Building a Business Case for Online Communities

B2B companies frequently look at online communities with mixed emotions.  On the one hand, they see the obvious success of sites like the Amex OPENForum, and they aspire to reap similar benefits.  On the other hand, there are the standard fears that many companies have:

  • Fear that community will devolve into a quagmire of complaints from upset customers
  • Fear that they will not be in control of the community discussion
  • Fear that they will invest substantial resources in a digital product whose ROI is difficult to calculate

These are all valid concerns, but they frequently recede into the background as more is learned about how communities develop, and how to think about the value they create.

Building a Business Case

The ROI question is truly a challenging one for most B2B organizations. The point of community, of course, is to provide value to the community members, not to push product. But even setting that expectation can set some B2B organizations on edge.  They end up asking some version of the question: “If I can’t measure a lift in products sold, how can I prove value?”

The over-arching message should be about building a strong sense of trust and relationship within the community, which increases customer loyalty and improves brand image, advocacy, and preference.

And there’s research to prove this (emphasis mine):

  1. “Research… reveals that customers who socially interact with other customers, via participation in brand communities, often exhibit an intense loyalty to the sponsoring brands.”
  2. “Positive influences of participation on recommendation behavior, brand image of the community sponsor, and intention to continue community membership can be confirmed.”
  3. “Researchers believe that in the future online communities will be the fundamental basis of companies’ marketing strategy. Especially, understanding consumers’ brand community behavior is considered a key success factor in doing business in the digital age. Virtual consumer communities (communities centered on a specific brand or consumption activity) can be of great value to marketers. Firstly, a company can use virtual brand communities for data mining and learn more about its customers, products, and even competitors. From active communities it is also easy to find potential candidates for pre-release product testing. Secondly, the most active members of these kinds of communities can do some of the work traditionally done by the company marketers by providing information seekers with purchase incentives and reliable information. Brand loyalty is closely linked to virtual interaction and to formation of strong social ties between individuals in a community.”
  4. “In the quest for building long-term successful brands, many marketers have become increasingly interested in how to create and foster successful communities of brand users. The appeal of such an approach to relationship marketing lies in the recognition that members of brand communities tend to exhibit favorable brand-related behaviors and intentions.
  5. “The results from the structural model suggested that perceived social support and consumer-brand relationship were important drivers of relationship mediators (i.e., sense of online brand community), which led to relational outcomes (i.e., brand commitment, brand preference, brand advocacy, and behavioral loyalty).”

The next challenge is to take these softer notions of loyalty, preference, and advocacy, and translate them into something measurable:

Web Engagement metrics:

  • Total visits by channel
    • Referring sites
    • Direct
    • Search
    • Social
  • Total pageviews
  • Time on site
  • Bounce rate
  • New visitors
  • Repeat visitors
  • Frequency & Recency

Community Satisfaction (qualitative):

  • Community responses to online surveys
    • Qualaroo, Foresee, FluidSurveys, etc
  • Bi-annual “Community Health Index” survey
    • Email survey to all active community participants asking for feedback

Community Engagement (quantitative):

  • Registrations
    • Ratio of new visitors to registrations (conversion rate)
    • Number of registrations over time
    • Registered users vs active users
  • Contributions
    • Total number of threads
    • Total unique contributors
    • Number of posts per active member
    • Posts per day
  • Topic interaction
    • Most popular subject areas
    • Thread depth (posts per thread)
  • Moderation effectiveness
    • Speed of replies to discussions
    • Number of volunteers

Community Development

Online communities are organic entities.  They have to grow and develop over time, and they often grow in surprising directions.  That said, community development is not a passive endeavor.  Communities require proactive management and participation in order to maximize positive business outcomes, and reward positive behaviors.

Despite the surprising directions that communities can grow in, the motivations for community participation are often quite uniform:

  1. The opportunity to participate in like-minded discussion
  2. Being connected to something larger than themselves
  3. To give and receive help
  4. To receive affirmations of the importance of their contributions
  5. The opportunity to elevate themselves as “experts” within the community

In order to position a new community to attract, retain, and grow its member base, the following considerations must be taken into account:

1. Seed the Community

  • Send invitations to participate to people who you think would be a good fit
  • These can be thought leaders, business partners, and loyal customers
  • Choose a core set of SMEs who will be accessible to community members
  • Exposure to, and the ability to network with, known experts is a core part of a community’s value proposition

2. Develop Your Moderators

  • Moderators must be open, candid, and “real people” not a “corporate mouthpiece”
  • Moderators must be responsive to activity within the community
  • Moderators must recognize and react to the needs of the community
  • Members of sufficient standing may be offered a position as Moderator over time

3. Expect 2-Way Communication

  • Think of members as “advisors” to your company
  • Be open to receiving feedback and advice from community members
  • Show community members how their feedback is influencing your company, your priorities, and your products

4. Encourage Profile Development & Content Creation

  • Allow members to accrue “points” based on volume and quality of interactions
    • Posts
    • Responses
    • Likes” of comments
    • Etc
  • Allow users to build out profiles that represent themselves
    • Personal interests
    • Professional interests and qualifications
    • Detailed descriptions of their businesses
  • Score users based on how “good” their profile is
    • E.g. LinkedIn “Profile Completeness” meter
  • Encourage content creation
    • Elevate guest blog content of outstanding quality to the main blog
    • Proactively promote the best content outside of the community
      • Primary social media accounts for the community should share this content via social media for added exposure

Setting Expectations

Finally, you have to set expectations around how quickly the community will grow.  Every B2B organization I’ve ever discussed community would prefer that the community be populated, vibrant, and self-sustaining as soon as it’s launched, but that’s obviously not a realistic expectation.  You must actively invest in your community, and those investments can take a significant amount of time to pay off.

For example, everyone in B2B knows that Amex OPENForum is a powerhouse with massive traffic, attracting very notable contributors.  What’s easy to forget is that OPENForum had very humble beginnings.  In 2007, it was originally started as a place to house video assets.  Early versions of the site were heavy on entertaining videos from Mario Batali and The Blue Man Group.

But the early site also had a live chat functionality, where employees of Amex could participate in discussions with actual community members, to discover what they needed.  In Lean Startup practice, this is called Customer Discovery.  Amex didn’t know what their customers’ problems were, so they asked them.  Here is an actual group chat transcript from Feb 2007:

Lee from Amex: Hello. Thank you everyone for coming to this on-demand experience of an OPEN event. A new OPEN Forum site is going to relaunch very soon with all new community features as well as propiertary business content. Please check back to Openforum.com on 6/18 and for the next Iconic Event taking place at the LA Film Festival on 6/26 with a new slate of brand builders.

stacy: Hi Alshatu Mamudu, I am in India right now. You can establish small business in India as you can save on the manpower and infrastructure cost. mail to : [email protected] if you wanna know more details.

page Bouchereau: What about Tesla?

toks: sadjo how are you? do you have any business ideas you can hint me?

sadjo: has anyone ever seen the blue man group before?

kararaina metekingi: hi there l am curious about finding out how to start any business not sure what l wanna do but just curious

AIshatu Mamudu: I really need a guide on how to begin a small bussiness of my own.

ELLYCE CHIA: NOT VERY CLEAR ABOUT THE INFORMATION THAT I WANT TO KNOW

Natalia Mbamba: hey how do i join this it is very intresting.and i would like to get the guide i need in opening a business of my own

Ashura: Am intrested in this course and i would like to get educated about opening a small business of my own so please guide

Wow!  Amex had to pivot substantially from their “video platform” positioning in 2007 toward what became the OPENForum in mid-2008.  The process of identifying the true customer need involved LOTS of hands-on discussions with their end users.  And this process of finding their true purpose and building the platform to address customer needs took time:

Amex OPENForum growth

Image via ContentLab

After its launch in 2007, the OPENForum only accumulated 425,000 pageviews in all of 2008!  If we assume a modest 3 pageview per visit (significantly lower than the 6.4 PVPV they get now), that translates into fewer that 12,000 visits per month!  For a massive organization like American Express with massive budgets at their disposal, that’s a modest start.  It’s also a really potent reminder that no amount of resources can cheat you ahead in the process of establishing product-market fit.  It’s an exploratory process, and it often takes longer than you would hope it does, even if you’re a gigantic corporation.

Another example that I like to use is Wikipedia. True, it is not a “community” website in the same sense that a B2B forum is a community website.  Wikipedia’s potential user-base is everyone in the world, writing about almost anything in the world, in contrast to a B2B site whose target audience and focus is much more narrow.  But it’s still instructive to look at how long the ramp-up time was for Wiki:

Wikipedia growth

Image via Wikipedia

Some highlights:

  • Getting from zero 100,000 articles took 3 years
  • Getting from 100,000 to 200,000 articles took 1 additional year
  • Getting from zero to 500,000 articles took over 5 years
  • Getting from 500,000 to 1,000,000 took 1 additional year

This is a powerful reminder that patience is a virtue in community development. Done well, the rewards for community development are substantial.  But they don’t happen overnight.

Understand the long-term view of how community can help you develop, understand, and communicate more effectively with your customer base.  Know that the first turn of the flywheel is going to be slow, expensive, and require a huge amount of effort.  Go into the project with your eyes wide open.  Done well, the rewards for community development can be massive.