A common topic discussed with our customer is, How can we prove that Increased Community Engagement adds to the bottom line?
We recently (October 2023) conducted an analysis on community engagement and the associated impact on Retention and Expansion. Out two takeaways were:
- Customers who were highly engaged in our communities renew at 3 percentage points higher than customers with low or no community engagement.
- Customers who were highly engaged in our communities expanded a 2.2x higher rate than those who with low or no engagement.
In this article, we will present how we conducted the study, so you can do the same.
Firstly, lets clarify the definitions of the two value points.
What is Gross Retention Rate?
Gross Retention Rate (GRR) is a metric that measures the percentage of customers who continue using a product or service over a given period, without taking into account any new customer additions. It helps businesses assess the loyalty and satisfaction of their existing customer base.
What is Expansion Rate?
Expansion revenue is any revenue that is generated in excess from a customer's initial purchasing price or contract. Up-selling and cross-selling are the primary drivers of expansion revenue.
How did we do it?
- Figure out which accounts the registered users belong to. For this we pulled the Contact Data of all the Accounts from SDFC & then cross referenced it with the user list exported from the Customer Community Analytics Export.
- Once we had the list of users and their associated accounts, we pulled the CS Forecast ARR & the Renewable ARR for those specific accounts, thus allowing us to determine the the GRR for these accounts.
- With the account information and username combined, we next created a definition of High, Medium and Low engagement for each ACCOUNT. For this first iteration we defined engagement as a straight forward count thus;
Engagement per Account = Topics + Replies + Likes
(across all the users for that specific account)
The buckets were defined as;
-
Low/no = 0-7
-
Medium 8-24
-
High = >26.
This segmentation was chosen to get a somewhat even spread across engagement levels.
- We can then sum the Renewable ARR & Forecasted ARR of all the respective accounts that fall into the defined Engagement buckets get the GRR contribution for that specific Engagement Bucket.
