Planning for the return on investment (ROI) on your business's online customer community is one of the most important and elusive exercises in your social business strategy.
I recently detailed a University of Michigan study that found that incremental revenue from customers who joined the organization's online customer community increased by 19% after they joined the community. That same study also had some tips and guidance for companies on ROI expectations and breaking even on their online customer community investment.
What Does It Take For Your Online Community Strategy To Break-Even?
Though all organizations are different, customer bases vary, and decisions made during the online community planning process can cause costs to fluctuate greatly, the University of Michigan research found that reaching a break-even point for your online community is sooner than many executives might think.
According to the report, organizations can break-even from an increase in revenue from existing customers after only 13% of the total number of customers who are expected to join the online community join after 15 monthly have joined.
For instance, if you have 5,000 customers and you expect 60% of the (3,000) to be members of your online customer community after 15 months, you could break-even after only 390 customers have joined the community.
Keeping in mind that this ratio is from one large company and that your organization's results will vary, you can do the math for your company using the chart below:
The math produces a rough estimate due to the number variables each company presents, but the point is that online customer communities are not an endless social experiment. Executives should look for a break-even point from the start and integrate those metrics into their strategy.