Online Communities: What You Don’t Know Can Hurt You


Online communities have become a strategic digital asset for many companies, but marketing leaders still lack meaningful metrics to report success.

According to Leader Network’s latest research study, “The Business Impact of Online Communities,” 92 percent of marketing and community leaders say that their online community has an impact on the organization. That’s the good news.

The bad news is that marketing and community leaders struggle to measure and report on the quantifiable financial and competitive benefits that online communities deliver.

Marketing leaders who can’t demonstrate the success of the online community endeavors – using the hard-and-fast data that business stakeholders crave – are at a significant disadvantage, particularly when it comes to resource and budgeting conversations with their CFOs.

So, if you have an online community (or are planning to launch one) what should you be measuring?

What Are You Spending, Saving, And Generating?

I was surprised by the answers to basic questions about financial tracking in the survey. In response to the question, “What are the annual costs of your community inclusive of software, staff, and content?” a whopping 25% of marketing and community leaders – one in four – reported that they don’t know or don’t track their community expenses. Also, 24% don’t know if their community generates revenue or not. And almost 40% do not know whether their community saves their organization money or not.

On the bright side, we found that 49% of communities generate or influence revenue – and 29% realized more than $1 million last year. Despite revenue gains, without a clear picture of cost it’s impossible to calculate ROI.

Since the majority of our study participants hold senior roles, I don’t think that lack of knowledge is due to lack of access to financial information. Rather, it suggests that many marketing and community leaders don’t have a standardized method for tracking community financials. That needs to change, and quick.

First, get your financial and business metrics in order so you can start to track what you spend against what you yield. Then, meet with your CFO to understand his or her expectations for developing a cost-benefit analysis of your community.

As important as these financial measures are, if that’s all you measure, your online communities won’t be effective.   You must also be able to answer another critical question.

How Is The Community Driving Competitive Advantage?

For most organizations in the study, competitive advantage means customer retention (57%), followed by customer intimacy (48%). But when asked how they measure community success, marketing and community leaders provided the fewest examples in the customer retention and satisfaction arena. That means they’re not measuring what matters most to their organization.

In response, the Community Impact Framework was created, which marketers can use to quantify the value of their online communities. To build the framework, hundreds of metrics that marketing and community leaders are currently using to measure success were combed through, and then overlaid with metrics from Leader Network’s own KPI library. The goal was to demonstrate that a metric (of any kind) must be aligned with and in support of a business goal to be meaningful.

As you move through the framework – from Community Vibrancy Metrics on the left to Business Integration Metrics on the right – you’ll see an increased impact on the business. While a metric like “membership growth” is important to track, it’s when you can measure things like “correlation between user engagement and annual revenue spend” or “uptake of new product” that you’ll have them yelling “Bingo!” around the boardroom.

Without clear metrics to demonstrate financial and competitive benefits, marketing leaders will continue to fight for internal support and increased funding for their online communities. The time is now to adopt new standards of measurement that will enable you to track and tell your business impact story, convincingly and consistently.