Membership

The ROI of Online Member Communities

By / Jun 8, 2016 (iStock/Thinkstock)

The latest study from The Community Roundtable digs into calculating the return on investment for online communities. The model it offers, focusing on the value of questions answered, could be what associations are looking for.

In English, ROI is business-speak for “return on investment,” and we pronounce it as an acronym: R-O-I. But, for anyone who has tried to calculate ROI for anything but the most simple of business functions, the French pronunciation of roi (at least as it sounds to American ears) might be a lot more fitting: “wha?”

In other words, ROI can be tricky. Associations face no shortage of challenges in tracking the ROI of their myriad programs and services, and perhaps just the latest head-scratcher is figuring the ROI of an online member community platform—a technology endeavor that comes with a pretty big I.

The primary reason to calculate ROI is that it forces you to define value.

The 2016 edition of The Community Roundtable’s “State of Community Management” report digs deep into the question of measuring value in online communities. While the study encompasses communities at both for-profit companies (external users groups, internal staff communities, or both) and nonprofits, the findings offer useful insights for associations with member community platforms, as they have in past years.

Cosponsored by Higher Logic, the SOCM report identifies a wide range of metrics that are commonly tracked by organizations with online communities. Some are obvious and nearly universal, such as total activity or active members. But the key finding is that “best-in-class” communities are far more likely to track a variety of outcome-based metrics, not just activity measures:

  • Questions answered: tracked by 68 percent of best-in-class communities versus 48 percent overall
  • Influencer identification: 46 percent versus 27 percent
  • New-member activity: 37 percent versus 21 percent
  • Behavior flows and conversions: 32 percent versus 14 percent

“Best-in-class communities demonstrate the importance of choosing metrics that don’t just measure community activity, but rather capture the behaviors that align with community goals,” the SOCM authors note.

Others experts and providers have also identified various potential benefits or returns for associations from their online member communities:

  • Ben Martin, CAE, CEO of Online Community Results, urges associations to connect their online community software with their association management or customer-relationship management systems. “When you can correlate activity in your community to favorable business outcomes like retention, product purchases, event attendance, and etc., it becomes far easier to prove the ROI of your community efforts,” he writes.
  • Higher Logic highlights several case studies of associations driving nondues revenue via their online communities in a white paper titled “Community ROI: Generating New Revenue Streams” [PDF]. Examples include revenue generated through third-party advertising and sponsorships as well as cross-promotion of association products and events.
  • Joshua Paul, director of strategy and marketing at Socious, notes the simple increased value of membership when access to an active private online community is added as a feature in the membership package. Moreover, he points out the “secret superpower” of an online community, a compounding effect that occurs when a critical mass of members participate: Each interaction a member has in an open discussion thread, for instance, drives value both for that individual member but also for any and all other members who can view the discussion.

But, again, putting numbers to these positive results may not be simple. The Community Roundtable (The CR) urges organizations with online communities to start somewhere, even if that means measuring just a narrowly defined outcome.

“We get ourselves wrapped around axles trying to create a community ROI model to prove complex outcomes like conversion, retention, or innovation, when in reality even the broader organization may not have a good approach for proving or valuing those outcomes,” the authors write. But such complex estimations are “too much to expect for your first approach to articulating ROI.”

Instead, The CR proffers a specific ROI model that focuses on the value of questions answered, something broadly applicable across various types of online communities. The data an association needs (either monthly or annually):

  • Value of answers
    • number of answers
    • average financial value of an answer
  • Networked value of answers
    • number of searches
    • percentage of searches that are successful
  • Community budget

The formula then combines the value of answers and the networked value of answers (a metric to quantify that compounding effect of answers being available for search by others) and compares it to the budgetary investment in the community.

The one data point that may be most subjective in this ROI model is the financial value of an answer, though the SOCM authors acknowledge that seeking such an estimate is part of why an ROI exercise can help generate shared vision and objectives for a community. “The primary reason to calculate ROI is that it forces you to define value,” they write.

One possible method for estimating that value could be simply asking members to put a dollar value to the questions they get answered. But, however you do it, you may find that calculating ROI has its own ROI, according to The CR: “When you can clearly and crisply define value, you gain credibility for yourself and you give your stakeholders a powerful tool to communicate with others. This in turn makes it easier to secure attention, support and resources more quickly. In short, it makes you more successful. We found a correlation between those who can articulate their community’s shared value and their engagement rates.”

How is your association measuring the activity, outcomes, and value of its online member community? If you’ve struggled to do so, what are the primary challenges? Share your experience in the comments.

Joe Rominiecki

Joe Rominiecki is a contributing editor at Associations Now, a lifelong Phillies fan, and a proud alum of Ohio University. More »

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