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The Ultimate Return On Investment: Online Communities

Justina Fenberg

March 9, 2020

The Ultimate Return On Investment: Online Communities

The Ultimate Return On Investment: Online Communities

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What if you could get a 6,469% ROI on your marketing efforts?

This is the average ROI that online communities are generating. Brands are using these communities to make prospective customers familiar with and trusting of their brand and build a stronger, personal relationship with current customers.

These communities can be used to innovate products, reduce support costs, and get more sales.

If you’re thinking that your brand isn’t community friendly—think again.

DEWALT, the power tool company whose drill is probably in your closet, says they saved $6 million in research costs by launching their community.

The DEWALT community became a free focus group that gave the power tool company open feedback that led to major product innovation and reduced support costs.

The University of Michigan looked at the relationship between online communities and sales and found that customers spent 19% more after they became a member of a brand’s online community.

What are online communities and how are businesses getting these results from them?

Here’s everything you need to know.

What is an Online Community?

An online community is a group of people who interact with each other on an online platform. These communities can range from the 1+ billion-person Instagram community to a 10-person community of coffee lovers that rates artisan cafes in their city through a private Facebook group.

There’s a huge range in how an online community can scale, and understanding what type of online community is the most beneficial for your brand is the first step in building your own community.

What kind of community does your target customer want?

Types of Online Communities

The type of online community that you choose to create is going to be the answer to the above question, what community does your customer want? Your artisan coffee community doesn’t want to share their coffee tasting experiences with 1+ billion people. They want an intimate group of coffee lovers who know what they’re talking about and have a similar palette.

On the flip side, bloggers making a full-time living sharing their lifestyle are more than happy to try to grow their brand’s community as large as possible within the massive Instagram community of 1+ billion users.

There are two types of online communities:

1. Public social networks.

Think Instagram, Facebook, Twitter, TikTok—even Vine (RIP) was a massive online community. Public social networks are online communities that only require someone to have an account to be part of the community. There aren’t many guidelines or restrictions when it comes to who gets to be part of this type of community.

2. Branded communities.

This type of community is the opposite of a public social network. You’ll need to provide more than an email address and password to get inside of the community. Imagine SOHO house, or a private members club, but online. You’ll need the right credentials (experience, common interests, location, etc.) to have access to the community—even if it’s on a public social media platform.

Advantages of Starting a Branded Online Community

Having an online community is like inviting your customer avatar into your virtual store and having them come back every single day thereafter. When you create an online community that fits what your customer avatar is looking for (in relation to your products), you’ll put them into your ecosystem and give yourself new opportunities to learn about them.

Here are the advantages created for brands with online communities:

1. Drive product innovation.

Your customers are the best people to tell you what product improvements need to be made. They can tell you what they love, what they hate, and what they never use. Your online forum is a megaphone for your customers as to what you can do to improve your product for them.

It may feel scary to have them sharing their feedback (good and bad), but this vulnerability is where you can upgrade from Version 1 of your product to Version 5 faster than you would have without the community.

2. Get to know your customers.

You can also use this megaphone to understand the before-and-after state of your customers. You’ll notice patterns in the way they describe their problems that you can use to improve your copy. This makes the copy more relatable to your customer avatar and shows them that this product is the one they’re looking for.

Your copy should show them that your product is more relevant to them than your competitors’, and what better way to do so than with their own words?

3. Reduce support costs.

Inside your online community, look for patterns about the before-state of your customers as well as their after-state. Their after-state comes once your product has solved their problem. Your goal after-state for your customers and the actual after-state may differ if your customers are running into issues with your products.

Your online community can not only be used to answer questions that customers might have, but can also be used to see what reoccurring issues customers are having and fix them. This will reduce the number of tickets coming into your customer support team.

4. Product feedback.

Similar product complaints or questions in your online community should never be passed over. While they are great for reducing your support costs, they’re even better at improving your product in exactly the way that your customers want.

Don’t let these complaints and questions get lost — take note of them and put them on your “Product Improvement Notes” to-do list.

5. Increase engagement.

Online communities can boost your engagement in several ways. If you’re the blogger we wrote about earlier who has grown a substantial following on Instagram, having your community tag you in their Instagram story to share a daily win, how they’re using a product, etc., boosts your engagement. You can also have people comment on your Instagram posts, post in your Facebook group, reply to your tweet, etc.

All of these actions from other users are going to increase your account’s engagement and put you in front of new users.

7 Steps for Building an Online Community

Building an online community is a valuable marketing strategy. The brand with an online community giving them constant feedback to improve their copy and product is going to have a huge advantage over the brand trying to put together focus groups or customer research.

But that doesn’t mean it’s a hard process. Community platforms (including social networks) are in full support of these communities and have made it easy to create a community for your brand. Most of the work behind building a community is in figuring out its purpose and how you’re going to promote it.

Here are the 7 steps to build your own online community.

  1. Identify key stakeholders for the online community.
  2. Define the purpose and goal.
  3. Select a community platform.
  4. Build a member profile.
  5. Develop rules and norms.
  6. Set up your community.
  7. Identify key stakeholders for the online community.
  8. Promote your community.

1. Identify key stakeholders for the online community.

Your community should be as organized as your business. Just like you have CEOs, managers, and supervisors in your business, you want to have team members dedicated to specific jobs in your community. Which team member completes which tasks in your community will be based on their role in your organization.

Select a community manager

Your community manager is a dedicated team member whose job is to handle all things related to your community. Community management is critical for the success of the community. You can think of them as the COO of the community. It’s their job to make sure everything is running smoothly. They’ll also have a bit of a CEO position, as they’ll be the ones that can identify the improvements that need to be made to your product, community, and branding, since they’re working so closely with your community members (and customers).

Individuals and organization departments

Other members of your team can work with your community as well. For example, your marketing manager will be creating the content calendar for your community. This can include content that encourages community members to buy for the first time, to buy another product, or to buy a higher tier product.

2. Define the purpose and goal.

This is the first step in building an online community, and you cannot continue to Step 2 without it. If your community doesn’t have a purpose, people won’t understand why they should join it. Your community is giving something to your members; the question is: What experience is it giving your customers?

For example, your community could be for people who are backpacking through Europe and want to know tips, tricks, and recommendations from others who have backpacked through the same cities. Your purpose is to give them access to firsthand information it would otherwise be hard to find online. Your members will ask each other for hostel and hotel recommendations, where the walking tours start, or if it was worth it to go to a faraway landmark.

3. Select a community platform

Now that you have your purpose, you have to find its home. An important question to ask yourself right now is, “How many people do I want to grow this community to?” If you’re looking to create a 10-person community, you could create a WhatsApp group chat, a Telegram group, or an Instagram group DM. If you’re looking to create a community of 100,000+ people, you’ll want to look at other platforms, like Reddit or a Facebook group. Nobody wants to be in a group chat with 100,000 people.

There are two types of community platforms to choose from once you know how many people you’d need in your community.

Free community platforms

Free community platforms are social networks like Instagram, Facebook, Reddit, etc., and messaging apps like Telegram and WhatsApp. They’re platforms where your community members (and you) can create a free account and then host your community within a micro-community of the larger platform.

Owned community platforms

Owned community platforms are websites that have their own login and password. In this case, you would have your own website that community members log into when they want to virtually enter the community. Community member owners from police officers to gardeners host their own website and own their community platform.

4. Build a member profile.

Your goal is to fill your community with members of your target audience. Your member profile should mirror your customer avatar’s profile and answer the question: Who is this community serving?

  • Is your community serving backpackers traveling through Europe?
  • Is it serving coffee enthusiasts who want to talk about the notes behind their cup of coffee?
  • Is it helping ecommerce business founders who want to be more savvy with their strategies?

Once you know who your ideal member is, you want to ask:

  • What does this community give them that they didn’t have before?
  • How do they feel before joining it (before-state)?
  • How do they feel after joining it (after-state)?

That’s your member persona, and it will inform the copy you’ll use to convince them to become a member of your community.

5. Develop rules and norms.

While your community is serving your members, that doesn’t mean they get to make all of the rules. Before people are official members, show them the ground rules and norms for entry and have them agree to abide by them. If they don’t, tell them that they will be removed from the group.

For example, rules and norms can include that members are not allowed to speak negatively to each other; profanity is not allowed; and members can’t pitch their own products within the community.

6. Set up your community.

You have the purpose of your community, the member persona, and the rules that all members need to follow. Now, it’s time to bring this community to life and set it up on the platform of your choice.

Create initial community categories

Your community can be one large forum, or it can be categorized by topics. For example, you could have a forum for traveling and then categorize topics by location (Paris, Rome, Berlin, etc.). If your community is for business owners, your categories might look like Accounting, Marketing, Automation, HR, etc.

Depending on your products, you can create categories inside of your community showcasing how they’re a great solution to a community member’s problems. This can also help you understand which community members are interacting with which categories most often, and what products would be best suited for them.

Review sign-in process for members

Just like your transaction process, the sign-in process for your members needs to be easy and convenient. Review the process before launching your group to 1) make sure it’s working as it should, and 2) experience your members’ journey to become part of the community.

  • Do you need to add more questions to ensure members are qualified to be in this type of community?
  • Do you need to ask fewer questions to keep members from procrastinating on their application?
  • Do you want to ask them what they want to get out of the community?

Define the roles of your staff and members

As an extension of your brand, you want your community to run smoothly. Figuring out who handles specific situations now is going to save you later when a problem occurs. Each team member associated with the community should fully understand their role and how it fits into the larger team.

For example,

  • Who responds if somebody complains about your product inside of the community?
  • Who decides if a member has violated the rules and needs to be removed?
  • Who deletes posts from members who are promoting their own products?
  • Who is in charge of starting conversations inside the community?

Whether your goal is to always moderate your community or to eventually have your members hold their own conversations, you’ll want to figure out what you need from your members to make the community successful. For example, do you need them to talk about how they’re using your product?

If your group is for backpackers in Europe and your product is a backpack organizer, your moderator can ask, “How do you keep your backpack organized? Send a photo of your backpack and your FAVORITE organizing product that you don’t want to live without.”

Configure spam controls

Community owners be warned—spam accounts will find your community; they will infiltrate; and they will do undesirable things. To avoid this, set up spam controls on your member login. For example, you can use reCAPTCHA to keep spam accounts from creating profiles. This is the security tool that asks you to click on all the photos with crosswalks, fire hydrants, cars, stairs, etc.

Align community with brand

Time to brand your community—with your brand. Your community is an extension of your brand and it should feel that way to the members. If you’re on an owned community platform, then you can brand the website with your logo and brand colors. If you’re on a free community platform like Facebook, you can brand your community with headers, profile photos, and the images that you share within your post.

Aside from visual brand design, you’ll want to keep brand voice and tone guidelines in the posts, comments, videos, etc. that you publish inside of your community. You’ll want to use the same type of language that you have on your landing page inside of your community.

For example, if you’re a brand targeting Gen Z, you don’t want your landing page to be fun and edgy and your community posts to be corporate.

Test, test, test!

There is one requirement that transcends every business regardless of profits, industry, or size—you have to test. Test the content that you’re publishing in your community by choosing metrics for success. Your metrics can be your:

As a new online community, your focus might be on your sign-up rate. How many people signed up to be part of the community out of every 100 that goes to the community’s login/application page?

Once you’ve established your community, you can start to ask other metric questions like, “How many members clicked through to the blog post we talked about in today’s moderation?”

7. Promote your community.

It’s time to go live. The backend of your community is set up and now it’s time to get people to want to be members. Promoting your community is just like promoting a product. You’re going to be showing people why they want to be part of this community by pushing on the pain point that the community solves.

Here are 4 ways to promote your community:

Partner with influencers

Partnering with influencers promotes your community to their community. The influencer should have a community of people who are like your ideal member — and they already have their attention. This is a faster method of finding your target member than trying to run paid traffic campaigns, retarget to people, and hope you’re able to get enough conversions to cover your acquisition cost.

Invite your contacts

Who do you know that would want to be part of this community? Your contacts include a list of people who all have one thing in common: they all know more people. By telling your contact list about your community, they’ll be able to spread the word to their friends, and so on. Your web of target members just grew through organic networking.

A referral program

Referral programs give members rewards for referring people into your community. Your rewards can be a free product, a discount code, a prize (like a new laptop), etc. This is the same idea as that of your contact list—your current community members know people who would also want to be part of the community. You just have to motivate them to want to spread the word for you.

Integrate community into your marketing strategy

Your community is as much a product as your core product you sell. Depending on who your community is for, it can be the product people purchase before your core product or after. Find where in the buyer’s journey that your audience enters your community, and then integrate that into your marketing strategy.

  • Is your community an upsell
  • Is a downsell?
  • Is it a bonus that comes with buying a product?

4 Tips for a Thriving Online Community

If you’re not seeing success in your community, you need to adjust your strategy. You don’t have to delete the community and start from scratch—you need to find where things aren’t going right and then improve.

Here are 4 tips for creating a thriving online community.

1. Celebrate your community members.

At the end of the day, your community serves your members. While it’s a great marketing strategy to sell more products and grow brand awareness, it only works if you’re treating your members right.

Part of a thriving online community is highlighting your community members. You can do this by talking about members who are succeeding with the product, did well in a challenge you hosted, referred the most new members, had the highest participation rate, etc.

How you celebrate these members depends on your community—what makes them feel special and appreciated? It could be featuring them in a case study, giving them a free month’s supply of products, sending them a t-shirt, or writing a post about how grateful you are to have them as part of your community.

2. Hire the right community manager.

Your Community Manager is essential to the success of your community.

If your manager isn’t moderating the group correctly, members may get offended by other members, leave, and have a tarnished perspective of your brand.

If members aren’t feeling like they’re getting the value promised to them when applying for the community, then they’ll leave.

If members are inundated with notifications, they’re going to silence your community and forget about it.

The right Community Manager is going to balance all of this. Remember, they’re like the COO of your community. It’s their job to make sure the behind-the-scenes operations are running smoothly so that, to members, it all appears seamless.

Hire your Community Manager based on their experience handling communities the size of yours, their success metrics (sign-up rate, click-through rate, conversion rate), and their passion for wanting your community to succeed.

3. Track and measure everything.

There’s only one way to know if something is working, and that’s to look at the numbers. You can think that your community is doing great because it has incredibly high engagement, but what if your conversion rate is 0%? Then you’re paying a Community Manager to run an unsuccessful community, taking your team’s time away from more profitable tasks, and using resources without seeing a return on investment.

This community looks great in a feed, but it’s costing money—not making it.

Measuring metrics like sign-up rate, engagement rate, click-through rate, and conversion rate is essential to evaluating your community’s growth and performance against your initial goals. If you’re not getting the conversions you need, it’s time to test new strategies inside of your community.

4. Join and learn from other communities.

You don’t have to reinvent the wheel. There are plenty of online communities that have found the formula to success. You can borrow ideas from other successful communities, test them with your audience, and revise as needed. Learning from other communities can help you grow your community faster, increase your engagement, direct people to your website, and scale your business.

5 Successful Online Communities

We care about online communities enough to write this hefty blog post because—they work. Community-building is a validated marketing strategy for growing your brand awareness and moving people through the customer value journey. 

1. Passion Planner community.

Passion Planner sells academic, dated, and undated planners—and they have a legion of happy customers. They use free community platforms (Facebook, Instagram, Twitter, etc.) and connect customers via their #PashFam hashtag. On Instagram, the #PashFam hashtag has been used over 80,000 times.

They tie #PashFam into their website’s newsletter sign-up form offering “inspiring stories, free downloads, exclusive sales, and tips that will empower you to build your ideal life” to people who join their community. This is content their customer avatar wants to read and, once Passion Planner has their email address, they can send product promotions.

2. Mr. Money Mustache community.

Mr. Money Mustache, a Millennial financial guru, has created his online community on an owned community platform—a forum on his website. His community is called The Money Mustache Community and has 30,000+ members. To access it, visitors must first create an account.

His forum page shows the number of posts in specific categories of his community. For example, the Taxes category has 20,000+ posts, there are 24,000+ case studies, and his Q&A ‘Ask A Mustachian’ category has 46,000+ posts. By showing the different categories of his community and being transparent about the number of posts, new mustachians can see the benefit of joining his private community.

3. Skullcandy community.

Skullcandy has a massive Facebook community of two million followers. This is a free platform community that they’ve used to build their brand awareness and highlight their community members.

Skullcandy has Top Fans that are shown at the top of their Facebook page. Top Fans are the most active members of their community. By highlighting these members, Skullcandy is building a relationship with their biggest fans and turning them into brand ambassadors for their products.

4. Airbnb community.

Airbnb created a community for one specific segment of their customers—their hosts. The host community has close to one million members and is hosted on their website, so it’s an owned online platform. On their community’s landing page, they show the number of current members, the number of currently active members, and the number of posts.

They also show current discussions happening inside the community, to help prove that the discussions will be valuable and relatable. This builds credibility for their community as a place that other Airbnb hosts are learning new ways to level up their hosting, discussing local issues, and getting support.

5. TripAdvisor community.

TripAdvisor hosts their online community on their website’s forum. Their ideal member is also their ideal customer: somebody looking to travel and needing trip recommendations. They’ve categorized their community by travel location and “Beyond Destination” forums that cover topics like traveling with pets, road trips, gadgets/gear, and solo travel.

They also give their community members the option to have their own accounts to share their travel expertise. This type of “power” shows community members that TripAdvisor values their opinions, which is an essential part of building a long-term relationship with customers who are going to be traveling their entire lives.

Executive Summary

Online communities build brand awareness, increase leads, and drive conversions. With a clear purpose and the right moderation, these communities can become one of your most powerful marketing channels. Their ability to create relationships between brands and customers makes them a validated marketing strategy that businesses in almost any industry.

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