The real business value of Brand Communities: A beautiful blend of benefits – Part 1

large__7711389266Blogger Ken Thompson reveals that “a recent survey that was conducted in 2011 revealed that 50% of the top 100 global brands have hosted some kind of branded community”. Why is it that more and more brands invest in online communities? How exactly do they create value? I will introduce you to some of the main spin-offs that can be of great value to firms.

Social CRM tool

According to Baird, social CRM – “the integration of social media with customer relationship management (CRM) strategies – is the next frontier for organizations that want to optimize the power of social interactions to get closer to customers. With the worldwide explosion of social media usage, businesses are feeling extreme pressure to be where their customers are”. “Social CRM combines the power of online communities, social media and traditional CRM systems to offer a better way of building and managing customer relationships“ (Lam). Brand communities allow companies to listen, engage, and act on customer’s conversations, which can lead to meaningful relationships between the consumers (existing or new/potential) and the firm.

Customer insights

A well-executed online community can be a rich source of valuable insights that companies can use to improve their products and services. As stated before, people online talk about you (and your brand) with an enormous speed and power. Companies that best take advantage of the valuable customer feedback and insights provided to them can have a significant competitive advantage. In BusinessWeek, Michael Dell – founder of computer corporation Dell – said: “These conversations are going to occur whether you like it or not… do you want to be part of that? My argument is you absolutely do… and you can be a better company by listening and being involved in that conversation” (Jarvis).

Customer satisfaction

Brand communities allow customers to directly interact with firms and give them instant feedback. Brand communities give consumers a voice; they can directly express their thoughts, experiences and opinions. They get the feeling that they are more intimate with the brand and its products. This often leads to higher levels of customer satisfaction.

Brand advocacy

Brand advocates can be seen as one of the most valuable assets an organization can have. These are people who not only buy your products or services but also actively spread the word and express their satisfaction about your brand toward others.  This is why many businesses nowadays are trying to create brand advocates through their online communities. A well-developed brand community can be a great tool for brand advocacy. A community allows the organization to build closer and stronger bonds with consumers. Community members can start to feel “a strongly affiliation with the brand and the community” (Marshall and Moffit 9).

Increased sales

A study recently published in the Harvard Business Review revealed “consumers participating in brand communities spent up to 54% more on average than non-community users” (Algesheimer and Dholakia).

Avoided costs

For a lot of companies, brand communities can save costs in many ways.  It is way cheaper to support a customer or answer their question using an online community than it costs to handle a customer service phone-call. Brands that hosted an online community have “reported savings of more than $500,000 annually from their online community efforts” (Guidry 17).

In 2008, Deloitte, Beenie Labs and the Society of New Communications conducted a research aimed at “learning from the early experiences of more than 140 organizations that have hosted and managed a brand community” (McClure). They examined a variety of brand community initiatives (commercial as well as non-commercial).

Their study revealed that the greatest value of online communities is that they:

  • Increase word-of-mouth (35%)
  • Increase brand awareness (28%)
  • Bring new ideas into the organization faster (24%)
  • Increase customer loyalty (24%)

Besides, there are many other benefits of brand communities. In most cases, factors like community type, focus or platform will highly influence the specific benefits that you will get from your (community) marketing efforts.

I hear you thinking…Anne-Sophie..what about the drawbacks of brand communities? Read part 2 to find out;)!

Until next time,

Anne-Sophie Gaspersz

Photo credit: y.caradec via photopin cc

Photography: Yann Caradec

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