This presentation was given by Socious and FeverBee. During the webinar, Richard Millington of FeverBee outlined why measuring ROI is important, how to measure the ROI of an online customer community, and how to increase the return on your investment. You can watch the full webinar video at; http://info.socious.com/webinar---roi-online-customer-communities/

1. www.socious.com
@SociousSoftware

2. Housekeeping
 Tech Check
 Ask Questions in the Q&A Panel or
Twitter at @SociousSoftware
 We ARE Recording!

3. Online Communities
Return on Investment
Richard Millington
www.feverbee.com
richard@feverbee.com
@RichMillington

4. 1) Identify the problems with assessing the ROI
• Collect data is an appropriate manner (without
biases)
• Identify the ROI of the community
• Understand the principles of increasing the ROI

5. “What’s the
ROI of your
mother???”

6. “What’s the ROI of
putting your pants
on?”

7. Background
• Most organizations don’t (or don’t know how to)
measure their ROI
• Those that do measure the ROI, do it badly
• Unless we know the ROI, we don’t know if the
community is worthwhile
• The data we have paints a mixed picture
• Anti-measurement bias

8. Research shows communities can...
1) Increase avg. amount spent spending per customer
2) Attract new customers
3) Reduce costs
4) Increase productivity (internal communities)
5) Fulfil an organisation's mission (non-profits only)

9. The problem is...
...we are terrible at proving it

10. Common ROI Mistakes
1) Measuring antecedents of return (or irrelevant stats)
2) Trying to use a single formula
3) Trying to be precise (instead of accurate)
4) Using biased/dumb metrics (fan -vs- non-fan)
5) Not measuring attributable return

15. Increased spending per customer
1) Increase in retention rates (customers stay longer)
Increase in retention rates since joining community = (avg. retention rates of
members/lurkers - avg. retention rates of newcomers)
Less the avg. increase in retention rates of non-members (control group)
Multiplied by the value of customer per year
2) Increase purchases of existing products/services (customers buying more of
what you sell)
Increase in sales of members since joining community = (avg. value per active
member/lurker - avg. value of newcomers to the community
Less the avg. increase rates of non-members (control group)
Multiplied by the # active members + # lurkers in the community

17. Spending per non-member, newcomer, lurker,
active member per quarter (self-reported)

18. Increase/decrease in member spending

19. Increase/decrease in member spending
attributable to community (control group removed)

21. 3) Sales of new products/services to existing customers
Included in the repeat purchase rate (tracks all purchases via survey)
4) Advertising revenue
Total of advertising revenue connected to community
If community elements added to existing platform, then the increase between the two
(should correlate to the growth in community)

22. New Business
1) Leads generated through misc community activity
Measure # ‘how you heard about us’ and multiply by profit generated by
the deal
2) Misc income
Profits from community events & activities.
Sponsorship
Focus groups
Direct membership income (incl. in repeat business)
- Account for quarterly revenues (divided by 4)

24. Reduction in Costs
1) Advertising/marketing/PR
Direct cost savings from advertising/marketing/PR budgets
2) Customer service
Direct cost reductions from customer service team
3) Recruiting costs
Direct savings from headhunter/recruitment
Note: Must be attributed to community activity

26. Increased productivity of staff
1) Productivity ratios
e.g. profit per employee
avg. sales of employees in community -vs- those out
the community etc..

27. Fulfilment of organization’s mission
1) Satisfaction/happiness.
- Happiness/self-reported usefulness to
members/non-members
- results from community members
deducted from non-members
- increase attributable to the community
- value per happiness (from non-
members)
- * by active members

31. AND THE ROI IS...

32. AND THE ROI IS...
- 4%

33. AND THE ROI IS...
- 4%
:-(

35. Not included in the ROI
1) Benefits of new product ideas/innovation/research
2) Improved performance of staff recruited through
social media
3) Future value of community
4) Off-line referrals

36. How to increase the ROI
1) Keep developing community (links to activity & SOC)
2) Tremendous Value Exchange

37. Tremendous Value Exchange
1) Gain great feedback by making it an exclusive
opportunity (or use information in community
2) Increase purchases (first opportunity, branded
products, special bonus etc)
3) Recruitment (only let top members apply, or post as
a challenge/activity)
4) Word-of-mouth (sneak previews/exclusive
information)

38. FeverBee Community Management Course
http://course.feverbee.com
• Live weekly lessons
• 100,000+ words of written material covering every step of the community development process.
• Coaching sessions from the world’s greatest community specialists
• A complete new book of case studies.
• FeverBee's personal coaching to support your community.
• Template scripts/strategies and other documents we use for our own clients.
• End of term assignments covering the course material focused specifically on your organization’s
community efforts.
• Access to key academic journals.
• Problem-orientated live discussions with fellow participants..

39. Questions?
Socious Online Richard Millington
Community Software www.feverbee.com
www.socious.com richard@feverbee.com
@SociousSoftware @RichMillington