The most important Growth metric in 2020...

is something your data science team hasn’t even started thinking about.

For those of us who know how extremely valuable a Community is, we also know that calculating the return-on-investment (ROI) can be tricky. Many people & brands understand the importance of Community, but not everyone knows how to measure its impact. Unfortunately, most Community teams are subjugated into a subcategory of the marketing or product development teams. Thankfully, we’ve been working with some of the best Community leaders in the industry to build a research plan and ROI calculator. The key result is going to be the most important metric for Growth, and Customer Success in 2020.

Return on Community (ROC).

A lot of teams struggle to measure the ROC. So we’ve been spending a lot of time talking with Community leaders across a range of different business verticals. And we’re about to kick off a major field research project with Qualtrics that will measure the combined value of Community. One of the most important considerations people leave out of the equation is the differentiation between online community, and offline, or in-person community. Over the past decade, online communities have been all the rage. And for good reason. It’s easy to scale and measure the impact of an online community. But issues surrounding data privacy, endless stories about hacking, and all the misinformation have given rise to a lack of Trust and Safety in most Online communities. More importantly, members of your in-person community are your most loyal and trusted brand advocates, And ultimately your most valuable. We estimate their LTV is 5-10x higher than active members of your online community.

The problem is how do you measure that?

Most data science teams are fixated on readily available metrics. Getting IRL metrics is hard. It’s a Qualitative measurement, which takes heat as being inaccurate based on the hypothesis that people rarely do what they say they’re going to do. This is why we’ve seen the proliferation of the data science profession in general. But as we’re drowning in a sea of data, people are starting to gravitate towards smaller IRL communities. Forrester has predicted 2019 as the year to invest in humans, especially as people continue to game the system in order to throw off chatbots and virtual assistants. The power of human connectivity will emerge as one of the most powerful trends in 2019. And here are the 5 core metrics you should be thinking about:

Introducing the SPACE Model for Defining Community’s Business Value.

1. Support and Retention - Measured by Customer Churn Rate (CCR). Members answer questions and solve problems for each other in order to be more successful and ultimately reduce churn. This is an area of community that most of you are probably familiar with. It can take the form of a support forum where people are showing up with product questions and the community answers it for them. It can also be a customer success platform, where members are helping each other to use your product more successfully.
2. Product / Revenue - Measured by Customer Lifetime Value (CLV). By bringing their users or customers together, companies can leverage the collective insight of their community to get ideas to build better products that lead to increased sales and CLV. Some companies take this even further that bring their community into every step of the product development process, from design to development, to ensure that the voice of the community is present in everything they create.
3. Acquisition - Measured by Customer Acquisition Cost (CAC). This is where the power of Customer-to-Customer (C2C) marketing starts to help you scale. As digital channels become saturated and authenticity of content marketing erodes (Fyre Festival anyone), the voice of customer communities becomes much more powerful. More and more companies are recognizing this and are building C2C communities and in doing so, are reducing their customer acquisition costs.
4. Content / Satisfaction - Measured by Net Promoter Score (NPS). Distributed models are changing the way businesses function. Collaborative consumption, crowdfunding, user-generated content, marketplaces, open source… these are all examples of distributed models where the value is created by the masses, and the business is just creating the platform. The end result is a steady stream of user generated content that leads to increased customer satisfaction when the customer community is more involved with the brand.
5. Engagement - Measured by Daily Active Users / Monthly Active Users (DAU/MAU). Community is powerful because it gives people a common sense of identity and belonging. If the brand is the leader that gives them that sense of identity, it doesn’t matter if the community is focused on their product or not, members will feel a stronger connection to the brand. This ultimately leads to increased product usage and advocacy. Whether it’s logging into an online community every day, or attending IRL events every month, C2C marketing drives higher community engagement.

If you want to be a market leader in 2019, it’s time you rethink your Growth and Customer Success metrics and focus more energy and resources on driving your Return on Community.