Aug 30th, 2023

Connecting community and cash flow: ROI insights from Holly Firestone [VIDEO]

It’s a perennial topic among community professionals: how best to prove return on investment.

While you can debate which metrics matter most until the cows come home, you have to understand your “why” before you can settle on your “what.”

We talked about that and much more with Holly Firestone—former community leader at Atlassian, Salesforce, and Venafi and current CEO at Holly Firestone Consulting—in our recent event: Return on community.

Here are three of the top takeaways from that conversation, including:

  • Why community strategy should follow business strategy
  • What role reporting structure should play in your measurement
  • How to approach community health versus community ROI

1. Don’t try to reverse-engineer community ROI

Community practitioners often face a chicken or the egg dilemma when it comes to their programs.

Namely, should they focus on building a community first and then figure out how it drives business outcomes? Or should they start with business outcomes and then figure out how to build a community that supports them?

More often than not, executive leaders will help make that decision for you.

“Good luck getting resources and money if [community is] not going to fit into the business strategy,” Holly said.

It’s important to map out what you’re hoping to achieve with your community early on and make sure it aligns with overarching business goals. It’s equally important to make sure your boss (and their boss) is on the same page.

“Your leadership team might have a completely different view than you do, and if your leadership team is expecting support deflection [...] then you really have to think about how that integrates into your strategy and how you're going to prove that," Holly said.
What it means for community teams: Building a community with a clear understanding of the results you want to generate is much easier than reverse-engineering it after the fact. Get aligned with company leaders and approach your community strategy with specific KPIs in mind.

Communities can serve multiple business-critical functions—from product education to word-of-mouth marketing. But at the end of the day, dollars and cents speak loudest to company leaders.

That’s one reason why support deflection is a popular way to tie community to bottom-line business metrics. Not only can communities help customers find the answers they need, they can free up resources for support staff, which saves money and improves productivity.

The team at Salesforce used an algorithm to show how much its community helped in deflecting issues from its support team.

“[W]e had an algorithm [that said] we were saving $2 million a month,” Holly said. “Granted, Salesforce is giant, obviously, but that was a conservative estimate. So those are the numbers that kept us driving forward and kept us getting the resources that we needed to grow and expand.”

2. Be a team player to win support

When it comes to what to measure and how, it can help to start with the team you fall under.

“Some community teams are on the marketing team, some community teams are on the customer success team [...] everybody's everywhere,” Holly said. “And so when you think about building out your community strategy, ultimately your goals have to roll up to your team goals, which roll up to your company goals.”

No matter which team you ladder up to, work to understand which metrics matter most to it.

For instance, say you’re a community professional who reports to the customer success team at your company. Perhaps there’s a customer health score this team uses to understand how likely an existing customer is to churn or expand. The team’s goal is to push this number higher.

You can work with the team to drive customers with low scores to your community and start evaluating the impact this has on customer health scores over a set time period.

“Proving how that score changes is something you can directly relate to the community versus just saying, ‘Well, people who are in the community spend more,’” Holly said. “If you see that the score is going up and you can tie that to different activity in the community, and then you can see that they renew at a higher rate, or they're no longer in the red, or whatever it is that you're looking at [...] that's an example of how you could tie it back to community.”
What it means for community teams: Different metrics will be more impactful to different teams. Figure out what moves the needle most for the team you report to and start there. You can then expand over time to prove how community impacts multiple business functions, not just one.

Getting your hands on the metrics you need is often easier said than done. This is where it becomes invaluable to work closely with your company’s data team to make sure you’re able to gather the right information.

This may mean making the case to an executive leader about why they should sign off on resourcing. Data analytics professionals commonly create reports and dashboards for marketing and sales stakeholders to prove ROI. Community shouldn’t be any different.

“It can't be that you go to the data science team and say, ‘Hey, when you guys get some time, is there any way you could look into this for me?’” Holly said. “It needs to just be somebody's role.”

3. Community health drives ROI

Proving community ROI is only possible if your community is a place where people want to spend their time.

In other words: The hunt for ROI shouldn’t come at the expense of community health.

“I look at community metrics in two buckets,” Holly said. “The first one's the health bucket …. If you do not have bucket one, you cannot have bucket two, and bucket two is the ROI.”

Membership growth, member retention, engagement rate—metrics like these won’t wow executive leaders the way revenue metrics will, but they’re essential to understanding the overall health of your community.

That said, focusing time and effort on community health doesn’t mean having nothing to show for it.

For example, tracking testimonials from customers about the value they see from your community is a great way to show the real-world impact of your work.

“I think those quotes that you get are some of the ways that you can highlight [value], especially if they're from some of your enterprise customers or a target audience that you know that your leadership team is really interested in,” Holly said.
What it means for community teams: A healthy community is a prerequisite for community ROI. If people aren’t joining, participating, or getting value, you won’t be able to draw a line from community to overarching business objectives. Treat community management with the same care and attention you give to reporting on ROI.

In many ways, a healthy community is its own selling point for customers.

“We did a survey of customers [at Salesforce] … I believe it was 83% said that they saw a higher return on their investment in the product because they had the community as a resource,” Holly said. “So I think there's things like that that you can look at as well that tie it back to whichever team is trying to gain value or understand the value.”

Proving the ROI of community can feel like entering uncharted waters.

Let your business goals—and the wants and needs of your community members—be your North Star.

Measure community health and ROI with Common Room

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