Maximizing the Financial and Social Impact of Online Communities

Maximizing the Financial and Social Impact of Online Communities

Introduction:
Online communities have become an integral part of our lives, serving various purposes from connecting individuals to driving business growth. However, measuring the return on investment (ROI) and maintaining the quality of these communities can be challenging. In this article, we will explore the concept of community ROI (CROI) and the evaporative cooling effect, and discuss strategies to maximize the financial and social impact of online communities.

Understanding Community ROI (CROI):
Similar to marketing ROI (MROI), CROI helps organizations make informed decisions about community investments, accountability, and justifying community spend. CROI measures the incremental financial value gained as a result of community investment, minus the cost of investment, divided by the cost of the community investment. By linking the financial impact of a community to the business model, it becomes easier to justify the appropriate level of investment in community programs and activities.

Actionable Advice 1: Increase Your Sales Pipeline:
One of the key benefits of online communities is the potential to increase your sales pipeline. Atlassian, for example, measures the success of their community events by tracking the number of attendees. They found that a significant portion of attendees downloaded a free license or made a purchase within 30 days of attending the event. To maximize your sales pipeline, focus on creating engaging community events and providing valuable resources that drive conversions.

Actionable Advice 2: Boost Deal Size:
Communities can also contribute to higher deal sizes. By nurturing strong relationships with community members, businesses can establish trust and credibility, leading to larger and more lucrative deals. Encourage community members to share success stories, offer testimonials, and participate in case studies to showcase the value of your products or services. This not only increases deal sizes but also attracts new customers through word-of-mouth referrals.

Actionable Advice 3: Enhance Product Adoption and Support:
A thriving community can significantly impact product adoption and support. Engage with community members to understand their pain points, gather feedback, and identify areas for improvement. By actively addressing their needs and incorporating requested features or capabilities into your product roadmap, you enhance customer satisfaction, loyalty, and ultimately, product adoption. Additionally, community members can help answer support tickets, reducing the burden on your support team and improving overall customer experience.

Understanding the Evaporative Cooling Effect:
The evaporative cooling effect refers to the phenomenon where high-value contributors leave a community because they cannot derive sufficient benefits from it. As more new members join, the rate of high-quality contributors decreases, resulting in a decline in community quality. However, slowing down this trend is crucial for the long-term success of the community.

Strategies to Mitigate the Evaporative Cooling Effect:

1. Implement Social Gating: Social gating is a powerful method to maintain the quality of a community. By setting entry barriers, such as requiring relevant basic knowledge or frequently canceling inactive accounts, you ensure that only committed and engaged members join the community. Charging a membership fee can also act as a form of social gating, as it filters out those who are not genuinely interested in the community.

2. Recognize and Elevate Special Contributors: Giving high status to special contributors can help retain valuable members. By acknowledging their expertise, contributions, and providing them with opportunities for leadership or exclusive privileges, you create a sense of belonging and motivation for them to stay engaged. This not only prevents the loss of high-value contributors but also encourages others to strive for recognition within the community.

3. Balance Scalability and Stability: Consider the structure of your community. Plaza-like communities, which are easily scalable and open to the public, are more susceptible to the evaporative cooling effect. On the other hand, warren-like communities, which are more personalized and private, may be less scalable but offer greater stability. Depending on your goals and resources, find the right balance between scalability and stability to maintain the quality and engagement of your community.

Conclusion:
Online communities have immense potential to drive both financial and social impact. By measuring CROI and implementing strategies to mitigate the evaporative cooling effect, organizations can maximize the benefits of their community investments. Focus on increasing your sales pipeline, boosting deal sizes, enhancing product adoption and support, implementing social gating, recognizing special contributors, and finding the right balance between scalability and stability. With these actionable steps, your online community can thrive and deliver significant value to both your organization and its members.