Online communities are growing in popularity. From brand communities to customer support, increasingly we are moving away from broad, social networks, and seeking smaller, niche spaces to connect. In 2019, 76% of internet users visited an online community of some kind – a number which is increasing year after year.
Yet there is still a lack of clarity among most people on what the specific benefits of online communities are for both brands and their customers.
Building an online community can seem like a big decision. This isn’t a surprise; it’s a major commitment that requires total buy-in from an organization in order to be successful. For those still in some doubt over whether an online community is a worthwhile investment, we’ve put together this list of their 5 biggest advantages.
Advantages of online communities
- Create participation with your brand
- Leverage the power of peer-to-peer
- Own your data
- Generate clear ROI
- Improve customer lifetime value
1. Creating active participation with your brand
We all know that retaining existing customers is significantly cheaper than acquiring new ones. Acquisition costs have skyrocketed in recent years – so it has never been more important for brands to engage their existing customers and place them at the center of decision making.
Accelerated digital transformation has evolved the relationship between brand and customer into a two-way street. Customer participation no longer simply refers to writing reviews online or filling out feedback forms; this is just one element of a wider, more holistic process. Customers increasingly demand to feel personally involved in the brands they buy from, and for those brands to reflect their values. In essence, customers are no longer happy with relationships that are just transactional; they want to participate.
Deloitte’s model of Customer Participation has four distinct stages. The most basic level is customer insights, which can include surveys and feedback forms, but also spans across behavioral insights, polls and user groups. Online communities consolidate all of this in one hub, providing a holistic view of the customer. There are many B2C brands doing this well, including beauty brand Glossier. Glossier uses their online community to engage their customers, elicit feedback and even to beta test new products with their most loyal customers before they are launched.
One level up from this is customer engagement – or put simply, an interaction between brand and customer. While this is not a new concept, online communities provide a place for customers to interact directly with a brand. Rather than broadcasting to customers, communities open up a dialogue, developing a trust which ultimately leads to brand loyalty and advocacy.
Communities allow customers to learn about new products and services, to engage with peers, share their experiences and advice, and offer their feedback. In the wake of the COVID-19 pandemic, one of the primary motivations for engagement is the desire to help others. Brands that can tap into this desire will put themselves at the center of these customer conversations.
The third level of customer participation is co-creation, which means inviting customers to act as advisers and allowing them to contribute their own ideas and perspectives. Contests, toolkits for consumer innovation and user generated content are just a few examples of how customers’ ideas for a product or service can be woven into the creation process, ensuring they are completely customer-driven.
Finally, the most immersive form of participation is ‘customer as brand’, in which customers essentially become part of the brand itself. Scientific publisher Springer Nature uses its online communities to amplify the voices of researchers. Initiatives like ‘Behind the Paper’ invite them to tell their personal stories behind their research. This has become a core part of the Springer Nature USP and brand identity. Other examples include Airbnb, whose business model sees users let out their properties, effectively taking on the roles of salespeople and representatives of the brand.
This layered approach to customer participation speaks to the wide range of ways in which customers are influencing the companies they choose to buy from. Online communities allow for a stronger relationship between brand and customer, by encouraging more active forms of participation, and allowing the company to become both customer-centric and customer-driven.
2. Leverage the power of peer-to-peer and peer-to-expert
Customers today use the internet to connect, communicate, share their thoughts and ideas, and ultimately influence each other. So it is hardly surprising that referrals are playing a larger and more critical role in the buying cycle. Referrals suggest a high level of trust in a brand, with 78% of B2B marketers saying they generate good or excellent leads. Prospects are 4x more likely to buy if they are referred by a friend. Online communities harness the power of referrals. They put customers front and center, and bring them together with prospective customers, who endorse and advocate on a brand’s behalf.
Online communities also allow brands to leverage the power of peer-to-peer networking. This grows over time in well-maintained communities as members begin to interact more and share their thoughts with one another, taking pressure off the community manager to keep conversations going, moving the community towards self-sufficiency. Whether customers are answering each other’s queries or contributing content, their desire to connect with each other is the lifeblood of any community and even helps to lower support costs.
The ability of online communities to boost expert voices also helps to create trust. Creating a hub of expertise around a brand that users rely on will improve product adoption, customer satisfaction and cement that brand as indispensable. Mainstream social media platforms are so heavily saturated that genuine product and subject matter expertise is often drowned out. Clearly signposting experts within an online community means trusted insights and knowledge can be shared directly with customers in a way that is accessible and engaging.
3. Data ownership
Social media giants like Facebook have had a stranglehold on online marketing channels for years – along with the data that comes with them. When tech companies can charge you for the privilege of reaching your own followers and withhold crucial analytics, it’s no surprise that so many organizations who rely on social media marketing end up wasting their money.
Over on LinkedIn, similar issues arise concerning data ownership. Brands which have built up a community of followers on the platform have found themselves unable to contact or even view their members, with LinkedIn owning these relationships and changing the rules at their leisure. The situation is very clear: the only way to ensure you don’t lose access to vital data is to own it yourself.
Social media platforms also keep hold of key data and analytics. An owned, online community means full data ownership and user behavior insight. A survey of brand managers by Sector Intelligence revealed that 86% felt they had experienced a deeper insight into customer needs following the pivot to a community model, with 82% reporting that they had gained the ability to listen and uncover new questions. By retaining complete control over analytics, brands can ensure they get the whole picture of their audience.
4. Generate clear ROI
Online communities offer monetization opportunities, including advertising, sponsorships and subscriptions. This means brands can monetize existing expertise to create new revenue streams. Wilmington Healthcare’s OnMedica community, an independent resource and peer-to-peer space for doctors, allows them to create highly targeted sponsorship packages based on members specialisms and online behavior.
Online communities can also offer additional ROI that more traditional marketing channels cannot. An example of this is within the events industry, as online communities extend the lifetime of an event into a year-around engagement opportunity. Attendees become full-time members of a brand’s audience, beyond just the 2 or 3 days of an event itself. Speaker sessions can be made available on-demand, reaching a much wider audience and continuing the conversation.
Online communities also provide better sponsor ROI. Sponsors can be given their own space or content hub within a community, providing them with a space to deliver their expertise, and engage the audience with video, webinars and even face-to-face meetings. Where sponsors once had a booth in an exhibition room for a few days to collect leads and boost awareness, they have a larger window of opportunity to demonstrate their value to the audience. The year-round activity of a community means sponsors see a better return on their investment.
This is what sponsors of simplycommunicate, an internal communications community, found after they moved their annual simplyIC event to an online community format. They created virtual exhibition rooms for each sponsor, providing a space to showcase their value and engage the event’s audience during the event, and beyond. Though simplycommunicate will be returning to in-person events in the future, they will adopt a hybrid format, allowing sponsors to boost awareness and generate leads before, during and after the event.
In addition to creating new revenue streams, online communities can create cost efficiencies. Firstly, by reducing customer support costs. By creating a self-sustaining community where customers answer each other’s questions and offer advice, brands can reduce the support tickets or time or costs by 72%. All in all, it is cheaper to an organization for a question to be answered via their community instead of a support team, while also leading to higher levels of customer satisfaction.
Another cost efficiency of running an online community is reduced ad spend. Many marketing channels are becoming more expensive and less effective, with brands throwing away millions each year on social media advertising. The back end of 2020 saw social media ad spend in the US skyrocket to a 50% increase on its pre-pandemic high, signalling that the saturation of social media cannot be stopped. Brands with their own online communities are able to spend considerably less on social media advertising than their competitors, because they are able to reach customers and prospects in an owned space.
Though setting up an online community can be a significant investment, the cost efficiencies and revenue opportunities are irrefutable, making it a sustainable choice for brands that are in it for the long run.
5. Improve customer lifetime value
Attracting new customers to a brand will always be important. But with customer acquisition costs rising, as we touched upon earlier, it is imperative that brands also look to extend customer lifetime value (CLV).
The ability to radically improve CLV is one of the greatest advantages of online communities. By encouraging active participation and building an emotional connection with customers, online communities mean that members are more likely to stick around for the long term. This means individual customers are worth more, reducing the pressure to constantly acquire new business. Customer churn is often explained using the ‘leaky bucket’ analogy. The best way to plug the holes in your bucket is to build a relationship with customers that goes beyond being purely transactional.
Welcoming customers into a thriving community of like-minded people, where they can share their experiences and be rewarded for their participation, helps to foster a sense of belonging and ownership. Customers want to feel connected – to see their values reflected in the companies they buy from. For brands, this means actively engaging customers within a community setting and demonstrating that their views and opinions have a bearing on the brand itself.
Online communities have many advantages for businesses – more than we can even list in this article. To sum it up, online communities turn transactional relationships into meaningful ones. They allow brands to stay actively connected with customers, leverage their opinions and feedback and engage them on a long-term basis, all while providing significant ROI. Setting up an online community might be a sizeable investment – but it pays for itself in so many ways over the long term.