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3 Ways Online Communities Help Software Companies Drive Revenue

Written by Brian Sugarman on December 20, 2018 at 8:17 AM

Kids on go-karts who are very excited

As consumers, we know that brands that consistently deliver value and make our buying experience effortless will continue to win our business over time. In my household, for example, we’re more likely to buy add-ons like Audible and Amazon music because we know the same level of convenience we get with our Prime membership will exist.

Our relationships with companies like Amazon remind us of the high bar that’s been set for the modern day customer experience, not just in the consumer world, but also for business-to-business (B2B) sales. Whether consciously or subconsciously, this standard of service influences our expectations for our buying relationships with B2B technology vendors.

This is nothing new, by the way...although technology has changed how and where we buy, successful brands have always focused on delivering valuable products to their customers and making it easy for them to purchase. However, companies that compete in markets with little to no competition have found ways to be successful over time, simply by being the best or only option available.

Think old school cable television – with so few consumer options, your area provider could win your business despite a reputation of delivering horrendous customer service. Now, with the rise of Over-the-top (OTT) streaming subscriptions, I’ve found that the level of service and ease of doing business has actually improved with my cable company.

The software business model is another example with (historically) limited competition – until now. In a sea of growing competition, it pays to focus on your customers.

Why Community Should Be Part of Software Companies’ 2019 Strategy

With the cost to build software going down, the barrier to entry is much lower. Thus, more competition exists. Software companies are now more focused than ever on building long-term customer relationships, which is why they continue to invest in customer-centric teams that advance the relationship beyond a customer’s initial purchase period.

This is also why marketing, customer success, and sales organizations are investing in online communities to grow customer lifetime value. The business case for these buyers will show the potential increase in revenue from retention, upsell, and cross-sell opportunities.

Beyond the direct ROI, an online community will help your software company improve the way it does business with customers online. Online communities enable you to:

  1. Learn more about your customers’ needs

  2. Create better channels of communication that humanize your brand

  3. Create a culture of transparency with constant feedback loops

How does each one of these drive more revenue? By improving the customer relationship. Let’s explore.

#1: Communities Enable You to Learn More About Customers’ Needs

A Leader Networks’ study found that 69 percent of marketing and community leaders use their customer community to listen to member needs so they can market better. An online community, much like an in-person focus group, allows you to listen closely to your customers’ needs. This grants you the opportunity to better define your audience, market, and sell.

With good community management, you can guide customers to have specific conversations about your products, but you can position them to feel more like organic discussions.

Beyond a simple example like focus groups, online communities create a wealth of small data: actionable pieces of information that your Marketing, Sales, and Customer Success teams can use to improve the customer relationship.

Let’s quickly clarify stated vs. observed interests in the community:

  • Stated interests: things that customers directly tell us they’re interested in (like local networking or speaking engagements)

  • Observed interests: things that we infer about customers, based on behaviors and actions taken in the community

How does this help our teams? Let’s explore some examples.

For Marketers

Small data allows us, as marketers, to segment and improve personalization, based on what we know about customers’ interests in the community. This allows us to place dynamic content within the community that’s relevant and timely for the customer.

This data can (and should) be shared into your digital ecosystem (like marketing automation systems) so you can use data from the community to enrich what you know about customers to optimize your outreach.

For Sales

The same example above applies, except now we are passing community data to your CRM system. Your Sales team can get notifications when a customer interacts in the community. Perhaps that customer engaged in a discussion about an add-on product that you sell, giving the Sales rep a perfect opportunity to reach out.

Of course, your Account Managers will know when the right time to reach out is and will be better informed on how to address that customer’s needs. Hint: it takes finesse/discretion. No one likes a creepy outreach, but we do like when Sales helps and understands our pain points and needs.

For Customer Success

Community data factors into our overall customer health scores. Many software companies today use a tool like Gainsight for insights into customer satisfaction and the likelihood of churn. We know that customers who are active in your community are more likely to renew, and you can factor this into your overall customer health score.

First, you’ll need to decide which data points are worthwhile to track for your business. Once you establish them and integrate your technology systems, your community will start to produce a more comprehensive picture of your customers and their needs, dictating how you should respond.

Expert tip: If you see that an account has never created community profiles, or has very low engagement scores in the community, it may be a sign that they haven’t fully adopted the product. With this data in tow, your CS team can seize the opportunity to reach out to save that account’s business before it’s too late.

#2: Create Better Channels of Communication that Humanize Your Brand

As an organization, how are you communicating with your customers? As a consumer, how do you prefer to be communicated with? In the last section, we looked at using community data, but it’s important to think of community as more than just a sales or marketing tool. The best thing you can do with a community is to focus on engagement to build meaningful relationships with your customers, using community tools as an opportunity to show the human side of your company. This type of engagement will drive loyalty and retention, thus, revenue.

Most communication channels your company uses probably fall into these categories:

  1. Reactive (1x1 emails, support tickets, phone calls); designed to resolve issues

  2. One-way (marketing emails, NPS surveys, press release/corp comms); communication from customer-to-brand or brand-to-customer, but not both

An online community opens the door for a third category, which is two-way communication, through dialogue between brand employees and customers. The level of intimacy you would get in an in-person conversation can now be achieved online, at scale, in your community. Discussion threads also capture conversations and share the message both one-to-one and one-to-many.

To humanize your brand, be authentic.

It’s hard to stay interested in an online community if the discussions seem forced and the majority of the content tends to be self-promotional. Groups that operate like this, via social platforms or other means, aren’t very impactful for members because it all seems, well, fake.

On the other hand, a great example of authenticity in a successful community can be seen in author Jackie Huba’s work. She was one of our keynote speakers at this year’s Super Forum and her presentation revolved around how sensation Lady Gaga drives loyalty to her fanbase of “Little Monsters” through an online community dedicated to creating a safe space for victims of bullying to talk and seek support. Jackie points out that this community has become such a success because Lady Gaga (who refers to herself as “Mother Monster”) is actually present in the community, taking the time to respond to fans and be a motivating force for them.

If Lady Gaga can find time to engage, so can your CEO.

Bringing this back to the B2B world, your executive team has an opportunity through online communities to speak with customers, respond to their concerns, and win their loyalty by showing they care enough to respond and that they, too, are human.

If done effectively, this can build stronger relationships with customers that affect how they make purchasing decisions in the future. It’s one of many factors, but humanizing your brand can be a major differentiator that helps create buyer trust.

#3: Create a Culture of Transparency with Constant Feedback Loops

Speaking of trust, there’s a huge opportunity to use communities as a channel for your executive team to build transparency and open those lines of communication with customers. An online community creates powerful feedback and communication channels where customers can be transparent in their feedback on an ongoing basis, allowing you to own the conversation.

By this, I mean that the conversation can happen in private communities vs. public-facing channels, allowing you to structure the conversation and respond directly to the topic. When something goes wrong, your customers should feel empowered to communicate their frustrations in a positive and productive way, rather than bailing on your business without warning or taking to social media to voice their grievances publicly before cluing you in.

A community creates a private forum for customers to give honest feedback, allowing you to better understand their frustrations, make them feel heard, and look for ways to maximize their satisfaction and drive further business. On the flip side, when you have exciting product news, you can demonstrate value to your community by sharing this information with them first.

By getting feedback early, communities help you to stay agile, giving you ways to optimize the customer journey. Of course, you do also have to deal with that feedback. You can’t fix everything for customers, but you will be creating a culture of transparency with open lines of communication to your product and service teams. You should then define next steps, setting realistic expectations for the outcomes and making commitments on any deliverables.

The Time is Now: Is Community Part of Your 2019 Strategy?

Research leaders from CEB, now Gartner, show that it’s not over-the-top service that makes customers loyal – a true indicator of loyalty has to do with customer effort. Those brands that make it easier for customers to do business, by providing an effortless experience, see higher rates of loyalty. For software companies, you should be actively looking for ways to improve your products and make them easier for customers to use.

While the rise of community platforms is relatively new, the business principles behind them have been around for a very long time. Businesses have always listened to customers to market better, connect with customers on a sentimental/personal level, and take feedback to improve products…the technology just allows us to do these things at scale, online.

If you work for a software company today, the smartest thing you can do is to start building a community, nurturing customers, and looking for ways to develop customers for life.

Want to learn more? Download your copy of the Marketer's Guide to Customer Community ROI for strategies and tips on how to measure the impact your online community has on your business.


Topics: Marketing, Customer Experience, Customer Retention, Customer Success, Online Community

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