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What Startups Know About Building Community That Many Bigger Businesses Are Just Finding Out

Written by Joshua Paul | on March 10, 2015 at 9:20 AM

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The significant increase in online community management blogs, resources, and services over the past couple of years suggests that online community strategies are rapidly moving into main stream business strategy discussions. However, for some corners of the business landscape, it's already there. As usual, tech startups are leading the way in making effective use of this emerging approach to marketing and customer management.

Take entrepreneur Gary Vaynerchuk of VaynerMedia fame, for example. As a long-time mouthpiece for the value of community management, Vaynerchuk encourages community management naysayers to look at the numbers. In his slideshare, "Community Management: Why Betting On the Human Side Works," Vaynerchuk explains how online communities are integral to the long game when it comes to customer retention. He points to the popular statistic that simply increasing your customer retention rate by five percent can increase your profits by up to 95 percent — and one of the best ways to create loyal customers is by investing in human connections.

Or, consider AirBnB. As their Global Head of Community Douglas Atkins puts it, "a movement is a community on the move." By creating scalable communities that take action, your brand can develop a cult-like following that takes advantage of the "Snowflake Model" – or the process of creating a devoted following that does work and engages their own communities on your behalf.

Another example of startups leveraging their online community is  David Noël, the Vice President of Community for SoundCloud, who's known as one of the best startup community managers. He oversees a team of 15 community managers dedicated to improving the customer experience and community feel of the SoundCloud user-base. 

For some startups, building a strong community is as simple as being a better listener. Megan Berry, the Marketing Manager for Klout, believes that every single customer interaction is important. The community management team at Klout considers it their personal mission to respond to every single request, issue, question, or instance of feedback from their community.

So, why is it that startups rely so heavily on community? Simply put, because it works. Startups across all verticals are leveraging active online communities to grow their businesses at a fraction of the cost of their counterparts – which are often larger and much more established companies.

Not surprisingly, enterprise companies are starting to take notice. Here are six lessons that bigger companies are taking away from the online community building efforts of startups.

6 Online Community Building Lessons That Bigger Companies Can Learn from Startups

Lesson #1) Community Creates Advocates

One of the fundamental pillars of creating a successful startup is creating a growth hacking plan that seeks to find a more affordable and innovative approach to traditional marketing and growing the business fast

A big part of that is relying on people who have engaged with your company to then turn around and spread the word about your company in a positive way. An active and informed online community is the foundation of these types of growth hacking strategies.

Lesson #2) Community Brings Down Both Marketing Costs to Both New and Existing Customers

Many startups with solid business models rely on either repeat transactions or customer retention. Either way, it's important to market to your existing customer base to encourage them to take further action – whether that action is purchasing again or using an existing product in a way that generates more value for them.

Having people engaged in the online community where they can see others take those actions or share ideas for how to use various products and services can increase your conversion rate faster than traditional marketing campaigns. Increased conversion rates works to reduce your current marketing costs and your business development costs in the future.

Lesson #3) Community Makes Your Retention Strategy More Bulletproof

The qualities that make up a strong customer retention strategy, such as the ability to show transparency, making your customers feel cared for and listened to, or answering customers' questions quickly, are all easily implemented using a customer community model.

Through your online community, you can identify people who are struggling or unhappy quickly and more easily, which creates the opportunity to improve their customer experience, before the relationship is damages beyond repair. Not only can your customer support team proactively reach out to discontent customers, but you also have a safety net of advocates within the community working for you 24/7.

Lesson #4) Investors Care About Community

Increasingly, investors are not investing in startups unless they have a strong online community management operation in place. The "money people" pay attention to important figures like customer lifetime value and the cost of customer acquisition. They know that community means more eyeballs on your business – and more eyeballs means lower marketing and customer acquisition costs. When investors say, "show me how you're building community," the very best startups know that their answers indicate more than just their level of interest in social communities. A strong community management operation means that those key performance indicators, that investors care about and that are so important to startups, are important to the startup and there is a plan to efficiently scale the business.

Lesson #5) Community Prevents Isolation and Spurs Innovation

In large companies, people often think all the answers come from within the walls of the company. This level of "group think" can sometimes prevent companies from creating innovative products that align with their market's greatest challenges.

Having an active community where ideas are easily crowdsourced can help your company stay on the cutting edge of what your target audience wants without getting bogged down in internal politics and poor assumptions about your customers.

Lesson #6) Community Makes Your Company Accountable

In addition to crowdsourcing for new ideas, your online community can also help validate new product features or tools before you roll them out, so you can avoid investing in something your target customers aren't interested in.

When you make your community a central part of how you align your products or services with the needs of your market, your company is more accountable to your customers. You'll be able to create new products that you know your customers will already love because you have such easy access to their feedback.

Not only does your online community provide that type of invaluable feedback, but it provides it fast. In many cases, leveraging your community for validation can have a turnaround of just a few hours. This allows your company to "fail faster" so you know not to waste time on products that don't fit your market. 

Online Community Building Takeaway

It's not a coincidence that startups are taking advantage of community building they're doing it because it works to grow their businesses. By looking to effective methods of making and maintaining those "human connections" Gary Vaynerchuk touts, bigger businesses can learn a lot from how small startups are taking advantage of community management and leveraging their communities.

Tips for developing a great online customer community strategy.

Topics: Online Community Management, Customer Retention, Customer Advocacy

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