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The Business Case for Starting a User Group

Written by Kaila Timmons on February 23, 2016 at 8:30 AM

Why Companies Build User Groups

Higher Logic has helped dozens of companies plan, manage, and grow user groups in the last decade. From that experience, we can definitively say that you can tell a lot about a company by how they view their user group (or the idea of starting a user group if they don't have one). 

Commonly user groups, like associations or other membership organizations, are clusters of people that share common interests, expertise, and experiences.

In the case of user groups, that shared experience revolves around your company, products, or services. User group members get access to exclusive resources, networking opportunities, and events which can get them excited to be part of something and help keep them informed about your product offerings and company.

Given how long user groups have been part of the customer relationship landscape, you'd be surprise how few people can articulate the business value of starting a user group.

At Higher Logic, we usually hear reasons like, "our customer asked for one." Sometimes that is enough to get executive buy-in. However, more often than not, you're going to need a stronger case for investing in launching  user group.

The following guide will highlight how to build a solid business case for your user group strategy that you can use to start your user group or show your value to the business, if you manage a user group today.

User Groups Come With Pros and Cons

Since user groups began popping up for software and other technology companies more than three decades ago, company executives have had a love-hate relationship with user groups.

On the one hand, user groups keep customers more informed about and engaged with your products and services.

On the other hand, by nature user groups are very collaborative. Companies can no longer make decisions in a vacuum without consequences. There's usually some level of accountability to your community of customers. Executives and user group managers have to deal with loud voices, diverse personalities, and customer expectations on a level that they wouldn't have to work with so closely if their user community was not given a seat at the table and a voice in making decisions that impact their organization.

The Customer Community Fallacy

Many executives live behind the customer community fallacy. This fallacy says that, if I don't engage my customer community, then I don't have a community.

Often, executives don't want to deal with their customers having a voice. Although it adds complexity to your customer relationships and strategic plans, it is difficult to make market-driven decisions and build healthy customer relationships if you bury your head in the sand and pretend that your community isn't there.

How User Groups Engage Customers

If you have customers or partners, whether you like it or not, you have a community regardless of how or if you engage them. This frame of mind is very important when building the business case for starting a user group.

Your user group is often the vehicle that gives a formal structure, boundaries, and rules of engagement to your existing community of customers. Many companies that don't have a strong user group are finding that customers want a place to share ideas, discuss challenges with other customers, and develop their personal brand as a leader in your product community or your niche industry.

The reality is that, in today's digital environment, your customers will find ways to connect with each other, support each other, and share best practices. Your company has a choice of whether to be involved in that process, support those relationships, and host those conversations. Or not be involved and let them happen often outside of your company's view.

Is a User Group Right for Your Company?

Starting a user group is not a good fit for every organization at this time. Major considerations for whether or not to launch a user group are:

Management Mindset

Do you want to deal with customers? Do you want to give customers a channel for interacting with you, your product development team, and your other executives? Do you want customers to develop expectations that their voice will be considered when you make decisions about your platform, services, or company direction?

Capacity for Community Building

The second consideration is your capacity to manage, nurture, and grow your user group. With everything else that the people inside the company have going on, can you afford to divert resources to managing the user group community, assessing feedback ,and planning engagement opportunities, such as content events and peer-to-peer interactions?

If you understand the fundamental nature that you have a user community today and you'll be able to support a user group, both in disposition and capacity, then you're ready to begin building your business case for starting a user group.

Creating Your User Group Business Case

Like any community-building strategy, companies run into trouble when they launch a user group for the sake of having a user group.

Find the Overlap of Customer Needs and Company Objectives

There's a balance that must be struck between what your company is trying to achieve and what your customers need. If you put too much emphasis on what your company needs, your customers won't see the value of participating in your user group. If it doesn't clearly benefit them, customers won't see a reason for contributing or engaging. Thus, they'll will spend their time in one of the many other communities that are part of their work and non-work lives.

If you put too much emphasis on what the your customers want to get out of your user group, you risk not being able to support and justify the investment that your company is making in time, people, and tools to run a user group. You'll eventually lose buy-in inside your company and may have to shut your user community strategy down - resulting in embarrassment, brand damage, and potential loss of customers.

Be very intentional in your user group design and management to both deliver benefits to your customer, reassuring them that this is where they should be spending their precious time, and measurable benefits to the company, so that you continue to get funding and support for your user group initiatives.

So, what does a user group business case contain? The following are six business outcomes around which to build your case for your company's user group.

Outcome #1) Win More Deals

We work with many businesses that highlight their user group during the sales process. If your prospective customers are comparing two companies with similar products and one of them has an active user group, your prospective customers may give preference to the “product + user group†proposal vs the product-only option.

In addition to the social proof and confidence in their purchase decision that an engaging customer community gives prospects, user groups are fertile places to identify and recruit customer advocates. Increasingly, buyers trust their peers much more than they trust your sales and marketing teams.

According to Nielsen, 84 percent of consumers across the world claimed customer advocacy to be the most trustworthy source of advertisement.

Your customer advocacy corp can play a big role in helping you get found by generating content and spreading your ideas through activities like case studies, testimonials, and joint presentations.

Outcome #2) Generate More Revenue Per Customer

For many business-to-business companies, getting customers to make additional purchases after the original sale is central to their revenue model. This may include professional services, product upgrades, and additional products.

Companies leverage their user groups to land and expand because customers are paying closer attention, relationships with customers are stronger, and account managers have more rich insight into which customers may be interested in additional solutions.

Outcome #3) Increase Customer Retention

Make your user group the foundation of how you company will build and maintain strong relationships with customers.

With more rapport with your customers comes higher trust and customer retention. Your customers know you. They have greater insight into how your company works. And they understand that you are doing everything that you can to make them successful.

User groups also give you the opportunity to create super advocates by offering members of your community volunteer leadership positions. Customers who serve on boards, committees, and advisory councils will rarely make the decision to forgo their status in your industry only to have to start building their reputation from the ground up with a competitor.

Outcome #4) Create More Profitable Products and Services

One of the primary reasons for starting a user group resolves around product feedback.

Your customers want to aggregate their voice and have their feedback be central to your product planning process. The marketing and product management team at your company wants a consistent stream of market data to uncover problems your company can solve, make data-driven decisions, and validate ideas.

Take advantage of your user group's online and offline engagement opportunities to collect structured market data lie surveys, as well as anecdotal insights.

Outcome #5) Strengthen Your Partner Program

For many companies that Higher Logic works with, their user group helps maintain better relationships with not only customers, but partners too.

Plan out the role that your partners will have in your user group, beyond sponsoring your online community and events. Find ways to get your partners involved that benefit your customers, as well as your partners. Will you be able to attract additional partners in your market by creating a unique opportunity to build relationships?

Your customers will get added value from people in the industry that they interact with in your user group and your partners will appreciate the exposure and access to your customer base.

Outcome #6) Get More Customers to Do What You Want

Finally, think about all of the other important things that you need your customers to do once they initially become customers.

In addition to the conversion points listed above, these are actions that your business model relies on, such as using your product to get tangible results, using the right support channels, and attending customer events and training.

An analysis conducted by Gallup found that customers who are fully engaged generate an average of 23% more revenue and profitability. When customers are more informed and on the same page regarding your solutions and company, they are more likely to convert on your calls to action.

User Group Planning Takeaway

Starting a user group is not the right strategic move for every business. However, if you have the management mindset and capacity to do it right (or hire the right people to do it right), the business benefits are clear.

Use your "business case lens" to evaluate your options and develop your strategy. Tie your user group launch and management plans to the six business outcomes outlines above. This framework will keep you focused, help cut out waste, and ensure that you a building a case for your user group that aligns with your company's core goals.

Original research explains the impact online communities have on businesses.

Topics: B2B Communities, User Group Communities, User Group Management, Online Community

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