Two Ways to Demonstrate the Business Impact of Customer Communities

Revenue. Customer support costs. Acquisition. Retention. These are basic examples of business metrics companies track to evaluate their performance. They’re also metrics any online community can use to show business impact. The best community professionals measure, track, and compare metrics to demonstrate how their communities are impacting their...

Use these two comparisons to show your online community's business impact.

Revenue. Customer support costs. Acquisition. Retention. These are basic examples of business metrics companies track to evaluate their performance.

They’re also metrics any online community can use to show business impact.

The best community professionals measure, track, and compare metrics to demonstrate how their communities are impacting their businesses. They start by identifying the most important metrics to their company, then use them strategically to show impact.

How to Identify Your Business Impact Metrics

Online communities will have different goals, depending on the business. The metrics you use to show your community’s business impact will depend on your community’s purpose. Why did you create the community? What did you hope to accomplish?

Often, these goals are similar, if not the same as, larger business goals. For example, a major business initiative might be to reduce customer service costs. That game goal may be the reason why you create a customer support community.

To determine if your community is successful, you need to go back to your goals and identify key performance indicators that show you if those goals were met. In our example, the customer support community’s main KPI is customer service costs.

But identifying your KPIs isn’t enough. To show business impact, you also need to show a change in those KPIs. That means you need to compare numbers influenced by the community with numbers that were not influenced by the community. There are two main comparisons you can use.

1. Compare Before and After Metrics

This is the simplest way to show business impact metrics. All you need to do is compare your business’s KPIs from before you had a community to those same KPIs after the community.

Let’s take another look at our customer support community example. In the year before the community, the business spent $100,000 on customer service. In the year after the community launched, they spent $90,000 on customer service. That’s a 10% decrease and a savings of $10,000, which are the numbers you should present to your leadership team to show business impact.

Before and after comparisons only work for KPIs that your company has been tracking before you launch your community. For metrics that your company didn’t track before your community, you need to use our second comparison.

2. Compare Metrics for Active and Inactive Customers

Not every customer will be active, or even join, your community. That gives you two different populations to compare for business impact. Inactive customers provide performance numbers that are not impacted by your community, similar to the before metrics in our first comparison.

Divide your customers into active and inactive groups and compare your KPIs for each. For our support community example, we might look at the number of yearly customer service calls that come from active customers vs inactive customers. Multiply that by your company’s cost per call, and you’ll have a monetary representation of how much less it costs to support customers who are active in your community.

Make KPI Comparisons with Company-Wide Data

Because both of our comparisons show how community is influencing business as a whole, you need more than just data from your community to make them. Before and after metrics rely completely on company-wide data that shows customer support costs, retention, or acquisition for your entire company, for instance. Even active vs inactive customer comparisons require company-wide data, such as support calls from each customer.

Start looking for company-wide data as soon as you identify your business impact metrics, so you have the data you need for each comparison. Customer support communities often find company-wide data from customer service departments. Communities with other KPIs may find useful data from finance, operations, and marketing. If you don’t find what you need through various departments, go through your company’s quarterly financial earnings calls and annual reports – they’re full of business metrics.

Once you have the data you need, start crunching numbers and reporting results to your team, other departments, and the c-suite. As everyone sees how your community is benefiting the business, you’ll prove its worth and help secure buy-in and resources for the future.

Get the formulas you need to calculate your online community's business impact.

Source: blog.higherlogic.com