What is the real Return On Investment you get from your community?

Updated: Oct 21, 2020

If your business manages an online community, you probably know how much time and money is being invested in maintaining it. Can you however evaluate the return you get on this investment? Do you have a plan for how to improve it?

If one of the following questions is a mystery to you, you should probably keep on reading.

Do you know how many active community members are on each of your communication platforms? Or the exact number of community members in total? How many of your members are also customers? Does your community help increase your retention rates? How engaged is each member in each platform? Who are your greatest advocates? What happens in communities similar to yours?

If you don’t know the answers to some of these questions, don’t feel bad! After reviewing over 4,000 communities from different sectors, we can say with confidence that most businesses don’t have access to this type of information about their community.

Let’s start with the basics - Why do businesses build communities?

Businesses that invest in online communities choose to host the market and its users rather than aggressively target them at the right customer journey intersections. It is a “let them come to you” attitude.

The community approach is innovative and affects the way customers behave. Aside from customers’ growth in terms of using the product more often and inviting friends, communities enhance retention rates, brand loyalty, create a better customer experience, and reduce the need for customer support. If you think about it for a moment, it makes perfect sense. A brand community allows you, as a member, to take an active part in shaping the product by sharing your opinion and stating how it can be better. People are more motivated to play with a toy they helped create!

The change in community structure

Five years ago, the renaissance of community management platforms started. These platforms were designed based on the assumption that community members will easily migrate into their platform, and that the main communication channels would take place inside those platforms. Good examples for these are - Ning, Hivebrite, Higher Logic, Khoros, and Jive.

Over the last two years, major changes occurred globally in the structure of interpersonal connectivity and content consuming models. With the recent inflation of social media platforms and communication apps, it has become very challenging to convince users to migrate and converse in customized and designated platforms. Most people choose to communicate and consume content through different social media platforms like Facebook, Instagram, Mailing lists, Twitter, Reddit, Linkedin, Slack, and others. This trend created a new challenge for community managers - multi-channel operation. COVID-19 just accelerated this process.

Why is running an online community in 2020 much more complicated than 5 years ago?

Imagine interacting with 50,000 community members across one platform. Not an easy task, but manageable. Now imagine interacting with 50,000 community members across 5 different platforms. That’s 250,000 potential micro-interactions to handle. Once you start engaging with your audience across different online platforms and make data-driven decisions that are based on multiple data sources, things are getting complicated. Multi-channel community operation is one of the core reasons which explains why most businesses don’t know their community ROI, and why they aren’t able to answer the questions above.

HoneyBook use-case

“Let’s say you manage a product community for a SaaS company. Your company is doing well and it has a lot of clients. When you first founded your community, you did so on a single platform (Facebook for example), and you made sure that only active clients were admitted into the group. Over time, you expanded your community activity to additional platforms (newsletter, Instagram, or telegram) and launched a few sub-communities to address different segments within your community. Naturally, over time, the company experiences churn at a certain rate. Now you have different members of your community spread across several platforms, with no indication if they are paying customers or even active. Trying to keep track of this is exhausting and ineffective.

At HoneyBook, we have recently teamed up with an Israeli startup called Simpoco to consolidate our data throughout the various platforms we work with, like Salesforce and Facebook. We used Simpoco to cross data about members from our Facebook group with our customers’ database on SalesForce. The output was a list of Facebook members that are not customers. This helped us get a better understanding of what our community looks like and how to optimize its potential, by identifying opportunities we didn't know of within our client base. Aside from that, we got a deeper layer of insight into how engaged our community members are, which helps us get a better understanding of what impact our community has on our business goals.“

Maria Green-Povarchik - Head of Community at HoneyBook

There is a solution - Consolidate your data!

Assuming you already know what your community goals are, your next move should be to build the infrastructure that would enable you to measure success in your community using KPIs you determined. To do that, you need to be very honest about your blindspots, create a clear methodology, and a data-driven environment to rely on. A major part of creating such an environment derives from the consolidation of all your data sources into one place.

Here is one example of how data consolidation can help gain better results. Let’s say that one of your KPIs is to increase retention rates. To do that, you need to understand what actions increase the odds of a community member to renew a contract, subscribe, or purchase again, for example. By consolidating members’ data from all of your channels of operation like Discourse, Facebook, Slack, and others with the data from your company’s CRM, you can understand the percentage of community members that are already retained (your KPI), and look into them. Now, imagine that you found that 78% of those retained customers attended at least two community events. You can now link the connection between customers attending events and higher retention rates. This insight can focus your efforts on contacting all customers that have dropped and attended one event or less, and invite them to attend more community events. This is only one of endless cases explaining how consolidated data can help you improve your KPIs and drive your communities to new accomplishments.

In other words, Starting an online community is very much like starting a farm. You need to meticulously plant and nurture the seeds with love and attention. The community irrigation system is maintained by engaging and facilitating conversations. The best fertilizers are quality content, great events, insightful workshops, and webinars. A community manager who has done his job well will harvest the sweetest fruits when the time is right - strong advocates to carry on the brand’s name, along with satisfied and recurring customers, that provide valuable insights on how to make the business better. Simpoco tells your business what plants need watering, and which fruits are ready to be harvested!

Community managers are some of the most influential actors of our generation! The right technological tools are the basis for making the right decisions, and making the most out of your community.

Think you are ready to make the most out of your community? Click here and join us!

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