Wednesday, August 20, 2008

Eight Considerations to Help Branded Communities Succeed

You'll find a brief and informative article on WSJ.com about communities and why they succeed or fail. Deloitte completed a study of more than 100 businesses with online communities. "Not surprisingly, these sites failed to gain traction with customers. Thirty-five percent of the online communities studied have less than 100 members; less than 25% have more than 1,000 members". Said Ed Moran, who conducted the study, "A disturbingly high number of these sites fail."

The article goes into slightly more depth on the reasons communities fail, here are three simple conclusions:
  1. Communities are about people and not technology: Spend more resources identifying and reaching out to potential community members than investing in software.

  2. Communities require experienced management: Put someone who has experience running an online community in charge of the project.

  3. You have to select the appropriate metrics that measure to your goals: If your primary objectives are generating word of mouth and increasing customer loyalty, measuring the number of visits to the site won't prove you achieved your goals.
Over at MyTechBoxOnline, an interview with Ed Moran sheds more light on his study. Here are two more simple lessons for community success:
  1. Moderate lightly; trust the community: "Permit the community to vet, categorize, critique, and challenge the inputs, ultimately ascribing a value to it through ranking, adoption, or use."

  2. Assign the resources necessary to nurture the community: Community members value quality moderation and facilitation so "management must allocate sufficient resources (read: probably not one part-time person) to community moderation in order to optimize results." Forty-five percent of respondents recognize that finding enough time to manage the community is one of the biggest obstacles to making communities work.
While you wouldn't know it from the WSJ article, the Deloitte report does have positive things to say about the impact of communities, according to a PRNewsire release on Forbes. While many communities may be struggling, the survey revealed some positive results: "Of the companies surveyed, 35 percent have seen an increase in word-of-mouth for their brands, and 28 percent have seen their overall brand awareness increase. Online communities are also helping companies increase customer loyalty and bring outside ideas into the organization faster, according to 24 percent of survey respondents."

More details of the Deloitte report, conducted in conjunction with Beeline Labs and the Society for New Communications Research, can be found in the embedded presentation below. Here are some additional conclusions culled from the deck:
  1. Think broadly about the benefits of communities; don't just consider marketing benefits: Less than 30% of companies with branded communities stated their purpose or business objectives included reducing market research costs, reducing customer support costs, or new product development. Ignoring these benefits may be one of the reasons so many companies feel their community efforts fall short--they're either getting benefits they are failing to recognize, or they are neglecting some important uses and values of their communities.

  2. Give communities time to succeed: One thing I found disappointing considering all the buzz around this report about the "failure" of communities is that none of the interviews or PR mention the considerable portion of the communities surveyed that were quite young. Over a third of the communities studied were less than six months old. Given the modest membership figures, it seems evident many of these organizations neglected to consider traffic-driving and member-attracting strategies, but it still is premature to call a community a failure after just six months.

  3. Invest more to get more: There seems to be a linkage between staffing, spending and results. This may seem obvious, but the correlation isn't specifically called out in the report or in the news reports about the study.

    While quite a few of the bloggers who covered this story sarcastically noted that 34% of the communities analyzed had fewer than 100 members, it's interesting to note some very similar numbers from the report: 32% of the communities are private (which limits membership), 34% don't even have a single full-time person dedicated to the community, 58% have an annual operating budget of less than $50,000, and 29% of the companies have less than $1 million in annual revenues. Given the size of these organizations' customer base, the level of staffing and investment, and the fact 37% of the communities are less than six months old, are the modest membership numbers really that surprising?

    On the other hand, 17% have more than 5,001 members, and again the report has some strikingly comparable figures: 16% have more than six full-time people dedicated to the community, and 19% have an annual operating budget of $200,001 or more. I don't have access to the raw data and cannot confirm a high degree of correlation between investment, staffing, and community size, but I'd bet there is a statistical linkage. This only further reinforces my belief that the bottom line of this study shouldn't be the "failure" of communities but that communities take time, attention, and financial support to flourish.
One last observation I'd share based on my exploration into the Deloitte report is that it is disappointing how many journalists and bloggers seemed predisposed to seeing the negative and neglecting the lessons and recommendations. While the Deloitte report indicates many communities are not living up to expectations, the report's intent is to provide guidance to help branded communities succeed. Is this impression you get from these headlines? Deloitte says Branded Social Networks are a Bomb, Corporate Social Networks Are A Waste of Money, Study Finds, and Corporate Online communities Fail. Sometimes you need to do a bit of legwork and scratch below the surface to get past the hype of the headline and find the nuggets if wisdom!

6 comments:

Geoffroi Garon said...

Thanks for this great job! I appreciate also the presentation because i'm an Web anthopologist ! :-)

Augie Ray said...

You're welcome, Geoffroi. How do I get a cool title like Web Anthroplogist!?! :)

Annette Schulte said...

Great post, Augie. As a journalist exploring online communities, I'm not surprised at negative headlines related to the study. Online communities, social networks and related tools are part of the forces disrupting the media world. Knowing firsthand how hard some media employees are fighting or running scared from the uncertainty of our future, I can understand -- which is not to say I condone -- the emotions that might tinge reactions. Understanding that, of course, doesn't lessen the disappointment.

Augie Ray said...

Annette,

Thanks for the comments. Interesting perceptions for the reasons why there might be a inclination toward the negative. You're right--it might just be traditional media hoping for the worst in social media (sorta like the people who said the Internet was going to be a "flash in the pan" back in the late 90s.)

It can't be a fun time to work in the traditional media world. I do think the quicker they can embrace social and stop being fixated on traditional delivery, the greater their chance for success (or survival.)

accounts said...

Hi, and thanks for the link! I get the feeling I was lumped into the network negativist camp because I happened to call the Deloitte report as I saw it. Really truly I promise I'm not that guy! From my own post on the subject: "The upshot is this: in spite of the doom and gloom from Deloitte, don’t shake down the social networks just yet. We’re entering an era of connectedness unlike any we’ve yet experienced. If you know your customers — if you truly understand them — a community might be your next best home run."

To your point, spot on. It's REALLY hard to look past the negative in the sales process (by sales I mean selling concepts to those who don't "get it"), and that tends to be the kneejerk response. I really appreciate your thorough presentation of the data here. Great thoughts and insights!!

Cheers,

Pete

Augie Ray said...

Thanks Pete! I was just noting the negative tone of the headlines, but you're right--you and others pointed out many positives in the report.

Happy Thanksgiving!