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The ROI of Community: Measuring the Value of Community Building

People crave community. It’s in our nature to be part of a group with a shared mission. But can you put a value on community?
Written by
November 20, 2020

People crave community. It’s in our nature to be part of a group with a shared mission. We are social creatures, and despite a Covid-19 pandemic that tells us not to gather in person, people will never give up their communities. As Dr. Ian Malcolm (Jeff Goldblum) said in Jurassic Park, “Life finds a way.” For humans, community finds a way.

But can you put a value on community? Can you get as much or more out of it as you put into it? Our clients are community builders who invest time, energy, and money in their communities. It’s a reasonable question for them to ask: What is the return on investment (ROI) of community?

The ROI of Community

According to Harvard Business Review, "If a company can transition from simply delivering a product to building a community, it can unlock extraordinary competitive advantages and both create and support a superior business model."

At Localist, we are all about event success and community, so we wanted to spend a minute talking about how investing in communities delivers your organization's returns. Let’s look at the most valuable outcomes (returns) of strong communities.

Increased Customer Loyalty

People who feel they are valued members of a community show up. They are eager to contribute value to help an organization succeed. Whether that’s attending, buying, volunteering, recruiting, donating, supporting on social media, or any other job that’s mission-critical, loyal community members work hard and sacrifice deeply.

Improved Customer Retention and Lifetime Value

Strong communities last longer. People who have invested their time and energy into a community work actively to keep it together. A great indicator of a long future life is a long past life. Maybe it’s a half-life thing. Or a twice-life thing. We don’t know – despite what you may have heard; we aren’t actually quantum physicists. We know that communities that reach a certain threshold of strength become self-perpetuating machines in which customer retention and lifetime value are greater.

Greater Stability and Progress

These are a result of the first two. When members are loyal, and the community is long-established, there is greater stability. And from stability comes progress. A ship getting tossed about on a stormy sea can hardly make progress toward its intended port – it’s just trying not to sink. Stability is the calm sea and sky, which enable a loyal captain and crew to most efficiently navigate to where they want to go. The opposite also is true: Unstable communities don’t progress as quickly because they have to spend more of their lifeblood striving for stability.

Decreased Customer Acquisition Costs

Delighted members of a strong community freely devote their time to growing that community. If your members are growing your community and committed to supporting your community, your customer acquisition costs will be much lower. Member/customer voice is always more credible and effective than the corporate voice.

Reduced Cost of Service

When we mentioned that a community's loyal members would sacrifice for their communities, this includes their resources. A successful community doesn’t have to rely only on its own assets because its members are happy to share theirs. A healthy community is a collection of people who delight in trading resources for a sense of belonging. The community's return is a higher gross margin because when members help each other, the cost of service is lower.

Events are and always will be a centerpiece of community – even if those live events look a little different right now. If your organization is new to event strategy, event marketing campaigns, or event technology, check out our primer on the Community Building Hierarchy of Needs.

Community ROI may not be as easy to measure as event ROI. Still, if you have a strong brand and many stakeholders, additional investment in your community is one of the most valuable investments you can make.

To find out how Localist's event calendar can help you leverage the ROI of your community, schedule a personalized demo.

Written by
November 12, 2021

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