Experts Speak: Building a Business Case for an Online Community

Branded online communities can provide internal and external stakeholders a place to communicate to better themselves or their businesses, but getting the go-ahead to launch these digital meeting places can be difficult at best. 

Not only do businesses need to identify where the community will be hosted and who will manage it, but also where the funds to start a community will come from. As a continuation from our December feature, "Creating Connections via Communities," Website Magazine asked community professionals for their best advice about building a business case for this unique and potentially rewarding opportunity. We have curated their answers below as well as some quick background about their experience with communities. 
Sean_Kilian_PicSean Killian is a product marketing manager at Enola Labs Software, a full-service technology partner organization based in Austin, Texas.

His insights are below.

What is your experience with branded online communities?  

I've helped create online communities for companies both large and small. The largest company I've worked with in building an online support community in the social customer relationship management (CRM) space is Samsung. 

What are some arguments marketers can make for why their organizations need an online community to support internal or external stakeholders?

The best argument I've found is using the online community as a central space for customer relations. This allows you to contain and control the conversation surrounding your brand. A central location for customer feedback also improves engagement, response time and overall customer experience. 

What data should back up these arguments to build a strong business case?

The best way to convey the benefits using data would be a a current state cost analysis versus to-be state. If we use customer relations management as an example, call centers are expensive to operate and organizations have these numbers. If you can create a to-be cost analysis of how these costs can be reduced utilizing an online community to facilitate tier 1-3 support inquires, for example, you can easily create a return on investment (ROI) analysis of implementing a program for your organization. 

billAs president of Finch Brands, Bill Gullan is one of the marketplace's premier brand developers. A world-class speaker, writer and facilitator, Bill's point of view is highly sought after by clients and in the worlds of media and academia. Across a nearly 20-year career, his work has influenced hundreds of brands - including particularly powerful recent successes for Everlast, Conair and ThinkGeek. His insights are below.

What is your experience with branded online communities?

With clients coming back again and again for custom insights projects, Finch Brands saw an opportunity to increase the power and efficiency of their research programs. This led us to communities as an offering, which we use to engage consumers, drive innovation, turn research from a string of projects into an integrated insights program and support many different types of client decisions. 

At Finch Brands, the communities we operate span many topics from health care, to nutrition, to well beyond. 

What are some arguments marketers can make for why their organizations need an online community to support internal or external stakeholders?

Technology has fundamentally altered the relationship between brands and consumers. Given the rise of consumer connectivity, being customer-centric is paramount to brand success. This includes integrating the voice of the customer into decision making processes that inform sales, marketing, operations, product development and beyond. 

Most companies have a steady flow of decision points across the aforementioned functional areas, yet traditional market research leaves them with two imperfect options. Either invest time/money in fully customized research every time a question arises or simply go without data that might make for better design and decision-making.

Custom research is time-consuming. It is expensive. It yields pockets of specific knowledge rather than a cohesive, ever-growing store of insights. It doesn't really engage consumers beyond the time it takes to collect that focus group check or enter the sweepstakes for completing a survey. 

Enter branded communities. By recruiting a large number of consumers, and engaging them often, brands are better able to inform their decision-making with the voice of the customer. The information communities provide is richer than traditional research because it allows for ongoing, real-time feedback, ideation and collaboration. These insights build off each other as opposed to providing a glimpse in time and can be iterative. Best of all, compared to the cost of running one-off market research studies, the investment required to build and manage a community has been shown to be approximately 40-50 percent less.

Branded communities, however, are not just about moving traditional market research online; they are a new, collaborative, contemporary structure with which to yield game-changing insights while engaging consumers.

Along with insights activities that are focused on learning, the best community managers also program engagement activities to keep the community involved and drive brand advocacy. The net effect is that community members see themselves as consultants to the brand and thus provide the kind of deep learning typically unavailable in traditional research or through social listening alone.

Choices companies make that are based on consumer input result in greater demand/satisfaction among those who provided input, but also among the millions more who feel the same way as community members.

The bottom line is that insights communities simultaneously address two of the most important marketing issues today: (1) how to make brands more consumer-centric and (2) how to make market research more efficient, contemporary and valuable.

What data should back up these arguments to build a strong business case?

Cost: There is a pretty clear financial case to make, as the investment associated with insights communities can shave up to 50 percent off the cost from doing the same volume of research in an ad hoc way.

Time: Communities save weeks compared to standard research timelines, primarily due to not having to start from scratch with recruiting each time.

Management: When well-managed, communities make research teams and programs much more efficient, which can yield savings (both financial and emotional) at the staffing and vendor levels.

Comprehensiveness: Since they are ‘always on,' companies can research topics that were previously beyond the ability of traditional research programs. Get in and out of the field quickly, get quick reads on tactical topics, etc.

Insights: Assuming we believe in the power of market research to inform key decisions, communities amplify these business benefits.  
 AlexBowenAlexandra Bowen is the global head of social and community marketing at OutSystems, a low-code platform to visually develop an application, integrate with existing systems and add own code when needed.

Her insights are below.
What is your experience with branded online communities?

I have worked as a community manager, social strategist and developer evangelist in the tech industry my entire career. In my day-to-day life, I help companies embrace community as their core business driver and advocate for the needs, and excellence, of their communities. I am an architect of digital and community experiences.

What are some arguments marketers can make for why their organizations need an online community to support internal or external stakeholders? 

  • A flourishing 21st Century company is one that puts community in the heart of their operations. 

  • A successful community has buy-in from executives and resources. Lack of support and resources are the most common reasons why a community fails. Sometimes that buy-in takes time, so we would work together to build a business case before we break ground. I believe that brands have to genuinely care and be excited about their community.

  • When creating and fostering community around a brand, it means we are putting your customers and members at the center of focus and including them as an important part of your company journey. When you put them first, it means that you are listening to them, and giving them a platform and voice. That allows for ways of engagement with other members and with your brand. 

  • Broadly, community can be loosely defined as a method to organize and grow individuals around an idea, brand, place, event, topic, purpose, interest or goal. Traditionally, as we are all aware, communities are in forms such as: neighborhoods, districts, alumni groups, places of worship and even sports fans or "super fans"! Really, community can be built around anything, and everything! Don't believe me? Look up Bronies; it's the 21st century and in the age of the Internet, there is a community out there for everyone. 

  • Community does some great stuff too for your bottom line like impacting customer satisfaction and retention. It also reduces support costs, creates brand champions and helps a brand gather ideas to fuel future products and services. Community has a place in every brand and business whether it's through social media, forums, customer support, flash mobs, conferences, live chats or events. Communities are here to stay. Not only that, they are often the most underutilized part of a brand and business, and it can help strengthen your internal culture too. 

  • Community members spend more and have a higher adoption rate than non-community members. As a brand, gaining customer trust, improving customer interactions, operations and service (all of which improve the customer journey) are ways a community brings value. 

What data should back up these arguments to build a strong business case?

  • By 2016, 89 percent of companies expect to compete mostly on the basis of customer experience, versus 36 percent four years ago...

    " Gartner (2015)

  • An overwhelming 86 percent of survey respondents believe that having a branded online community will positively impact core operations, while 85 percent believe it will improve the and increase trust.

    " Leader Networks and CMX (2016)
vanessaVanessa DiMauro is CEO of Leader Networks, a research and consulting firm that helps companies use digital and social technologies to gain competitive advantage. She is a strategist, advisor, researcher, author, and keynote speaker. Vanessa is a pioneer in the field of online communities and in using digital business solutions to gain customer insight and increase revenue. She has shaped the digital business strategies of some of the world's most influential companies, including Cisco Systems, Hitachi, Hewlett-Packard, Royal Dutch Shell, Cognizant, and the World Bank. Her insights are below.
What is your experience with branded online communities? 

I spent my 25-plus year career founding, running, advising and funding online communities. Together this represents 250 online communities, 20 million users for 110 organizations, training of 10,000 online community managers, and writing three books, four eBooks and 150-plus reports on community.

What are some arguments marketers can make for why their organizations need an online community to support internal or external stakeholders? 

1. To help customers get more value from their products and services:
Especially today, as software-as-a-service and other cloud-based systems grow, businesses' utilization of the installed software they've bought has become more important ( according to Flexera Software's 2016 Software Monetization and Licensing Survey, 51 percent of executives at software manufacturers and users admitted they don't track customer usage).  Here, communities can be instrumental in helping increase customers' understanding of the products they purchase, troubleshoot problems when they occur, and ultimately increase customer use and value of products and services, improving their asset management practices.

2. To improve the way an organization enhances its products and services: Through online communities, organizations can learn more quickly about the things their customers wish they had from their existing products and services, rather than waiting for the annual customer conference or satisfaction survey.

3. To develop better new products and services: When an organization engages in sustained collaboration with their customers, it can create better roadmaps for future products and services.

4. To market and sell more effectively: When forward-thinking organizations leverage community early in the customer journey, when potential buyers have questions, need to learn from existing customers about their experiences and are weighing their options – communities can be the perfect place to bring pre-sales leaders and potential customers together.

5. To reduce the cost of post-sales service: What customer would want to wait to talk to a support professional when he or she can self-serve through a support portal and customer community, getting answers (and experiential “how to” details) from others? Here alone, communities can reduce support costs and increase customer satisfaction.

6. To control the social media conversations about their firms: While there's a time and place for public social media campaigns, many organizations prefer to hold their deeper customer conversations in private settings. This keeps competitors from gaining too much information, while also enabling the organization to foster sustained support and engagement.

What data should back up these arguments to build a strong business case?

In my recent 2017 research study, ‚Äö√Ñ√∂‚àö√ë‚àö‚à´The Business Impact of Online Communities,‚Äö√Ñ√∂‚àö√ë‚àöœÄ we found: 
  • almost half (49 percent) of communities report revenue gains from their online community.  
  • 55 percent of communities five years or older generate or influence more than $1 million
  • 36 percent of online communities influence revenue via customer retention and satisfaction, which is how the majority of marketing and community leaders define competitive advantage.
We also learned 25 percent of marketing and community leaders ‚Äö√Ñ√∂‚àö√ë‚àö¬® one in four ‚Äö√Ñ√∂‚àö√ë‚àö¬® report that they don't know or don't track their community expenses. And almost 40 percent do not know whether their community saves their organization money or not. 

Too often, organizations build online communities based on a single use case ‚Äö√Ñ√∂‚àö√ë‚àö¬® such as customer support or employee advocacy ‚Äö√Ñ√∂‚àö√ë‚àö¬® not a full-blown business case that articulates a clear path to an ROI.  As a result, community managers put their time and attention into the tactical aspects of managing their communities instead of focusing on the business impact that the community is making.

The catalyst for change usually occurs when the community graduates from being a social experiment and becomes aligned with a line of business. That's when an executive steps in and wants to know how the community is advancing his or her business goals.  And that, in turn, forces the community manager to articulate key performance indicators (KPIs) and success measures.

It's time to put the horse before the cart. By building a solid business case ‚Äö√Ñ√∂‚àö√ë‚àö¬® including a revenue model ‚Äö√Ñ√∂‚àö√ë‚àö¬® at the outset of the process, community managers can measure what matters from the get-go. You won't know if you're achieving the benefits of your business case if you're not tracking basic financial data.  

The mandate is crystal clear: know what you're spending and know what you're saving.  Even if your community is generating revenue, without a clear picture of spend and yield, it's impossible to calculate ROI. Revenue is not dependent on community maturity.  Communities that generate or influence more revenue do so because they have developed a financial model for tracking revenue.  With a solid business plan, sound financial metrics and integrated customer data, marketing leaders can cut to the chase measuring and reporting revenue sooner, rather than later.   
poojaPooja Krishna is an entrepreneur and business mentor. An MBA with 23-plus years of business experience, she's co-founder of Maroon Oak, a free, digital career platform for women and a founder at Win Thinks Consulting, where she speaks and writes about strategy, brand building and future ready career solutions. As a classroom mentor, she loves teaching students across the U.S. about job skills and entrepreneurship. Her insights are below.
What is your experience with branded online communities? 

My co-founder and I run a robust and very active networking community for women entrepreneurs and professionals on the Web. In addition, we manage a Facebook group and moderate several others for entrepreneurs. Plenty of our members not only share information, but also the business challenges they face. Peer mentoring is yet another advantage: the tips and tools people share are a real treasure. Many members have gone on to be advocates for our company by way of referrals and recommendations.

I'm also a facilitator for a student mentoring forum, with conversations and industry chats focused on entrepreneurship and job skills for high school students across the U.S.

What are some arguments marketers can make for why their organizations need an online community to support internal or external stakeholders? 

Thanks to the growing ‚Äö√Ñ√∂‚àö√ë‚àö‚â§social think,' online communities have become extremely valuable for brands moving from a ‚Äö√Ñ√∂‚àö√ë‚àö‚â§nice to have' to a key requisite. It's not just a great channel to build brand loyalty and support but it's also a  source of valuable feedback on products, customer service, corporate communications and the like. Communities that drive engagement will also ultimately see the impact on sales and revenue. That's why forums and Facebook Groups continue to thrive.

Communities are the new focus groups. Several brands have also used crowd inputs to gauge sentiment on issues like new logos and product launches. Many companies are also using community reach, especially on social media to share CSR initiatives that show their humane side like Empower-Mint (for voting rights) from Ben and Jerry's which was a great play on their own product line. Another unlikely but extremely effective example is the review and Q&A platform on Amazon which has had an exponential effect on driving both brand value and sales.

What data should back up these arguments to build a strong business case?

While some of the value of online communities is intangible, especially when it comes to brand worth, there are many quantifiable metrics too. Social media metrics on reach and responses are very useful because they are readily available with the leading channels. Campaign successes for building brand value e.g. custom hashtags on Twitter and Instagram like #tweetfromtheseat from Charmin or #SFBatkid from make a Wish Foundation are noteworthy - the latter not only captivated an entire city, but actually had a retweet from President Obama the same day.