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ROI of Community

Posted On: June 18th, 2010 by Heather Strout

“We tend to overvalue the things we can measure and undervalue the things we cannot.” –John Hayes, CMO, American Express

This past Wednesday, Farland Group hosted a web event titled The ROI of Community where Dawn Lacallade, who has managed the community strategies for Dell and is currently the Community Manager at SolarWinds, and Jane Hiscock, President of Farland Group, presented on the what, why and how of the ROI of community.

Recap

As we look at the Return on Investment in community, there are two important factors. You need to be measuring what type of return your business is getting from your community appropriately and accurately. More importantly, you want your community to be valuable and you want to be able to prove that the community is providing value to the business in a way that matters to the business.

You will get the biggest return for your community investment when you start with your business. While you are building the strategy for your community, focus on the area of the business where there are pain points that can be resolved through a community or where you can increase value by building (or expanding) a community. Building the foundation of your community around a business issue creates the first step in framing the measurement for ROI.

This image presented by Jane Hiscock in yesterday’s ROI of Community webinar demonstrates the framework for building value and measuring that value.

While there were many important items discussed in the webinar yesterday, there were a few key takeaways. As you look at metrics to communicate ROI to your business, report your information in terms the business will understand. For example, if you are talking to sales, report conversion, not number of discussion posts. Another item Dawn discussed was the idea of a balanced scorecard. The three areas she suggested reporting on in the scorecard are Brand Value, Business Value and Community Heath. While this scorecard is specifically for a customer community, it underscores the need to think about community ROI in a broad spectrum, using business terms.

Another point that really resonated was that while there are dozens of points in a community that can be measured, successful communities focus on a few key areas that really matter, especially as you are starting out and may not have the bandwidth to follow multiple measurements. Spend the time up front to identify your key areas of focus and then calculate ROI that will inform on those selected areas that resonate most with the business.

Community metrics can be easy to measure. ROI is more difficult but certainly not impossible. Start by building community strategy around a strategic business need and focus on the long-term purpose of the community, and make sure you think about what measurements can calculate ROI and deliver those metrics in a way the business can understand.


A Request

I spend a significant amount of time talking with my colleagues in this space about how to advance our collective understanding of community management to make sure that those who are working in the space have the tools they need to be successful. The more we can help them manage successful communities, the larger this very important area of business can grow.

Dawn offered to present on the Farland Group webinar for an important reason. She shared her deep understanding of community ROI in hopes that others will do the same with the ROI of community and case studies for all aspects of community success. If you have written a case or a post about your community ROI, please share it in the comments, below.