Community management is one of the most used marketing tools to promote a brand or a product. Most companies are aware of the importance of community management for their visibility. They all face a common challenge : how to measure the return on investment (ROI) of their community management efforts?
It is actually true for small and medium-sized businesses, which focus their profitability measurement cursor on sales.
In this article, we will take a close look at the ROI of community management and discuss the main factors that influence it.
What is community management’s ROI?
It is a measure that calculates the return on investment of community management efforts. It is calculated by comparing the cost of community management efforts to the total value of benefits obtained through these efforts. Simply speaking, the ROI of community management is a measure of the profitability of your efforts.
The main units of measurement come from:
- Engagement rate
- Community size
- Impressions generated
- Conversions generated
We have purposely placed last the conversions generated, which is the most coveted KPI traditionally in small businesses such as VSEs & SMEs. This is understandable because sales are the main indicator for a business leader.
However, community management itself, that is the actions of publishing posts on social media, is rather intended to generate visibility. As it would be the case for posters displayed in the subway for example, but with a more limited lifespan and a more targeted distribution. So, it is usually difficult to attribute sales to community management activity.
Obviously, tracking solutions exist and can identify both the traffic brought in and the sales achieved from social media. However, the tracking of sales is limited in time and not all conversions can be linked to the work done by the community manager.
What are the advantages of Community Management ?
Thank to the community management, company can benefit from several advantages:
- Improvement of the online visibly of the brand
- Customer loyalty
- Improvement of customer satisfaction
- A better discussion and collaboration among users
- Reassurance of prospects and customers with regular activity and up-to-date moderation
- Lead generation
- Generation of conversions and sales
It is clear that the objective and benefit number one of community management is to generate visibility with regular publications. It is then a question of improving the spontaneous reputation of its brand, with the dream of every leader or marketing manager which is to generate a positive “buzz” which will allow a publication to be shared many times on social media.
Also, it is almost an obligation to be present on social media for your future new customer in order to reassure them and show them that the brand is there, alive and communicating properly with its customers.
Challenges of community management
Despites its many advantages, community management has its challenges. As previously explained, it’s difficult to measure its ROI. So the trend is to control the cost of these expenses, which is inevitable to be present but represents a cost for the company.
It is therefore necessary to appreciate spending time on it Therefore, it will be necessary to appreciate spending time on it and/or the budget to spend in order to achieve its publications. Actually, the main challenge of community management is profitability. How much will I invest to generate visibility among my target knowing that the results will not be immediate and difficult to measure?
The answer is simple: the least possible
Indeed, why spend a large budget given that it will be almost impossible to measure the direct results. Do I have to be present? Yes, you have ! For all the reasons mentioned above. Do I have to invest large amounts of money? The answer is no with all the elements mentioned above 😉
How to calculate the ROI of Community Management?
Calculating the ROI of Community Management is quite simple. First, you need to determine the cost of the community management effort. This includes the time and resources needed to initiate and manage:
- The search for post ideas consistent with its brand value (on average 15 minutes for 1 post)
- The graphic creation of publication (on average 1 hour for 1 post)
- The creation of captions of the posts (On average 30 min for 1 publication)
- Schedule on social media (on average 5 minutes for 1 post)
- Responding to comments : moderation (on average 1 hour per month)
- Actions reporting (on average 20 minutes for 1 post)
- Analysis of results (on average 30 minutes for 1 post)
On average, you can see that the time/results ratio for a post is not very profitable. If you outsource it, you will pay for this time. If it is done in-house, you will pay someone to do it. In any case, these times can’t be reduced.
The calculation formula is very simple to calculate your ROI:
(time spent on a post x cost of this time) / selected KPI (engagement, impressions, sales…)
Tookano has understood this formula well, and that’s why we have created the first semi-automated platform dedicated to a more profitable community management.
In fact, Tookano allows you to automate a whole bunch of tasks dedicated to community management while working in quality.
In the end, is community management profitable ?
Yes it is ! Community management can be very cost-effective if the efforts are well measured and the budget controlled.
With Tookano, you manage your own budget, you choose the number of publications you want to make each month and the formats you want to use. For 59€ excl. VAT / month, you get one publication per month. Then, you can choose the number of publications you want to adjust your frequency and control your budget.
4 posts per month (i.e. 1 per week) with an “image +caption” format will cost you 236 € excl. VAT / month. A budget affordable to all small businesses and with which you can obtain a regular and impactful presence.
Finally, at this rate, community management becomes profitable because the efforts produced become less than the results recorded.
How can Community Management be more profitable?
It is a long term work. In order to make it profitable, you need to work on it over time. With a small monthly budget dedicated to community management actions, you will be able to offer yourself a regular frequency and reach new prospects and customers.
Obviously, there is no point in spending too much because as we have seen, publications have a short lifespan and their direct ROI is difficult to measure.
Community Management is however a powerful tool to promote a brand or a product. It is important to understand the ROI of Community Management and to know the main factors that influence the return on investment.
In conclusion, be smart ! Use tools that will make you:
- save time
- save money
- satisfy your customers
- and even bring you future sales
Your community management investment management must therefore be R-A-T-I-O-N-A-L !