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The Value of Knowing Your Community’s Value

Khoros Alumni (Retired)

Budgets in 2020 are…probably what you are expecting

Unstable. Some 90% of marketers say their budget commitments have been delayed or are under review, and Communities are also experiencing a budget crunch with layoffs happening in many industries.

A way to prepare for a possible competitive budget cycle is to know the value of your community. The problem is that calculating the business value of a community is both variable and complex.  Every community has a unique purpose, goals, and architecture that make it difficult for everyone to agree on the economic impact to the business. 

We at Khoros are lucky to have Community customers since 2001 and to serve more than 400+ live communities currently. That experience allowed us to capture a variety of ways business value is realized from many practitioners and from our own community of experts. The knowledge assembled allowed us to produce a high-level approach on quantifying value, that you can access here for free if you like.  We also have a much more in-depth version that our Sales and Business Value Consulting team ( @GrigorK  and @JakeR ) are happy to help you dive in.

Why Business Value? 

Most Community Managers will tell you that focus is one of the most strained resources when it comes to running a community. New stakeholders come in all the time, especially this year, asking for help to engage the community in a new way. Having a Business Value framework and simple story to point to makes it easier to say “no” flat out or provide guidance to how that new effort can be channeled to something that adds value for both the community and the business. 


The Khoros Model: Briefly

Our high-level Khoros Framework is detailed in this white paper if you want to learn more or get in touch with us. The 4 most frequent business value levers we have captured are as follows in our Khoros high-level framework. 

  • Contact Deflection:  It is the most common way to attribute value to a community because answering questions is the most common activity. The general idea is that every post is at least part of an answered question that would have resulted in a support case, so therefore every post has some value at deflecting calls. 
  • Customer Retention: Engaging in a community is a better experience than other support channels, and therefore increases customer satisfaction and loyalty. We have a number for this in our model: it is a modest 1%. But studies show that a 5% increase in retention increases profit between 25-95%, because acquiring new customers can be 5-6x more expensive than keeping your existing ones. 
  • Customer Growth: Beyond retaining customers, community members tend to spend more - at Dr. Pierre Ricaud in France community members are twice as likely to return to shop again. Our model is more conservative, with a similar 1% number for growth in revenue from customers buying more.
  • Crisis Mitigation: We have many stories in our community where members act like early warning systems for issues that could escalate quickly in more public forums. If a brand is active with these leading issues, it can lead to huge savings down the road. This is also marked as 1% because it is 1% of a HUGE number - the brand’s value. 

A few parting words about Business Value

There are many ways to measure the value of your community, but everyone agrees that you should have one of your own and that you should start quantifying it ASAP.

Having an agreed-upon way to measure the business value of your community is one of the surest ways to guarantee both longevity and success for your community. It not only helps you quickly explain the value to a wide array of busy executives, but it also helps you set priorities and maintain focus on what matters in a time of uncertainty.

Make sure to check out these links - and add any in the comments that you think should be included in our future research and calculations!

Thanks for reading!

Next ➡️

Discovering Business Value within a Community