Does Social Work? Measuring Community Effectiveness

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Today, everyone is jumping on the "online community" bandwagon. Yet if an organization is going to make any investment of time or money, it needs to be able to measure the return on these investments. However, quantifying the value of something such as "community" is no easy task: What exactly is an online community worth? And how do you measure its effectiveness or know for certain that you are getting a return on your investment when you allocate resources for this purpose?

This is a hotly debated topic across the social web and the business world alike. Social media enthusiasts argue that the return is built into the relationships, brand loyalty, and trust that communities often foster. Naysayers find such intangible measurements inadequate, offering little concrete evidence that community contributes to the bottom line. However, despite the ongoing ROI debate, businesses are increasingly investing in online communities. In fact, 94% of the 400 companies surveyed for Deloitte's "2009 Tribalization of Business Study," which was released in October, planned to maintain or increase investment in social media tools and online communities.

Companies such as Dell, Coca-Cola, IBM, Starbucks, UPS, Ford Motor Co., JetBlue, and Best Buy-which boasts 16,000 followers on Twitter and 1,026,772 fans on Facebook-are often praised in the blogosphere and on traditional media news sites for their innovative social media marketing methods, many of which include online communities. Even pharmaceutical companies such as Pfizer and Novartis are embracing online communities. Bayer has had much success with its online community and its blood glucose monitoring tool for young people living with diabetes in the U.K. Capitalizing on the popularity of the Nintendo DS, the company provides a tool that connects to the device and rewards the user for building consistent blood glucose testing habits and meeting glucose targets.

Tonium, a Swiss company that developed a portable DJ system, created an online music community to attract DJs and music lovers through new music mixes shared by members. This community created a channel for cost-efficient buzz marketing, shopping, product support, and communication with current and prospective customers. Within a year, the Tonium community included more than 40,000 members worldwide, and it currently has more than 4,000 uploaded music mixes. When Dell announced that it could attribute $3 million in sales to its presence on Twitter alone, the news quickly spread across the business and technology sectors and was reported by The New York Times and The Wall Street Journal. Such success may not be the norm, but it is clearly possible at both the national and local level as businesses big and small actively engage with customers and build communities online.

One strategy that is proving quite successful for Swagger Gifts, a boutique gift shop in Cary, N.C., involves a robust community of customers and fans participating in what store manager Heather Lilly calls "Facebook Fridays."

"Every week we try to put something on our Facebook Fan page, either the new hot item in the store or something that we would really like to push or increase sales on," explains Lilly. This regular engagement with the Facebook community produces favorable results, including increased revenue as well as customer retention. "We do see an increased amount of people coming into the store asking about that particular item and placing orders through our website," she adds. The product of the week is awarded to one lucky Facebook fan every Friday, a tactic that Lilly says drives people back every week. Not only does it increase their chances of winning, but it also allows Swagger a no-cost method for exposing customers to new products.

Retailers such as Swagger, with tangible products to sell, can measure their community effectiveness through visible sales numbers. An increase in purchases and a flurry of new customers is often the driving factor for their participation and success.

However, the question remains, particularly for companies that aren't necessarily marketing products through communities: What constitutes social success? Community expert and thought leader Dawn Foster of Fast Wonder Consulting places value on the conversations and connections being made within the community. "Think about the brand loyalty for the people who engage regularly in your online community," she advises. "Maybe you can't put a dollar amount on brand loyalty, but it's worth its weight in gold." Foster maintains that getting people talking about your organization and providing feedback will help you refine your products or services and get insight into what people think about your organization while also giving you additional visibility.

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