Research from Forrester found that 60% of businesses have a branded online community and 15% were planning to add one in the following 12 months.
Some companies rely on third-party platforms like Facebook to engage their customers. But with a website, marketing team, social media team and tech team already in place, should businesses focus on driving users to their own online community?
Here are the top five reasons companies should build a strong online community.
1. Reduce support costs
Anything that increases revenue or decreases costs is a win for businesses of any size. Branded online communities address both these objectives. A 2012 study by the University of Michigan revealed that users who engage in online communities spend 19% more than those that don’t. This increase was attributed to a willingness to pay a premium for goods and services as well as the increase in buying intention.
On the flip side, industry leaders repeatedly said that their online community reduced their support costs. The reduction in costs was attributed to the ability for community members to solve each other’s problems, rather than contacting the company’s support staff.
2. Increase retention and engagement
People love to be connected to brands and other customers. This connection builds loyalty and loyalty increases retention.
Tim Vogel of BUX, a company focused on the game development market, said that forums are vital for customer retention. “If players are getting bored with the game,” he said, “they could still stick around for the community, which buys you time to add new features and content before they churn.”
Customers also like to know that their concerns and ideas are being heard. Even if their ideas are not adopted, they will be more loyal to the brand when they get a direct response from the company.
In online communities that influence 16% or more of a company’s revenue, 64% have strong community engagement. In contrast, communities that influence less than 15% of a company’s revenue, only 26% report strong engagement.
3. Product feedback
People love to share their ideas. Forums are a great way for customers to tell you exactly what they want and also let you know if they are having any issues. These interactions are often the source of some fantastic product enhancement ideas.
For many companies, the cost of obtaining customer insights through surveys, market research and direct calls is expensive and time consuming. While these activities are often well worth the effort, the same result can be obtained by creating and cultivating an active online community.
Aaron Levie, CEO of Box, said: “You’ll learn more in a day talking to customers than a week of brainstorming, a month of watching competitors or a year of market research.”
4. Promote other products
One of the most significant benefits of the traditional marketplace is the ability to cross sell a variety of products. Traditional social media platforms enable a company to broadcast new product releases and promotions. However, the reach for a single Facebook post is often less than 3% of the total followers.
By building a branded online community, companies are able to establish a virtual marketplace where they can promote directly to their customers. Since most online community members are engaged, paying customers, it makes it the ideal location to promote new products and services.
Online communities also have lower user acquisition costs when they are easily searchable via Google. This makes the community a good new user acquisition strategy as well.
5. Better overall impressions
The final benefit of a branded online community is a better overall impression of the brand. The community serves as a source of information and a way to communicate with other customers.
When customers visit the online community, quickly find good information and hear positive comments, it immediately increases their overall impression of the brand.
Customers may have a concern with a product or service, but when addressed quickly and publicly the concerns are assuaged and a positive association with the brand is maintained.
The brand also benefits from the enthusiasm and support of customer advocates. These are typically the most active participants in a forum and they are also the most loyal to the brand.
The branded online community is the perfect platform for companies to build real and meaningful relationships with customers and prospects. These relationships foster continuous engagement and loyalty.
Online communities also create the opportunity to sell without the “sell” and make the company more approachable. People buy from people.
In fact, 18% of participants in a recent study indicated that over 30% of their organisation’s revenue is influenced by their branded online community. For these reasons, branded online communities have become an integral part of a sound business strategy.
Sourced from Brian Pontarelli, CEO, Inversoft