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Why Online Communities Still Aren’t a Top Business Strategy (And How to Change That)

Written by Katie Bapple | on March 30, 2017 at 8:30 AM

Online communities managers need to focus on active advantages and better reporting to highlight business strategy.

Dear online community professionals,

We have work to do. Today, we are failing to showcase the inherent value we believe online communities can provide, because too many of our arguments are unproven. Beliefs are not facts. Beliefs don’t drive revenue.

We need to reach further, grow the ranks of our advocates and allies inside the office, and push ourselves to learn the information we so desperately need to grow and succeed.

I get it. Few of us exist in companies that openly embrace community as a compelling, wondrous silver bullet of a business strategy. Even fewer exist in organizations that tout transparency. This combination of factors creates profound hurdles in identifying the cost of community and the monetary value of a registration, or a post, or an event. No wonder so many of us lack the invaluable ability to track and attribute revenue, or even success.

We all need to take up the call to establish why and how an online community can – truly – be a successful business asset.

How Online Communities Impact Competitive Advantage

The 2017 Business Impact of Online Communities study shared the perceived connection between online communities and competitive advantage, per 271 marketing and community professionals.

Customer retention is the top reported source of competitive advantage for online communities.A large majority of participants, most at the manager level or above, reported reactive methods as their main source of competitive advantage. The two most commonly reported factors – “Customer Retention” (57%) and “Customer Intimacy” (48%) – are inherent benefits of a well-managed online community. They can boost customer lifetime value (CLV), building brand loyalty and advocacy. This is good news.

However, areas with direct causation, including “cost reduction” (18%) and “better risk management” (5%), were minimal considerations from the same audience, implying a disconnect in advantage versus outcome.

Image credit: Leader Networks 

The Differences Between Associations and B2B/B2C Companies

Based on the top reported meanings of digital competitive advantage, that data is heavily skewed based on organization type and business operations. However, both associations (74%) and B2B/B2C companies (50%) ranked “Customer Retention” as one of their top sources for competitive advantage.

While this is not surprising news from either segment, the fact that many B2B/B2C companies rated reactive advantages higher than more proactive options, especially those perfectly suited to their specific business models, raises questions. Leveraging opportunities to drive ideation and innovation (40%) or brand, product and service awareness (40%), for greater upsell and informed purchasing decisions (37%), would be more strategic routes for B2B/B2C companies. Additionally, well-run communities that utilize these advantages naturally see increased rates in customer retention and customer intimacy due to a greater understanding of customer needs, involvement and insights.

Are Reported Community Results Solid – Or Are They Speculation?

The study also highlighted what appears to be a persistent handicap for communities trying to achieve grand outcomes and business results: ineffective reporting practices and procedures.

This was further substantiated by Leader Networks, who stated “…when asked how [the participants] measure community success, they provided the fewest examples in the customer retention and satisfaction arena,” – the two areas where the most emphasis was placed.

Image credit: Leader Networks 

A lack of CRM integrations is an obstacle toachieving competitive advantage with online communities.So I must ask: how many of these reported outcomes are mere speculation? 73% reported on lack of access or know-how to obtain and analyze business-relevant metrics.

Furthermore, a quarter of the respondents didn’t know their total community overhead costs, or if the community currently generated income. (Remember, these were community professionals predominantly in senior management.)

A quarter of survey respondents don't know the annual cost of their online community. Almost a quarter of community professionals don't know if their online community generates revenue.

Image credit: Leader Networks 

Unfortunately, these circumstances aren’t isolated to these participants. Additional studies published in the last year shed more light on how widespread this issue is in the world of community management. The Community Roundtable’s State of Community Management 2016 report, derived from a sample of 339 community professionals, discovered that “half of best-in-class communities regularly track activity, behavior change and outcomes, compared with just 19% of the overall sample.” You read that right, just 19%! The 2017 Community Value and Metrics Report from CMX, which focused on B2C/B2B branded communities, reported that only 44% of their participants “had metrics in place within six month of launching their community” (a number that did drastically increase when accounting for tenured communities.)

Community Managers Can Solve the Reporting Problem

We can change this. Data is an integral part of understanding your community’s greatest challenges and successes. It sets the baseline for proactive decision-making and creates a case for decision makers to support greater business strategy integration and support. Finding the data you need is easy if you know where to look, but utilizing it in a meaningful way can be painstaking if you don’t know where to start.

Not sure what to measure? Start qualitatively by asking colleagues in various departments what they would define as success for the community. Ask your customers or members what they would find compelling, what keeps them up late at night, or how they currently fulfill their social needs.

Then, decide what actions or outcomes will represent these objectives. How can you measure that? If you get stuck, ask for advice. You may be surprised at the hidden skillsets you can leverage throughout your company if you simply dedicate the time to find them.

Common Online Community Metrics

Most organizations measure a variety of community data, some with the purpose of tracking participation and use case trends, others to drive strategic decision-making. The best metrics, however, are those that illustrate a compelling business case. The examples below reflect each type.

Online community managers should measure traffic, activity, member and customer, and ROI metrics.

For most of these data points, your online community platform provider will have built-in reporting. Don’t hesitate to reach out to your primary contact to learn what may be available.

Community Managers Are Leaders

Remember this – we are trailblazers of the digital age. Embrace continuous learning by finding a mentor, taking an online class and reading avidly about measurement, metrics and data analysis. Embrace the challenge we face together, as an industry, and claw your way to a solution. We still have so much to accomplish, but this is a business case we can't afford to ignore.

The acceptance of online community as a key business strategy has come so far, yet we have not yet reached the pinnacle. And that's exciting. 

 Original research explains the impact online communities have on businesses.

Topics: Online Community Management, B2B Communities, Associations, Online Community

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