Return on Influence: The ROI of online communities

Nowadays it’s quite easy to find like-minded people online. You can hop onto any platform to find a person from any corner of the world and have a heart-to-heart talk about the topics that you both share a passion for. As more people join the conversation, it turns into an Online Community.

Online communities have their own distinctive features, which make them vary from a group or a club. The main difference is that we can describe any group from a community perspective, but not every group is a community.

Some of the main characteristics of online communities are:

• There should be over three people in the community
• Members share something in common; like ideas or experiences.
• Members have a need to get to know each other.

People join online communities to find particular answers to their questions and stay because of the genuine connections they make. The community itself can be in the form of blogs, forums, games, social media platforms, in-app communities, and brand communities.

Brand communities help the members to converse with each other and the brands to connect with their customers more deeply. Brands also get a vast amount of benefits from their online communities. One such benefit is ROI: “Return on Investment” or in the case of online communities, “Return on Influence”.

Let’s discuss ROI in Online Communities.

For most businesses, measuring ROI is pretty straightforward. But, when it comes to online communities, it’s not exactly a piece of cake.

Ever since social media have become the hot spot for marketing, companies have been trying to search for the perfect metric for ROI of online activities. Regardless of this search, social media marketing and online marketers require more qualitative than quantitative measures.

Some of the new qualitative measures such as the “Return on Influence”(ROI) is considered a substitute for the traditional ROI. Especially for online communities where “Influence” & “reach” plays a key role.

Your community’s first goal should be to create an impact that is relative to the “social media influence”; which is considered the new ROI, requiring a different perspective when measuring the success of the community.

Return on Investment Vs Return on Influence

Return on Investment: Let’s say you have spent 500 on a social media ad campaign and have achieved 1,500 new ‘likes’. It’s productive from a financial perspective and the quantitative assessment is ‘Success’.

Return on Influence: You have 1000 new followers during the same ad campaign, how many of those new followers can you desire, depending on whether they have shared your page, commented, participated in contests, etc.? If less than half of those new followers have engaged with you, then the engagement is pretty low. The main objective should be about impacting behaviors rather than just extending your reach. Hence, your qualitative assessment needs improvement.

Online communities are the most measurable social media tools which can help brands calculate a high success rate on their investment (ROI). The exact ROI, however, differs from company to company.

Here’s how Online communities can help with your ROI (Return on Influence).

Advertising: Online Communities are the best place for brands to test their ad creatives, offers, and strategies.

Revenue: They also help businesses to advertise in the community, providing an opportunity to generate additional revenue.

Customer Revenue: Measuring the revenue generated on products & services for community members(customers) against regular customers who are not part of the community, helps you find that community members inevitably spend more.

Retention: Measuring the retention of community-involved customers against other customers helps you find that community-involved customers stay longer and are more loyal.

SEO: Online communities help you generate user-generated content, favorable to search engine ranking helping in the free organic search presence of the brand.

Brands that are planning to build their online community need to remember that online communities can be really useful in providing a measurable return of ROI. All of the above categories can be calculated to get the exact numbers that enable brands to keep tabs on their investment returns.

The Takeaway

Regardless of the scale of your community, the obvious secret of improving ROI is to make sure you know all the most recent facts about digital trends, instead of just sticking to one strategy.

Dedicate some time every now and then to review the latest trends & stats of digital marketing and ROI.

Finally, remember that perhaps one of the biggest benefits an online community provides you is to improve your overall business outlook, which isn’t included in any ROI metrics.