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The Top 5 Reasons Why Companies Launch Branded Online Communities (and Why Some Succeed) [Research]

Written by Julie Dietz on March 8, 2016 at 8:30 AM

Reasons why companies implement branded online communities

According to a recent study from leading social and community business researchers Leader Networks and CMX, the marketplace is seeing a revolutionizing shift in both business and marketing behavior. Instead of focusing on traditional advertising and cost reduction businesses and associations are focusing on their relationships with customers to improve satisfaction and add value for existing and potential customers.

That means companies are increasingly looking to their customers as the source of their success and looking for more feedback on products, services, and practices.

To get this new information and forge better customer relationships, companies have begun employing new strategies to connect with customers, one of which is the use of branded online communities. Branded online communities are private social networking websites owned and supported by your business. These social portals provide a platform for customers to engage with your company directly, as well as share ideas amongst themselves.

Branded online communities give businesses and their customers a simple, easy-to-access place to come together that includes valuable content created by both groups.

Typically companies have multiple reasons for creating these communities. Common drivers revolve around providing differentiated value to customers, such as technical help, in-depth product support, company updates, or feedback venues.

Here are the top five reasons companies cited for starting their own communities in the recent Leader Networks study.

CMX reasons to implement a branded online community

Top Five Reasons to Implement a Branded Online Community

Reason #1. Improve Customer Satisfaction and Retention

57% of participating companies stated that customer satisfaction and retention were in their top three reasons for starting an online community, with 25% listing it as their number one priority.

Companies need to show customers that they are authentic and interact with them in order to build a stronger relationship. Online communities help make this to happen, and communities where members are actively interacting with each other often pull new or lurking members into discussions. As members participate in discussions and receive responses from company staff, product experts, or brand champions, they see that their concerns and opinions are valued, creating trust.

Getting members started on creating content and participating in discussions can be a challenge. Many customers won't join communities on their own, and many members who don't want to expose themselves and their ideas to criticism prefer to browse content without actually posting any of their own.

Your company can try several strategies to jumpstart conversations with your customers and get them to join your online community. According to the study, some of the more effective options include setting up programs to onboard community members and implementing campaigns that encourage others to join. Refer-a-friend campaigns are a good example from the Leader Networks research.

Reason #2. Increase Collaboration with Customers

While often thought of mainly as a platform for communication between customers, online community software also enables increased collaboration between businesses and customers. Engaged customers enjoy sharing their feedback, both positive and constructive, with peers and the brand itself. This feedback can lead to product improvements and market-driven innovations, which in turn can generate more sales.

Some customers may also have unique needs and ideas for future products and services that they can share within your community platform. If other customers express an interest, then this provides social validation for ideas that the company can run with, turning it into a new offering.

The most challenging part of this is getting the conversation started. How do you learn what problems your customers have that you could solve with a new product? The most successful communities will create product advisory and feedback venues by asking leading questions, giving new product updates, and making customers feel their voice is valued.

The more new, exclusive content you create around existing and potential products, the easier it is to grow your community by drawing others into the conversation.

Reason #3. Reduce Costs

For many B2B companies, cost reduction is high on the priority list. Businesses are using the tools and functionalities in online communities to reduce costs, often in support areas.

Online communities can reduce support costs by allowing peers to troubleshoot problems and work on solving them together. Self-service sections, discussion forums, e-mails, and other communication tools between members allow customers to help themselves and others with similar problems. The more customers solve their own problems, the less money businesses need to put into support services.

Of course, that doesn't mean that companies can't support their community members. Support specialists can (and should) jump on board by reaching out to customers via community messages or discussions in order to personally help solve problems.

Choosing the right branded community software, complete with all the essential tools for peer-to-peer support and self-service is key to reducing customer service costs. According to the new Leader Networks research, 57% of companies that reported the greatest success for their online communities also reported spending high or medium effort when researching the best software for the job.

Reason #4. Provide Support for Brand Champions and Loyal Customers

Advocacy plays a big role when it comes to generating referrals and leveraging customers and partners to grow your business. Giving brand champions a place to share success stories, new uses for well-known products, and reasons why a brand is effective draws in new customers and makes customer advocates feel valuable.

This social proof increases the credibility of a business, and helps to engage and convert average customers into loyalists and advocates.

Reason #5. Drive Revenue Growth

Driving revenue growth may take a back seat to goals like retention and cost reduction in this new study, but 17% of survey respondents still listed it as one of the top three reasons they set up branded online communities.

Business leaders have a variety of options for how their community strategy will impact revenue performance.

Some businesses include an online store and purchase-related calls-to-action within their communities, allowing them to generate more revenue directly from community members. Other companies take a more indirect approach, using discussions and new members to generate leads and drive demand for products, which can then be passed through the marketing and sales channels.

Branded Online Community Takeaway

While the motivation behind creating branded online communities can be as diverse as the businesses that launch them, the five reasons here are the some of the biggest drivers according to the latest research.

They drive companies' decisions because many of these outcomes are measurable. The strategies behind launching branded customer communities are rooted in improving the bottom line by keeping new and existing customers happy, as well as driving demand through advocacy, innovation, and consistent support.

Building a successful branded online community takes dedication and preparation, including choosing the right software and ensuring that it's easy and valuable for customers to join. Putting processes in place for community management, content creation, and customer support are keys to success.

This breakthrough study from Leader Networks and CMX, along with our day-to-day work with Socious customers indicates that aligning the community into your overall business goals is an essential part of your customer community plan. Companies that first define their business case and the reasons why the community is necessary are creating a foundation on which all other decisions can be made.

Get the metrics you need to track ROI in your online customer community.

Topics: Customer Communities, B2B Communities, Customer Retention, Customer Support

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