Many people ask how online communities can bring in new customers. It’s important, but communities aren’t just about growing your customer base. Part of a community’s value comes from something else - retaining existing customers.
It’s comparatively easy for customers to find alternative solutions to your product and switch. While customers can switch products, they can’t bring the community with them. Many organization’s see customer retention as a huge competitive advantage that saves their organization time and money in the long run - and online communities are an important tool.
According to The Leader Network’s new study, The Business Impact of Online Communities, many companies have shifted their thinking from only bringing in new customers, to working on customer retention. And community seems to be a factor in their shift in perspective and priorities.
From The Leader Network’s research, which surveyed hundreds of community professionals, they found 49 percent of communities generate revenue (29 percent of those realize a revenue of over $1 million). And, importantly, 36 percent of all revenue generating communities connect that revenue to customer retention.
These findings show that many companies have made the connection between customer retention, their community, and increased revenue/cost savings. Although not directly related to retention, the study also found that 45 percent of companies tied community to cost reduction.
Beyond making - and saving - money, 57 percent of companies surveyed by Leader Networks said that customer retention connected to community was their top digital competitive advantage. Unsurprisingly, this is particularly true for associations and nonprofits. Among that demographic, 74 percent saw retention as their top digital competitive advantage, versus 50 percent for other business types (although, 50 percent is still a significant swath of that market).
What makes community such a powerful tool for retention? According to the Cognizant Connections community team, it’s all about fostering strong relationships:
“When making the case for business impact, especially with leadership, highlight the community’s ability to create strong and long-term relationships – providing an edge over competitors. Demonstrate its ability to analyze customer behavior and pain points to develop state-of-the-art, first-to-market solution offerings. Community provides a platform for new ideas and thought leadership to emerge.” (Business Impact Study, Page 7)
It may seem basic, but it’s true - even in this digital age, customers care about being heard and maintaining relationships, with fellow customers and the organization whose product they love. That’s why, when done correctly, community can have such a visible, positive impact on your organization’s retention goals.
Now the question becomes: does your community retain your customers?
This can be tricky, since there isn’t an industry standard for online community metrics. One important step in tracking many metrics in your community - even beyond retention - is to make sure your CRM/AMS syncs with your online community. Leader Networks found that 37 percent of the organizations they surveyed hadn’t taken this important step - think of the information and connections are they missing.
Next, rather than just tracking overall community member growth or new member logins, look at renewal rates (if applicable) or your net promoter score. These metrics give you a deeper understanding of your customers and your community’s value to them.
Like any community initiative, a clear goal - like increasing customer retention by X amount - helps you decide what exactly to track. Using data is a crucial piece in creating a strong community.
Either your community contributes to customer retention, or it doesn’t. What do you do with that information?
If your community isn’t where you want it to be, start tweaking your community tactics - slowly - and experiment with increasing customer retention. Where are you losing people? Perhaps you should work on welcoming new members and building a strong relationship from the beginning. Or, it could be that integrating support more closely with your community funnel your customers back to the community more often.
And, if your community is contributing to customer retention, don’t think your work is over. How can you get that number to continue moving up and to the right? Or, if you’re done thinking about retention, what other organizational goals can your community support and how can you begin tracking those?