Business value of e-communities yet to be realised

WM Circle Logo

By: Wise Marketer Staff |

Posted on July 22, 2008

Business value of e-communities yet to be realised

Many companies have begun to use social media tools and online communities to engage with their customers and employees for brand discussions, idea generation, and new product discovery. But despite these online initiatives having a positive impact, business have not yet harnessed their true potential, according to a survey by Deloitte.

The survey report, entitled '2008 Tribalisation of Business', was conducted with Beeline Labs and the Society for New Communications Research, and concluded that the main barrier to realising the true business value of online social initiatives is the challenge of building up "critical mass" in the community.

Engagement a challenge According to the survey, the majority of existing online communities have fewer than 500 active members, and 50% of respondents felt that the biggest obstacle to making communities work is getting people engaged.

Notwithstanding this challenge, companies reported a significant impact from their communities, with 35% reporting an increase in word-of-mouth referrals for their brands, and 28% having seen their overall brand awareness increase. Online communities are also helping companies increase customer loyalty and bring outside ideas into the organisation more quickly, according to 24% of respondents.

New talent and ideas According to Ed Moran, director of product innovation for Deloitte Services LP, "Communities can extend the edge of the corporation in truly transformative ways: tapping into new talent, helping design products and services, providing customer support and, most importantly, building the brand with the customer. This survey points to some growing pains but companies are starting to see that online communities should be nurtured and leveraged for real business gains."

"The tribalisation of business is all about people helping people, where those who share a similar passion turn to each other for information, recommendations and community feedback," Moran explained. In fact, 60% of respondents indicated that their communities are open for public interaction and feedback.

Most effective features According to the survey, the three community features that contribute the most to an online community's overall effectiveness are:

  1. The ability for community members to connect with like-minded people (53%);  
  2. The ability for members to help others (43%);  
  3. A community focus on hot topics and issues (41%).

However, poorly managed online communities are a critical barrier to their effectiveness, as 45% of respondents recognised that finding enough time to manage the community is one of the biggest obstacles to making them work. Facilitation (25%) and quality of the community manager (34%) were the next most important issues that negatively impact a community's effectiveness.

Driving innovation Most recognised that online communities can be used as a seed-bed for innovation. Indeed, 39% of the companies that participated cited "idea generation" as the key purpose of their online community, while 19% cited "new product development" as the main goal.

Some companies are also using communities to help improve products and customer support. For example, one major technology company is using communities as a means of customer support, and is monitoring its user communities as an early warning system for product issues that could be expected to hit the help desk. This gives the company enough time to prepare itself to respond quickly, and in more helpful ways than would otherwise be possible.

"Communities provide insight into new features and opportunities, identify customer needs, and enable open innovation," added Moran. "By participating in these communities and facilitating a bidirectional conversation, companies can help engage top prospects and influence purchase decisions."

CMO takes on the community The survey also indicated that the role of the chief marketing officer (CMO) is being revolutionised by the introduction of online communities, with the CMO often becoming the main driver, empowering the sales, customer service, and product development functions with the community's intelligence and participation.

According to 42% of respondents, the marketing organisation is now responsible for driving online communities. With communities becoming a central focus, marketing is now required to participate in non-traditional functions such as customer support, idea generation, and employee communications.

New thinking required While the internet has produced unprecedented levels of insight into the size and demographic make-up of consumer audiences, the survey found significant gaps between community goals and how success is actually being measured. For example, while the top business objectives of the communities were to "generate more word of mouth" (60%) and to "increase product/brand awareness" (48%), the success metrics being conducted the most were found to be less helpful factors such as "number of visitors" and "number of page views."

As a result, marketers are increasingly challenged to identify areas in which online communities are achieving their goals, Deloitte warned. In some cases, management may also need to reconsider the ways of extracting true business value from sponsored communities. "The survey reveals that there are several disparities between companies' goals, how to measure success, and appropriate investment," said Francois Gossieaux, a partner at Beeline Labs. "The companies that commit the dedicated talent and resources to driving customer centric communities are likely to be the winners."

More Info: