putting your own community’s twist on a major news story usually helps to strengthen the community bond and provide interesting content.

Also, it’s not too difficult to build a community with a geographical twist. Take a large common interest (for example, Lady Gaga fans) and create a community for Lady Gaga fans in Detroit (or your city).

You can do this within an existing community (as is common) or build separate communities for each city.  It focuses your efforts, provides a greater common bond between members and makes real-time meet-ups much more possible.

How To Build An Online Community – The Ultimate List of Resources (Updated)

January 11, 2011 Comments Off on How To Build An Online Community – The Ultimate List of Resources (Updated)

This is a collection of my favourite and most popular posts from the last three years. It should give you a great overview about both the strategy and the process of creating an online community from scratch.

The Online Community Basics

  1. A Primer About Successful Online Communities
  2. The 11 Fundamental Laws of Online Communities
  3. Building An Online Community: How You Start With 0 Members
  4. How Do You Build An Online Community?
  5. 7 Contrary Truths About Online Communities
  6. Don’t Start A Community For Any Of These Reasons
  7. Basics Community Building Principles
  8. What Is An Online Community?
  9. Different Types Of Communities
  10. The 4 Fundamental Things A Community Provides Its Members

Strategy & Planning

  1. How To Write A Practical Online Community Plan
  2. Setting Objectives For Your Online Community
  3. Settings Targets For Your Online Community
  4. How Big Should Your Community Be?
  5. Which Communities Tend To Succeed?
  6. Why Will People Participate In Your Online Community?
  7. Getting The Appeal Right
  8. A Simple Formula For A Successful Online Community
  9. They Already Do It (Or Want To)
  10. Base Your Online Community Around Real People
  11. Don’t Target The Wrong People
  12. How To Make An Accurate Membership Projection
  13. Naming Your Online Community
  14. 12 Ways To Doom Your Community Before You Launch
  15. A 3-month Pre-Launch Strategy

Building An Online Community Website

  1. Test Before You Invest
  2. How To Design Your Online Community
  3. 20 Things That Should Be Included In Every Online Community Website
  4. The Perfect Landing Page
  5. 8 Overlooked Elements Every Online Community Should Have
  6. Developing Forum Communities
  7. Easy Ways To Add Value To Your Online Community
  8. A Simple Reputation System
  9. Stopping Human Spammers
  10. 7 Things A Community Can Live Without

Launching An Online Community

  1. 5 Things Every New Online Community Should Focus On
  2. 20 Ways To Start An Online Community
  3. Never Wait For The Website To Be Ready
  4. Seeding Your Online Community
  5. Who Are You Trying To Reach?
  6. Who Do You Need At The Beginning?
  7. How To Find Your Community’s First Members
  8. The Founder Role In Starting A New Community
  9. Create An Easy Reason To Take A Small Step
  10. How Small Businesses can Launch Successful Online Communities
  11. Simple Steps To Creating An Online Community

Converting Newcomers Into Regulars

  1. The Ultimate Welcome For Your Online Community’s Newcomers
  2. How To Keep Newcomers Hooked For 21 days
  3. Awesome Questions To Ask New Members Of Your Online Community
  4. Which Visitors Are Most Likely To Become Regulars?
  5. Create A Welcome Pack

Growing Your Online Community

  1. Why People Aren’t Joining Your Online Community
  2. Create A Criteria
  3. How To Get More People To Join Your Online Community
  4. Basic Tactics To Grow Your Online Community Without Any Promotion
  5. Target Clusters Of People At A Time
  6. 3 Perfectly Acceptable Ways To Invite Someone To Join Your Online Community
  7. Growing From A Social Media Following To Small Groups
  8. How To Persuade Your Employees To Join Your Online Community
  9. How To Get The Best People To Join Your Online Community
  10. The Right And Wrong Way To Grow A Forum
  11. The Problem With Asking Members To Invite Friends
  12. A Free Invite With Every Purchase

Increasing Participation

  1. Why People Join And Participate In Online Communities
  2. A Brief Guide To Reaching Unbelievably High Levels Of Participation In Your Online Community
  3. Increasing Activity And Participation In A Community
  4. Creating A Sense Of Community
  5. The Basics Of Increasing Interactions In Any Online Community
  6. Why Members Participate: Fame, Money, Sex, Power
  7. 4 Types Of Contributions You Want Your Members To Make
  8. The Only Way To Keep Everyone Active
  9. 20 Questions which Will Stimulate Activity In Your Online Community
  10. 7 Kinds Of Conversations That Always Stimulate Activity
  11. Concentrate Activity
  12. Simple Tactics To Encourage Your Members To Talk More
  13. 9 Ideas To Revive Your Stale Online Community
  14. When You Have Lots Of Members But No Activity
  15. Epic Events
  16. Why People Stay In Your Online Community
  17. Create A Guide To Be A Top Member
  18. Trade Control For Participation
  19. What You Can Do To Make Your Community More Fun
  20. 8 Ways To Encourage Individual Contributions In Your Community

Managing an Online Community

  1. Building An Online Community Team: The 5 Roles You Must Fill
  2. Moderation Strategy
  3. Attaining Power And Influence
  4. Hierarchy Of Communicating With Your Members
  5. Uniting Your Online Community: Creating Strong Ties
  6. The Art Of Forging Strong Friendships
  7. How Many People Can You Really Look After?
  8. Creating Momentum
  9. 10 Excellent Rewards You Can Offer Members
  10. Creating Titles For Members
  11. The Unlimited Supply Of Important Work You Need To Do
  12. How To Handle Troublemakers
  13. Finding Inspiration In Other Communities
  14. Reorganizing Your Forum
  15. Gossip Is Good
  16. Resolving Problems
  17. Why Fights Are So Important
  18. Never Reward Your Volunteers
  19. Community Guidelines
  20. The 24-Hour Response Rule

Content

  1. The Secret To Awesome Content
  2. The Problem With Great Content
  3. Writing Content That Bonds Your Online Community
  4. 20 Fantastic Content Ideas For Your Online Community
  5. The Power Of Exclusives
  6. Interviewing Members
  7. Every Online Community Needs A Local Newspaper

Measurement/ROI

  1. Measuring The ROI Of Online Communities
  2. Community Health Index
  3. What Matters (and what doesn’t)
  4. This Wasn’t Part Of The Plan
  5. How To Check Your Community builder Is Doing As Promised
  6. A Faith Challenge
  7. Measuring DIY
  8. Proving Benefits Of Building A Community
  9. Me And You, Them And Us
  10. How To Spot Your Community Is In Trouble: 8 Red Flags

Monetizing

  1. The Definitive Guide To Monetizing Your Community
  2. Becoming A Community Intrapreneur
  3. 40 Ways To Make Money From Your Online Community
  4. The Pros And Cons Of Charging For Membership
  5. Community Souvenirs
  6. How To Give Sponsors Access To Your Online Community

Branded Online Communities

  1. Never Let Your Company Start An Online Community
  2. Why Most Online Communities Shouldn’t Try To Create A Community
  3. Why Branded Communities Fail
  4. 6 Huge Advantages Big Organizations Have Over Amateur Community Builders
  5. A Requirement For Branded Online Communities
  6. Decide Between These 2 Types Of Communities
  7. How Do Online Communities Make Your Business Money?
  8. Why Amateurs Build Better Online Communities Than Businesses
  9. Failed Corporate Communities
  10. Your Dream Online Community

Non-profits and Online Communities

  1. Fundraising From Online Communities
  2. What Non-Profits Need To Change

Examples

  1. 15 Examples Of Successful Online Communities
  2. 15 Ideas You Can Steal From The UK’s Best Community
  3. You Can Learn A Lot From This Wildly Successful Community
  4. The Best Online Community You Can Begin Today
  5. Perhaps The Best Online Community I’ve Seen
  6. 10 Examples Of Great Online Communities
  7. Never Hire A Marketing Agency To Build Your Online Community
  8. A Great Example Of An Online Community
  9. A Great Examples Of Game Mechanics In Online Communities
  10. The Usual Errors From The Big Brands

Resources

  1. A Simple Example Of A Great Online Community
  2. 8 Brilliant Posts About Online Communities
  3. Essential Reading For Online Community Managers
  4. Forrester Wave Report

Misc

  1. How To Improve Any Online Community Without Spending A Penny
  2. Great Findings From Social Sciences Applied To Online Communities
  3. Creating A Community From Your Social Media Efforts
  4. The 7 Most Likely Ways Your Online Community Will End
  5. Struggling To Build An Online Community? Try This Easier Approach
  6. The Easiest Solutions To Your Community’s Biggest Problems
  7. 10 Steps To Building An Online Community In Your Spare Time
  8. 8 Ways To Merge Your Online Community With The Real World
  9. How To Revive Your Local Community
  10. How To Create Exclusive Online Communities
  11. 6 Social Psychology Hacks For Online Community Managers
  12. 5 Features Of Really Strong Online Communities You Can Embrace
  13. Searching For Online Communities
  14. The One Book Every Community Manager Should Read
  15. Community Awards 2010
  16. Beyond Your Website

Blogs

  1. Alison Michalk
  2. Angela Connor
  3. Blaise Grimes-Viort
  4. Kirsten Wagenaar
  5. Community Roundtable
  6. Connie Benson
  7. Dawn Foster
  8. eModeration
  9. Holly Seddon
  10. Jake Mckee
  11. Jeremiah Owyang
  12. Jono Bacon
  13. Martin Reed
  14. Matt Rhodes
  15. Patrick O’Keefe
  16. Phil Wride
  17. Rachael Happe
  18. Sue on the web
  19. UX Booth

Are there areas of your community work missing from the above? Let me know and I’ll be sure to blog about it shortly.

Measuring ROI Of Online Communities

August 9, 2010 Comments Off on Measuring ROI Of Online Communities

Many of the key benefits of online communities are measurable.

None of these should be your objectives, but they should be used to justify the costs of an online community. Remember all these are derivatives of a successful online community, not it’s purpose.

This isn’t comprehensive, but covers what most organizations are looking for.

Return on Investment for Online Communities

  • ROI = (Return attributable to the investment – Investment) / Investment
  • Return = Increased revenue + reduction in costs
  • Investment = Time, resources, People

Increase in revenue

In theory, you can measure increased revenue by overlaying your sales before your community activities with the sales for the comparative time period since you began your community activities and marking up the difference.

In practice, your online community is too entwined with your businesses dozen other marketing efforts (not to mention the rebounding economy) to attribute any number to the community.

The easy mistake is to chalk all sales through the community as a community benefit. This is misleading, it overlooks that many members will have purchased the products anywhere. It doesn’t show the benefits.

  • Membership fees. Do you charge membership fees to be a member of your online community? Is it part of your service package? You can count this income here.
  • Direct sales of products. Are you selling products directly through the community. This is a great return figure. However, be careful, most communities begin with loyal customers who would have purchased from them anyway. You need an average of purchases from the community less purchases through the alternative sales channels.
  • Other revenue streams. Easier to measure. Do you sell community-branded products? Organize events? Take a % of members selling products through your community? etc…Include these here.
  • Increased page views to website. Does your community increase page views to your organization’s website? Do you measure your funnel from new visitors to customers? Then you should be able to put a value to every page view and assign a number accordingly.
  • Mentions elsewhere. As per above, track other mentions of your community that lead to measurable number of visits to the business website. Each can be assigned a value as per the page views above.

Clearly, direct sales (namely, repeat purchases) is going to be the key sales figure here. Be careful to clearly demonstrate that the community has encouraged members to purchase more frequently. Demonstrating this loyalty is the key figure.

Reduced costs

This has to be a tangible number that your business can assign to your community. If you can cut staff because you’re getting less calls, then that is a reduced cost.

Reduced costs include:

  • Reduced marketing spend. When a member is in your online community you no longer need to spend money on direct marketing, PR campaigns or advertising to reach him/her. Calculate the typical marketing cost of acquiring a customer and multiply it by active members of your online community.
  • Reduced support staff spend. If your online community does a fantastic job of answering questions about your product, you can link to that from your online community and measure if you receive less calls. Can you reduce staff costs here?
  • Reduced recruitment costs. If you can find enthusiastic, knowledgeable and skilled staff through your online community can you reduce the money you spend on recruitment companies?
  • Feedback/Ideas generated. This is difficult to measure. How do you put a value on good product ideas generated through your community? You can’t. You can gain comparative costs from focus groups or assign a tangible contribution to a product that improved it’s expected sales, but that’s all.
  • Reductions from other crowdsourcing. What else has been crowdsourced? Have your members taken on any other work? Has there been a clear reduction in costs as a result of any crowdsourced work by the community?

Investment

Investment includes the people, time and financial costs tied to this online community. We will ignored the fixed overheads and opportunity costs for now. Your CFO can add them in later.

  • Community staff. This covers the salaries/pay of the staff involved in running the online community.
  • Time. How much time have other people needed to commit to this community? You need a rough figure of hours from anyone involved from your marketing team, legal team, management etc… multiplied by their hourly rate to give an accurate number here.
  • Resources. This includes the additional costs linked to the community. Did you hire an agency to create the community platform? Are you paying for hostage? Did you host community events? Do you give community products to use etc?

There are a lot of assumptions here. The problem is many things are too intangible for direct measurement, others are several layers removed from the return.

What isn’t included in this?

  • Future/Present values. The money you spent on this will be worth less tomorrow.
  • Opportunity cost. What else could you have done with the investment? Massive marketing campaign perhaps?
  • Sense of unity. Your customers like each other. That increases loyalty to the brand that united them.
  • Premium brand. Thanks to the positive image created by the community, can you charge a premium?
  • Value of feedback. Not all feedback is equal, this doesn’t account for that.
  • Cost of not creating a community. Imagine if your competitor had persuaded all your customers to join their community first. Lucky you got there first.
  • Competitors. Your competitors find it harder to poach your customers now.
  • Overheads. Nasty things, overhead. Your CFO will assign this better than I can.
  • Future value of the community. Unlike most assets, communities appreciate in value. The work you put in this year will pay off better next year.
  • The biggest benefit of your online community. It improves your business outlook incredibly, this isn’t included – pity.
  • Non-profits/social good. Organizations that don’t sell a tangible product/service wont have a direct relevance to this.

Naturally, everyone has a different perspective of the ROI of an online community. I hope this helps add to the debate. Good luck.

Community Leadership Summit

July 18, 2010 Comments Off on Community Leadership Summit

 

As a surprise bonus, we’re also sharing a bunch of other free resources below. This includes:

I hope this helps. Don’t hesitate to e-mail [email protected] if you have any questions.

How To Build An Online Community: The Ultimate List Of Resources

January 14, 2010 Comments Off on How To Build An Online Community: The Ultimate List Of Resources

This is a collection of my favourite and most popular posts from the last two years. It should give you a great overview about both the strategy any the process of creating an online community from scratch.

Before You Begin

Pre-Launch and Strategy

Building An Online Community Website

Launching An Online Community

Growing Your Online Community

Increasing Participation

Managing an Online Community

Measurement/ROI

Monetizing

Branded Online Communities

Resources

Misc

Why Amateurs Build Better Online Communities Than Businesses

November 23, 2009 Comments Off on Why Amateurs Build Better Online Communities Than Businesses

There are few successful online communities founded by businesses. Amateurs usually do it better.

  • Contacts. Amateurs are typically passionate fans with lots of friends they can tell about their new online community. This helps a lot. They have trust and respect from the people they want to join.
  • Knowledge. They know what the big issues are, who the most influential people are, the personality of the people and what the audience intends to talk about.
  • Passion. They’re passionate about the subject, they work on the online community during off-work hours (the times when people can visit and participate). They enjoy doing this. 
  • No Objectives/Time Frame. Amateurs aren’t concerned with objectives, ROI or time frames. They’re not burdened with anything other than creating an awesome community for the community. No extractions are necessary.
  • No Budget. Amateurs aren’t burdened (yes, burdened) with a budget. They’re not forced to waste a five-figure sum and countless months on a bespoke community site reflect an organization’s brand image.
  • Technology Luddites. They pick a simple technology they know how to use. By coincidence, this is also a simple technology their audience knows how to use.
  • No plan for growth. Amateurs don’t try to grow big. They focus on making the community fun rather than huge. If they don’t want more members, they don’t  try to get any more members.
  • They stick around for longer. Amateurs don’t abandon the community when they find a new job, or get given a promotion, or their work load picks up. They make the time every day (or evening) for the community.

You’re competing against amateurs. If you can’t run a better online community than the amateurs, members will leave for one run by one. The very online communities that most businesses want are the communities they would have if they acted less like a business and more like a passionate amateur.

FeverBee’s Online Community FAQ

May 7, 2009 Comments Off on FeverBee’s Online Community FAQ

What is an online community?

An online community is a group of people who have developed relationships around a strong common interest.

Why do people join an online community?

People want to be connected, motivated and recognised. Communities offer all three. Most people join an online community because they have friends there, it offers something they want (like expertise/insider status) or it it offers an opportunity to get recognised. Perhaps by recruiters, journalists etc…

What are the different types of online communities?

Most online communities fall into 1 of 5 categories.

(1) Leisure communities – where people spend their leisure time. e.g. communities about celebrities, films and fishing.

(2) Relationship communities – where people are looking for dates, friends, networking etc.

(3) Cause communities – for people trying to fix something wrong in the world.

(4) Self-improvement communities – for people trying to improve something about themselves.

(5) Collaboration communities – where people collaborate through online tools to get their work done.

How do you start an online community?

At it’s simplest level, introduce yourself to 5 people. Then introduce those 5 people to each other. Start conversations and add more people – if you feel you need them. That’s the easiest way. But there are many more ways to start an online community.

What’s the easiest way to get more people to join my community?

Ask them to. If you’re not messaging and e-mailing people to join your community why should they? No mass mailings, no clever adverts, no direct mail. Just find the people you want to join your community and explain why you would like them to join.

Likewise, if you want members to invite their friends, ask them to invite their friends. Simple, but effective.

Why do most communities fail?

Most communities fail because the founders don’t have the community’s best interests at heart. They have an ulterior motive, like short-term profits.

Businesses that need strict ROI measurements rarely create thriving communities. The process of converting every customer to a community member is a long-term one. Short-term profit clashes with this.

They don’t offer a good enough reason to join, fail to put someone in charge or don’t understand the importance of working within a community.

How do I hire a great online community manager?

Find a great online community, hire the manager.

How much does it cost to build an online community?

Nothing. You can start a mailing list, Facebook group or Ning site for free. Once you start growing you can consider investing in a dedicated community website and perhaps a full-time community manager.

Once you start to grow you’ll probably want to spend more on the website, new features and possibly arranging events.

Which software do you use to start a community?

It’s usually best to try the community concept on a small scale. Start a Facebook book, a mailing list or a Ning site. Then if you need more personalisation, data portability or control you can pay between $15,000 to $70,000 for a more tailored community site.

Companies like TeligentJive Software offer a premium platform packed with analytics, hosting and excellent features/support for around the $15 to $40k per year mark. Jeremiah Oywang has a good overview of the top vendors in his wave report.

My personal preference is to test a community concept using something free, then quickly scale it using open-source software such as Drupal or Joomla. This lets you scale, adapt and grow quickly.

 

Which bloggers do you recommend I follow?

In no particular order:

Seth GodinPeter KimJeff JarvisKevin KellyMartin ReedJohn KembleAngela ConnorMatt RhodesDawn FosterJake McKeeConnie BensenJeremiah OwyangDarren Rowse,Patrick O’KeefeBill JohnstonTara HuntMaki and Mack Collier.