Meet Evan Hamilton: a community badass with 7+ years of experience under his belt as a community professional. He created and hosts monthly Community Manager Breakfasts in San Francisco, and is an industry force to be reckoned with, now working at Coursera as their Community Lead.
He began his presentation with the importance of starting to measure basic ROI [Return on Investment] of community. This is crucial for us as we have not yet tackled it as an industry.
As difficult and challenging as it may be to prove ROI to the CEO, Board of Directors and the Company as a whole, we need to learn how to do this properly, both for our ourselves and the community profession.
But today Evan broke this down for us.
1. Know What the Goal Is
To begin, we must know what the goal is, and we must be specific about it. This can’t be simply “engagement.” At the end of the day, it’s about the bottom line. It’s more than engagement.
What is really important is measuring Retention and/or Acquisition. Make sure to keep asking until you get the answer.
Evan gave us three questions to get the answers to:
Q: What’s the goal?
A: To increase loyalty
Q: Why do we care if customers are more loyal?
A: They visit our website more frequently
Q: What happens if they visit the website more frequently?
A: They buy more of our products.
2. Know What to Measure.
Everything really comes down to two things: retention and acquisition. Pick one and measure it by asking questions.
- You can measure things like “churn.” The less you see turnover in your userbase, the better.
- Measure the spending of those who are community members
Are people who join the community more likely to sign up/purchase?
Are they more likely to upgrade?
Do they drive new leads and referrals?
3. Metrics & Analysis
Curious how to create the formula for measuring success?
Very simply, compare two groups of customers, those more engaged and those less to determine whom is providing what value to the company.
First, you need a sample of active community members, making sure to define “active,” by pulling a list of active members that may engage daily, weekly or monthly.
Next, you need your control group, with a same method to get same number of customers who aren’t in the community.
Examples of measurement include how to measure churn.
Churn = (customers at start of period – customers at end of period) / customers at start of period. Further defining this, you have three users in January, with one in March, and this shows a 66% churn rate.
Perhaps the assumption that you are looking to prove is that customers are more likely to spend more with your company. Investigate lifetime value.
Lifetime Value = average order value x number of repeat transactions x average retention months for typical customer.
Past CMX Summit Speaker Erica Kuhl from Salesforce has proved that engaged customers spend twice as much as non-engaged customers.
If your organization does not track this, be the first. You’ll be a superhero.
How do you start to measure if you’ve never done it before?
Send surveys to the current community, asking how they interacted with the company, feelings and thoughts about their experience, and any feedback they may have. Properly done, community doesn’t actually change the product, but helps provide a wonderful experience for the community to like the company and product more.
That begs repeating: Properly done, Community doesn’t actually change the product, but helps provide a wonderful experience for the community to like the company and product more.
Communities also cost less to run than spending a bunch of money acquiring new users.
If you have a SAAS or paid product, you will definitely want to look at how community creates more signups and purchases. To measure this:
More likely to sign up/purchase = # signed up / community visitors.
Evan recommends Google Tag Manager to help monitor growth over time. This can be seen in Jennifer Sable Lopez’s work at Moz, as community participation caused people to be much more likely to buy product and stay engaged.
In sum, find your equation, get your two population samples, one of the existing community, and one of non-users.
Control groups are, however skewed, as community members already love you. This is correlation versus causation, as evidenced by statistical analysis and complete control over all variables, which is a challenge to replicate. Causation can be studied by looking at how customers behaved before and after joining the community. However, the preferred method would be A/B testing. But we have to start somewhere.
4. Getting Management Buy-In & Resources
This is a common challenge and vicious cycle. Community is trying to measure impact, but it’s often sidelined when requesting growth, new hires, and budget. Evan recommends developing a strong relationship with developers. You can begin to develop relationships with them just by being nice and asking them to teach you what they know.
Getting management to engage is harder, but he suggests using CMX Summit to validate and encourage new directions for your company, as well as connecting with your COO/CFO to prove impact on bottom line. Hiring an analytics consultant also helps prove impact on deeper level, and Evan says they did just that at ZOZI.
In closing, Evan urges us to just go do this.
Start working on measurement, talk to your fellow community managers, and get started. We are all struggling with this, and are all ready to share and help. Attend CMX events, Evan’s Community Manager Breakfast in SF, CMX Series events, or connect online.
Every step you take will push the needle forward for our industry. We are counting on you.