A financial perspective on the measurement of the ROI of an Online Community

large__3418499435If you decide to invest in an online community, how do you know that it will pay off? Especially for non-profits,  every investment should have a reasonable return-on-investment (ROI). Every dollar needs to be spend wisely.

Non-profits obviously want to understand and see through the relative impact of their online community efforts. The ideal situation would be to be able to determine quantifiable business results that are directly extractable to the online community. In reality, however, this is a very challenging (almost impossible) task due to a variety of reasons.

Some brands measure the increased revenue (by overlaying their sales before their online community efforts) with the sales for the comparative time period since they began to invest in a community. They notice the difference and present the ROI. Nonprofits could do this, but then for example with the number of donations or monthly supporters. In my opinion, this would not give an accurate presentation at all.  Firstly, the brand community will be too entwined with other marketing efforts that your nonprofit is doing, to attribute any number to your community. Furthermore, there are other external forces that can influence results, such as the rebounding economy. Next, an online community is a platform where user-generated content, insights and ideas can inspire your business to do things differently. How are you going to measure the effect of a fundraising idea that a community member initiates? If you do not take other factors into account, you won’t get an accurate and reliable indication of the ROI of your online community.

The main reason that it is very difficult to forecast or measure the ROI for an online community is that it’s objectives can be difficult to determine. Let’s say you start an online community because you want to make the young generation more engaged with your organization. But what is an engaged young person? A person clicking through your website? A person watching a video that you hosted? A person commenting on one of your posts? Or is it a person who invites his friends to brainstorm an entire day on how to fundraise money for your organization?

I think it is crucial to first make clear what the exact behavior is you are looking for. Let’s say you want a higher brand awareness, increased trust, a stronger brand image and a higher awareness of development issues among young people. But how do you measure this aspect and attribute it to your community? These are qualitative data. Maybe, your end-goal is an increased base of supporters, which is quantitative and easier to measure. However, this is an ultimate end-goal. It can take several years before you actually see this change happening.

What can organizations then do to see whether their community efforts pay off? Learn more in my next posts!

Until next time,

Anne-Sophie Gaspersz

Photo credit: Ribbit Voice via photopin cc

Photography: Ribbit Voice

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