ROI on community

Senior managers and business owners ask this question all the time:

How can we calculate or prove the ROI (Return On Investment) on community?

In particular, the majority of senior managers and business owners want to know how community helps with the following:

  1. How does community help us acquire new customers?
  2. How does community help us retain existing customers?

You can read more about this (with plenty of statistics) in the 2021 CMX Community Industry report.

The quickest answer

The founder of Feverbee and author of the book Buzzing Communities, Richard Millington, tweeted this gem:

You can read more about how a community on Reddit (Wall Street Bets) drove the share price of Gamestop to unprecedented highs.

The longer response

To provide management with ROI of community, my first step would be to confirm with them what is actually important to the company.

For example, as mentioned above, many managers seem to focus on how community can acquire new customers (increase sales) and retain existing customers (maintain relationships).

Write this down first, and then you solve from there.

For example, let’s say management only cares about acquiring new customers.
They want to know how the community helps them achieve that goal.

Let’s also assume that the community was launched 1.5 years ago.
The community helps customers answer each others questions and customers can share ways they are using the product.

Here is my process for attempting to calculate ROI:

1. Sync up with the sales teams or the team responsible for compiling customer data.

Look at the data before the community was launched.
Determine any trends that was occurring before the community existed.
Perhaps the number of customers was already increasing by 1% per quarter, prior to the existence of the community?

Takes notes on this and consider this your baseline to get started.
I understand there may be many other factors for why these trends exist, but it’s a good start.

2. Deep dive into your own community data.

Depending on the platform used, the data available will vary.
Most importantly, you’re looking for anything that syncs with the goal of acquiring new customers.

You’re looking for indications of:
1) new customers being referred from within the community and
2) community members sharing posts/links etc externally as organic word-of-mouth marketing.

Even if your analytics are very basic, do a keyword search for “referral”/ “refer”/ “shared this post” etc to see if any existing customers have provided leads or have been organic marketers for new potential customers.

Deep dive in your DM’s for members who have sent you leads (if applicable)…

This may be painful, but it is proving the worth of your community AND the value YOU provide to the business.

Also note: this process WILL become less painful over time! You’ll start to know what you’re looking for.
You’ll develop better programs and methods to measure what is important (see below steps).

3. Marry the data together. Look for trends, spikes or anything unusual.

Develop a story using the data that you can present to management.

I KNOW this may feel like you are making things up, but it’s about making your case for how the community is helping to provide value to the business.
YOU KNOW deep down how valuable your community is, so try to find compelling evidence that proves this point.

4. Create new programs/methods to improve how you collect community data.

Think about introducing referral programs.

Perhaps existing customers in the community get a bonus/swag/some other motivating factor when they refer a new customer?

Create hashtags and accounts that can be tagged by existing customers when they share to their own networks.
You can then easily track these hashtags to help you gather this data in future.

Develop any programs or methods to make your life easier when you need to collect this data in future.

5. Continue to work with other teams in the business.

A lot of important and useful data seems to get lost within teams/departments.

By collaborating together you’ll be able to develop a fuller picture of how you are all helping to acquire new customers.

And that’s all I have to say about ROI and communities for now.

I’m open to discussing this further:
Send me an email
DM me on twitter @acommunitycoach
or comment below.

P.S – I know this is NOT an easy process and many community managers struggle with proving their worth every day. 

I hope my post above has helped you work through some things.

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