Online communities have emerged as strategic business assets in the past 10–15 years. Businesses wanting to increase the bottom line, obtain insights into customers’ needs, and provide great customer service are investing in online brand communities. A 2016 survey of 1,500 companies showed that 65 percent of them have some form of community platform, up from merely 10 percent in 2005.
Does this surge in interest stem from hype or are there long-term market fundamentals at play? We are convinced that online communities will remain relevant for a long time to come, and getting one for your company can benefit your business in more than one way.
Online Communities Drive Business, Increase the Bottom Line
Since it was founded in 1903, Harley-Davidson has been an iconic American brand with a fanatically loyal following. But a century of manufacturing and selling motorcycles has not been an uneventful journey, the company has seen its fair share of ups and downs.
As recently as five years ago, Harley-Davidson was in a struggling phase. The sales were down from 349,196 bikes in 2006 to only 247,625 in 2013. Something had to be urgently done to replace a “generation [of buyers] that is [sic] now over 50 years old, primarily male, and mostly white.”
H-D decided to invest in a community to find “new customers among the young, as well as women and the less pale.” The strategy paid off handsomely. Harley-Davidson was ranked 77 on Interbrand’s Best Global Brands 2017.
Game developer and the creator of one of the world’s most powerful analytics engines, Zynga, is another illustration of a company that increased its revenue after investing in its social community. When the company doubled its global fan base to 300 million a few years ago, its revenue grew three times.
What worked for Harley-Davidson and Zynga can certainly work for you. Investing in an online community can be your firm’s most profitable business decision ever.
Analyzing Data from Online Communities Leads to Better Products
What makes Fortune 500 companies so successful? They deliver products that their customers want.
Successful companies use a variety of methods—such as surveys, the Delphi Method, and data mining—for demand forecasting. Data mining is especially powerful, and online communities can generate swathes of big data for analysis.
Unsurprisingly, 86 percent of Fortune 500 companies keep their ears glued to the conversations on their communities. Two-thirds of Fortune 500 companies use the data they gather from online communities to improve their product development processes.
Lego, another one of Interbrand’s Best Global Brands 2017, is one of the frontrunners in engaging its online community in “co-creation.” The members suggest ideas for new products and help in their design.
It is not just large companies mining the information in online communities to develop successful products. Many mid-size businesses are employing this strategy successfully.
Your company can tap into the creative juices of your customers to create products that meet their specialized needs.
Online communities Increase CSAT and Reduce Support Costs
In the first section, we mentioned that Zynga could turn its online community into a predictable contributor to its bottom line. Impressive though this feat was, it was not the complete story.
Zynga saved millions in customer support costs.
It has been proven time and again that online communities reduce support costs. The difference can be huge, in some cases up to 50 percent.
A main reason for such large savings is the increasing expectations of customers who want a mixture of online help and traditional customer support. They want “digital, streamlined, mobile-friendly assistance wherever that makes the most sense, and they want the best of the best in human assistance wherever that digital support is lacking, confusing, or not appropriate for the situation,” according to Micah Solomon, a Forbes contributor.
Invest in an online community to save on support costs and increase CSAT.
You should care about online communities because they can help you design the products your customers want, offset millions on support costs, and generate a predictable source of revenue. Getting a platform is one of the first steps towards creating a full-fledged online community. In the next blog, you will find a 7-point checklist to help you select a suitable platform for your company.