roi - Cultivating Community2024-03-29T02:07:42Zhttps://cultivate.ning.com/ning-blog/feed/tag/roiTechniques to Help Measure the ROI of Online Communitieshttps://cultivate.ning.com/ning-blog/techniques-to-help-measure-the-roi-of-online-communities2014-01-15T21:44:58.000Z2014-01-15T21:44:58.000ZRichard Millingtonhttps://cultivate.ning.com/community/RichardMillington<div><p>If an organization is investing in a community, they deserve to know what they’re getting for their money. </p>
<p>The most common objections to measuring this ROI are 1) You can’t measure everything 2) it’s not about ROI.</p>
<p>The first is right, but you can still be accurate. The second is misguided (what does engagement eventually lead to if not greater profits?). </p>
<p>There are a few techniques that can really help here.</p>
<p>1) <b>Measure the increase since joining the community</b>.</p>
<p><img src="http://storage.ning.com/topology/rest/1.0/file/get/1282318?profile=RESIZE_320x320" width="300" class="align-right"></p>
<p>You can’t compare the spending habits of members to non-members. Those that decide to join a community are already likely to be your best and most passionate supporters. You need to benchmark buying habits of members when they join the community and then 6 to 12 months later. This shows what possible influence the community has had on their behavior. If members (on average) spent $35 a year when they joined the community and now spend $55 per year, that’s $20 per year increase.</p>
<p>2) <b>Non-members as a control group</b>. When Apple releases the next iteration of iPhone, millions of people will spend more on Apple products. You can’t attribute that to the community. To remove this, you need to use non-members as a control group (we’re abusing science a little here). Track the buying habits of non-members and remove any increase in spending from what you’re measuring. This gives you an amount that is attributable to the community. If the average customer (non-member) spending rose from $25 to $35, that removes $10 from the above figure. </p>
<p>3) <b>Survey religiously</b>. This is your secret weapon. You can’t track every purchase from every member (unless e-mail accounts are used to purchase the service <em>and</em> join the community). You need to survey the buying habits of your members. Not all members, but specific samples at certain times. This won’t give you an exact figure, but it will give you an accurate figure. You really want to know the value per active member – then you can multiply by the number of active members.</p>
<p>4) <b>Multiply by years</b>. If community members, on average, spend $10 per year attributable to the community, and you have 50,000 active members, that’s $500,000 <i>per year</i>. Multiply that by the year (and number of active members for each year) and you get a very accurate projection of future benefits of the community.</p>
<p><em>Image via GraphicStock</em></p></div>Measuring the ROI of Online Communitieshttps://cultivate.ning.com/ning-blog/measuring-the-roi-of-online-communities2013-12-17T20:32:19.000Z2013-12-17T20:32:19.000ZRichard Millingtonhttps://cultivate.ning.com/community/RichardMillington<div><p>Many of the key benefits of online communities are measurable.</p>
<p>None of these <a href="http://cultivate.ning.com/ning-blog/setting-objectives-for-your-online-community" target="_blank">should be your objectives</a>, 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.</p>
<p>This isn’t comprehensive, but covers what most organizations are looking for.</p>
<ul>
<li><em>Return on Investment for Online Communities</em>
<ul>
<li><b>ROI</b> = (Return attributable to the investment – Investment) / Investment</li>
<li><b>Return</b> = Increased revenue + reduction in costs</li>
<li><b>Investment</b> = Time, resources, People<em><br></em></li>
</ul></li>
</ul>
<p><span class="font-size-3"><strong>Increase in revenue</strong></span></p>
<p>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.</p>
<p>In practice, your online community is too entwined with your business' dozen other marketing efforts (not to mention the rebounding economy) to attribute any number to the community.</p>
<p>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.</p>
<p><img src="http://storage.ning.com/topology/rest/1.0/file/get/1281946?profile=RESIZE_480x480" width="400" class="align-right"></p>
<ul>
<li><b>Membership fees.</b> 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.</li>
<li><b>Direct sales of products.</b> 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 <i>less</i> purchases through the alternative sales channels.</li>
<li><b>Other revenue streams.</b> Easier to measure. Do you sell community-branded products? Organize events? Take a percentage of members selling products through your community? Include these here.</li>
<li><b>Increased page views to website.</b> 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.</li>
<li><b>Mentions elsewhere.</b> 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.</li>
</ul>
<p>Clearly, direct sales (namely, repeat purchases) are 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.</p>
<p><span class="font-size-3"><b>Reduced costs</b></span></p>
<p>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.</p>
<p>Reduced costs include:</p>
<ul>
<li><b>Reduced marketing spend.</b> 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.</li>
<li><b>Reduced support staff spend.</b> 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?</li>
<li><b>Reduced recruitment costs.</b> If you can find enthusiastic, knowledgeable and skilled staff through your online community can you reduce the money you spend on recruitment companies?</li>
<li><b>Feedback/Ideas generated.</b> 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.</li>
<li><b>Reductions from other crowdsourcing.</b> What else has been crowdsourced? Have your members taken on any other work? Has there been <i>a clear reduction in costs as a result of any crowdsourced work by the community</i>?</li>
</ul>
<p><span class="font-size-3"><b>Investment</b></span></p>
<p>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.</p>
<ul>
<li><b>Community staff.</b> This covers the salaries/pay of the staff involved in running the online community.</li>
<li><b>Time.</b> 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.</li>
<li><b>Resources.</b> This includes the additional costs linked to the community. Did you hire an agency to create the community platform? Are you paying for hosting? Did you host community events? Do you give your community products to use, etc?</li>
</ul>
<p>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.</p>
<p>What isn’t included in this?</p>
<ul>
<li><b>Future/Present values.</b> The money you spent on this will be worth less tomorrow.</li>
<li><b>Opportunity cost.</b> What else could you have done with the investment? Massive marketing campaign perhaps?</li>
<li><b>Sense of unity.</b> Your customers like each other. That increases loyalty to the brand that united them.</li>
<li><b>Premium brand.</b> Thanks to the positive image created by the community, can you charge a premium?</li>
<li><b>Value of feedback.</b> Not all feedback is equal, this doesn’t account for that.</li>
<li><b>Cost of not creating a community.</b> Imagine if your competitor had persuaded all your customers to join their community first. Lucky you got there first.</li>
<li><b>Competitors.</b> Your competitors find it harder to poach your customers now.</li>
<li><b>Overheads.</b> Nasty things, overhead. Your CFO will assign this better than I can.</li>
<li><b>Future value of the community.</b> Unlike most assets, communities appreciate in value. The work you put in this year will pay off better next year.</li>
<li><b>The biggest benefit of your online community.</b> <a rel="nofollow" href="http://www.feverbee.com/2009/08/biggestbenefit.html" target="_blank">It improves your business outlook incredibly</a>, this isn’t included – pity.</li>
<li><b>Non-profits/social good.</b> Organizations that don’t sell a tangible product/service wont have a direct relevance to this.</li>
</ul>
<p>Naturally, everyone has a different perspective of the ROI of an online community. I hope this helps add to the debate. Good luck.</p></div>Measuring An Online Community: Master Your Data to Gain an Unfair Advantagehttps://cultivate.ning.com/ning-blog/measuring-an-online-community-master-your-data-to-gain-an-unfair-2013-10-04T13:20:00.000Z2013-10-04T13:20:00.000ZRichard Millingtonhttps://cultivate.ning.com/community/RichardMillington<div><img src="https://storage.ning.com/topology/rest/1.0/file/get/2208290?profile=RESIZE_400x&width=400"></div><div><p>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.</p>
<p>I'm always amazed by the number of organizations and community managers who have either:</p>
<ul>
<li>a) No strategy for the community beyond maintenance; or</li>
<li>b) A strategy built upon guesswork and assumptions when the data is so close at hand.</li>
</ul>
<p>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:</p>
<ul>
<li><b>New visitors</b>. 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?)</li>
<li><b>New visitors to new registered members</b>. 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.</li>
<li><b>Percentage of members who make a contribution</b>. This shows whether you are converting those that register into participants within the community. If this is low, you might be just collecting lurkers.</li>
<li><b>Members active within the past 30 days</b>. 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.</li>
<li><b>Contributions per active member per month</b>. This is an activity per member ratio. If this drops, members are less engaged in the community and this could lead to more members leaving. This might also show if a small number of members are dominating the discussions.</li>
<li><b>Visits per active member per month</b>. 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.</li>
<li><b>Content popularity</b>. Each piece of content can and should be measured. How many people read it and how many responded to it. This will indicate which content items are most popular and which should be discontinued.</li>
</ul>
<p>You should also use <a rel="nofollow" href="http://www.feverbee.com/2008/10/measuring-diy.html">sampling</a> to understand the following:</p>
<ul>
<li><b>What percentage of newcomers remain members for more than a month</b>. 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.</li>
<li><b>Speed of replies to discussions</b>. 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.</li>
<li><b>The percentage of newcomers who initiate a discussion</b>. This highlights whether newcomers may be unmotivated or intimidated to start discussions.</li>
<li><b>Language and tone of voice</b>. 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 <a href="http://cultivate.ning.com/ning-blog/list/tag/community+lifecycle" target="_self">stage the community is in</a>.</li>
<li><b>Sense of community</b>. Ask members every year to participate in your specially modified version of the <a rel="nofollow" href="http://www.communityscience.com/pdfs/Sense%20of%20Community%20Index-2(SCI-2).pdf">sense of community index</a>.</li>
<li><b>Number of volunteers</b>. This will indicate the number of people moving on to the highest levels of engagement within the community. Low numbers usually limit the scalability of the community.</li>
</ul>
<p>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. </p>
<p>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. </p>
<p>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...). </p>
<p>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. </p>
<p> </p>
<p>(<i>Image: <a rel="nofollow" href="http://www.flickr.com/photos/aussiegall/286709039/">Measuring time</a>, a Creative Commons <a rel="nofollow" href="http://creativecommons.org/licenses/by/2.0/deed.en">Attribution (2.0)</a> image from aussiegall's photostream</i>)</p>
</div>Upcoming Webinar: Metrics and Measurement for Community Healthhttps://cultivate.ning.com/ning-blog/upcoming-webinar-metrics-and-measurement-for-community-health2013-09-24T19:04:22.000Z2013-09-24T19:04:22.000ZAllison Leahyhttps://cultivate.ning.com/community/allisonleahy<div><p><a href="http://storage.ning.com/topology/rest/1.0/file/get/1281949?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1281949?profile=original" width="302" class="align-right" height="259"></a><span class="font-size-3">You shouldn't be guessing what is or isn't working in your community. You should be gathering and analyzing data about your community's health. Metrics can paint a vivid picture about whether your existing, active members are more or less engaged in the community, and they can highlight anything that might be a cause for concern.</span></p>
<p><span class="font-size-3">If you want to answer questions about how healthy your community is, begin by gathering data. <a href="http://click.et.ning.com/?qs=0dabfa53cca88cb2f91419bf0caaaf4631f091f1ae6401816e44e0bfe0cbf9f4"><font color="#75AF2D">Join us October 1st</font></a> at 11am Pacific time to find out how to capture and interpret the data that will tell you if you have a healthy community.</span></p>
<p><span class="font-size-3">At the end of this webinar, you will be able to determine the difference between metrics for return on investment (ROI) and metrics for community health, identify key data points that you should collect to track community health, and turn this data into actionable insights about your community. </span><a href="http://click.et.ning.com/?qs=0dabfa53cca88cb2f91419bf0caaaf4631f091f1ae6401816e44e0bfe0cbf9f4" target="_blank"><br></a></p>
<p style="text-align: center;"><span class="font-size-4"><strong>Tuesday, October 1st at 11am PDT</strong></span></p>
<p><a href="https://www3.gotomeeting.com/register/135349318" target="_blank"><img src="http://creators.ning.com/images/signupnow.png" class="align-center"></a></p>
<p style="text-align: center;">(find your <a href="http://everytimezone.com/#2013-10-1,360,6bj" target="_blank"><font color="#75AF2D">local time here</font></a>)</p>
<p><span class="font-size-3"><strong><big>Key Takeaways</big></strong></span></p>
<table border="0" cellpadding="0" cellspacing="0">
<tbody>
<tr>
<td>
<ul>
<li><span class="font-size-3">The difference between metrics for ROI and metrics for Community Health</span></li>
<li><span class="font-size-3">Key data you should collect to track and determine Community Health </span></li>
<li><span class="font-size-3">How to turn this data into actionable insights about your community </span></li>
<li><span class="font-size-3">How lurkers add value to your community </span></li>
</ul> </td>
</tr>
</tbody>
</table>
<p></p>
<p><span class="font-size-3"><strong><big>About the Presenter</big></strong></span></p>
<p><a href="http://storage.ning.com/topology/rest/1.0/file/get/557601?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/557601?profile=RESIZE_180x180" width="100" class="align-left" style="padding: 5px;"></a>Richard Millington is the founder of FeverBee, a community consultancy, and author of the new book <a xt="SPCLICK" name="www_amazon_com_Buzzing_Communi" href="http://click.et.ning.com/?qs=560c57e3d19c1a56c67ddba1974f386d6fa9b833e60253373fa5865fd1a51365b08d12542be0bec1" id="www_amazon_com_Buzzing_Communi"><font color="#75AF2D">Buzzing Communities</font></a>. He is also a frequent guest blogger on <a href="http://cultivate.ning.com" target="_blank"><font color="#75AF2D">Cultivating Community</font></a> and our go-to presenter for the Community Management Talks series. His straightforward, results-oriented style is admired by many in the field, and it's just one of the reasons we've enlisted him to share community management best practices to help Ning Creators (and anyone else) refine their approach and cultivate thriving communities. Richard's next free talk is October 1st at 11am PDT. We hope you can make it!</p>
<p>A recording of this webinar will be available on the Ning <a href="http://cultivate.ning.com/ning-blog/community+management+talks" target="_self"><font color="#75AF2D">Community Management Talks</font></a> channel, and you can follow the conversation on Twitter using the hashtag #NingTalk.</p></div>