Show and Tell
Share your social network analysis from last week’s assignment.
Why should a business build a community? There are many compelling reasons, including:
- stronger branding
- building better loyalty
- better opportunity for press coverage
- higher employee engagement
- improved customer service
- inexpensive source for soft marketing and public relations
- learning more about the field from experts who happen to be consumers
- being able to collect qualified email addresses
- being able to collect data and make business decisions based on it
- increased sales
Ultimately, the end goal is increased profits. Online communities can help a business both to increase sales and decrease costs. More on this soon.
The Role of the Community Manager
A professional community manager directs not only the activities of the group, but integrates the business into the community. He or she should build the internal systems in place that generate a defensible Return on Investment (ROI).
The community manager should:
- Ensure the community is delivering value to the community.
This requires establishing and tracking metrics, that ultimately measure the ROI.
- Ensure employees participate in the community.
When employees participate, it increases the perceived value that the organization places on the community. That is, community members feel that the company cares about the community. Employees can provide deeper answers to technical questions in their field. They can help enhance the buzz about a product launch. They also provide more than a single touch-point with the company.
- Integrate the community with the four P’s:
- Product – develop community-branded products, or ask for feedback on existing and future products
- Price – provide special discounts
- Promotion – provide exclusive promotions
- Place – let customers buy exclusive products directly through the community
Measurements and Analytics
What kind of data can we collect from our communities? You can probably guess many of these:
- number of members or page likes, views, comments, shares
- what kind of content gets better engagement
- what time of day or day of week generates better engagement
- member age ranges, gender distribution, and locations
- how long people stay on the site
- how people get to your site
- purchases of products/services: non-members versus new members versus active members versus lurkers
- other conversions
- positive or negative sentiment toward the organization (how do people feel about announcements, product launches, or other activities?)
- advertising revenue from ads placed in the community
- customer/member retention rates
Where can we find this data? Some of this will need to be activated beforehand, but some of it is an automated feature of the software you are using.
- Facebook page insights
- Google Analytics
- WordPress plugins
- sales/eCommerce software
- customer surveys, both of community members and nonmembers
- qualitative assessment of the daily conversations
A few other critical metrics that a community manager ought to keep track of, related to the community:
- number of employees participating, and at what cost
- number of processes that have been adapted to suit the needs of the community (e.g. promotions, pricing, distribution)
Monetizing a Community
While most online communities are free, many are provided as a valuable resource at a cost.
I am in two Facebook groups, for example, that cost me money to join or stay in.
Here are a few models for monetizing (making money from) an online community.
- Offer Premium Services
You can provide two levels of membership. Free membership includes basic forum activity, but a premium membership provides greater value in the way of content, special offers, private messages, etc.
- Sell Products
Making exclusive special offers to community members, or advertise affiliate products that generate direct sales.
- Sell Information
Once you have a community established and people value your contributions and expertise, you can sell consultations, ebooks, guides, gaming tips, etc.
- Sell Courses
Similar to the above model, experts can sell online courses related to the community topic.
- Organize Events
Event organizers can earn revenue by planning and running a meet-up, and charging a fee above costs. Event planning can be complex and take a lot of effort.
- Add a Marketplace
You can allow members to list items for sale, and charge for the listing. Some groups charge more for a specially-promoted listing.
- Create Merchandise
Monetize loyalty by selling items with your community logo. T-shirts, mugs, mobile phone covers, stickers, etc. are all popular for displaying one’s tribe affiliation.
- Sell Advertising
Banner ads should be unobtrusive and targeted.
Above all else, bring value to the community.
Cool Ideas for Special Communities
How can your company provide even more value for community membership, making nonmembers want to join? Here are a few ideas that have been used:
- make a special community-branded version of your product
- bonuses with purchase that are exclusive to members
- exclusive opportunities such as special-access tours, a call with the CEO, guest tickets to events
As much as possible, if cost-effective, use automation to keep your community humming. Live managers should still moderate the content and conversations, but some of these tasks can be automated:
- registration in the community with purchase
- birthday greetings to members
- anniversary greetings celebrating their first, second, etc. year in the community
- publishing content that is written and scheduled ahead of time
- drip-release emails to encourage members to keep returning
- member surveys at registration and at regular intervals
Online communities are most likely to fail if they commit the following sins:
- fail to bring value for community membership consistently
- never ask for feedback
- ask for feedback, but make no changes to products or services based upon it
- leave a community unmanaged
- not recognize the contributions of active members
- remain distant, secretive, and worse: unapologetic when things go wrong
Return on Investment
Let’s take a deeper look at our community goals. It really comes down to money: revenue minus costs. Invest some money (costs) to increase returns (revenue). Return on investment, or ROI for short.
For most profit-based companies, they create a community with the hopes of achieving the following:
- Increased retention of existing customers.
It usually costs less to retain an existing customer than acquire a new one.
- Increased repeat purchases.
Get existing customers to spend more money with you.
- New revenue opportunities.
Inform customers about opportunities to buy with you that they aren’t already familiar with.
- Reduce marketing costs.
When you bring customers into your own community, you need to spend less time and money trying ot reach them via other channels.
- Solicit feedback and innovation.
Generate new product ideas, and fix your existing ones.
- Reduce customer service costs.
Your community can aid customer service by handing questions and complaints–often without the immediate attention of an employee.
- New sales leads.
Existing members may recruit people in their personal networks.
- Employee recruitment.
As a substitute for headhunters, you can seek people who are the most knowledgable and enthusiastic in your community for positions in the company.
Each of these has a direct effect on costs and revenue.
In order to defend the necessity of a managed community to the company stakeholders, a community manager must be able to calculate these in real numbers based on the data collected.
How To Measure ROI
We saw above where to get data about community effectiveness. Let’s see how to put them into practice and measure ROI.
- Member Longitudinal Surveys
Survey members at registration and later when they have become active members. Compare their buying behaviors and beliefs before and after. Do this repeatedly over a long period of time.
- Compare Existing Members to Nonmembers
Sample a group of mid-level repeat buyers. Compare community members against nonmembers to see who purchases more.
- Random Controlled Trial
Identify a similar group of customers. Invite half to join the community, and leave the other half as a control. What impact did participation in the community have?
- Marketing Cost Evaluation
Was the company able to slash marketing costs while maintaining the same level of sales?
- Customer Service Cost Evaluation
Have customer service costs decreased? Has the volume of calls/emails gone down sufficiently to reduce staff dedicated to it?
- Direct Sales
In many cases, purchases made in direct relationship to promotions offered in the community can be measured.
- New Revenue Opportunities
Similarly, it will be fairly easy to measure revenue generated from the community in the form of special events, premium memberships, special-edition products, etc.
You not only can measure the savings from using a community rather than traditional headhunting techniques to hire employees. You can also look at whether they have better efficiency, expertise, and retention.
Notice that all of these are financial metrics to some degree. They do not measure good will, buzz, brand recognition, and sentiment. Those things are useful to know too, but they do not fit into ROI.