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Your Community of Customers
By Nancy White
The jury is out on determining the return on investment (ROI) for online
communities. Communities are significantly diverse, they are relatively new, and
they are difficult to quantify. One theory is that the ROI increases over time
and as a result of the "maturity" of the community and the rate or level of
participation by the members. Significantly, the communities that have been studied have all been
associated with big sites. (For some great white papers on online communities,
visit Participate.com and click on
"whitepapers" under "research.") But what is the ROI for a small business that
runs an online community? How can you tell if you are "getting your money's
worth"? I wish I could tell you for sure, but I can't. However, we can look at some
of the factors to help you get a sense of what you are putting in and, perhaps,
getting out of your online community. There are "hard" and "soft" costs associated with an online community. (Hard
costs are any measurable out-of-pocket expenses, and soft costs are related to
your time spent working on your community.) Try filling out the following table
to estimate the monthly costs of your existing (or imagined, or planned) online
community: Did you buy a software license (a one-time fee, e.g., for Allaire Forums )?
Divide by 12. Do you use free software or Web-based services (e.g., World Crossing , which provides
free, Web-based discussion rooms on its server)? Enter $0.00 in the "Total
Item Cost" column. Do you lease space and/or service (e.g., Web Crossing at $95 - $495/month [U.S.] per month
for discussion space hosted on its server but totally branded for your
use)? Enter the monthly cost. Surprised? Especially at the value of your time? Now, on to the benefits
and/or revenues. Think about the ways online interaction and relationships might benefit your
company. Can you put a dollar value on them? Most of them are rather intangible,
but if you can at least gain a sense of how your online community is benefiting
your business, it might help you solidify your determination to make it work, or
to adjust your strategy. Consider some of these factors: Acquiring New Customers
What is the cost for acquiring a new customer? of forming a positive
human relationship with your client? Does your community make your customers
more loyal to you and more likely to provide you with more business? You just
saved money on new member acquisition! Word of Mouth
Do your customers tell others about your community? This can help you gain
new customers. You just saved money on marketing! (Yes, word of mouth!) Closing Sales
Are you able to close sales through the interaction in your online community?
Building Loyalty
Do your customers who participate in your online community represent a
greater revenue per person than those who do not? Calculate by how much per
month! Branding
Does your online community help solidify your brand or image with your
customers better than offline methods of advertising? As well as your offline
branding activities? At a lower or higher cost? Improving Responsiveness
Do you have a better sense of what your customers want and need because of
the conversations your online community affords? Has this helped you make better
short- and long-term decisions about your company? Has this affected your bottom
line? Facilitating Collaborations
Does your online community save you time, if you use it to work with
collaborators? Does it improve the quality of your collaborations? Reduce
information loss? Saving Money on Postage
Is your online community more or less cost-effective than paper and postage,
if you use it as a dissemination point for newsletters or to conduct surveys?
Increasing Site Traffic
Does member-generated content (review of your products and services,
Q and A) draw significant page
views
, providing you with an additional
point of visibility? Reducing Customer Service Costs Do you reduce your customer service costs (time, long-distance telephone
charges, postage) by providing this service via your online community?
Calculate how much per month! Anecdotally, I figure that this saves me $50 to
$100 per month in telephone, photocopy, and postage costs with one of my
clients. My online availability through a free Web site messaging service, humanclick.com, has garnered me two new clients
whom I never would have known existed otherwise! They were surprised by my
availability and willingness to help. Like trying to value the benefits of public relations activities, measuring
the ROI for an online community is part science, part art, and part magic -- at
best. But keeping the issues top-of-mind might help you do what you do a little
bit better. Good luck!
Participate.com white papers
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