My team and I recently discussed the value our analytical platform creates for our clients. Here are the notes from that discussion.
Why does a business need a community?
The most important thing a business cares about is profit. Therefore, whatever a business does, including launching a community, is directed to increase its profits. Yes, we often talk about communities in terms of “engagement,” “active users,” or even “ticket deflection,” but ultimately, all of these things (should) either increase revenue or reduce costs.
How can a community impact profits?
The first thought that comes to mind (which makes many CMs have a cold sweat) is likely something along the lines of “selling through the community.” In fact, in most cases, this is a very ineffective way of looking at community value. The true value created by a community for a business is that it enables a business to create a more desirable product faster and cheaper.
What does this look like at a low level?
- A deep understanding of the problem being solved and the target customer by the company’s product team
- Public knowledge base about each aspect of a product
- Strong customer engagement and as a result high CLV
- Low support costs for existing customers
- etc.
The list goes on and on. Whatever is on the list, in one way or another, it increases revenue or reduces costs.
Wait a second! There are many different types of communities. Surely they can’t all be reduced to product-related communities!
The first thing worth noting here is that, in my opinion, in reality there are no “types of communities”. There are only two types of intrinsic motivation among community members, which is what all community classifications boil down to: those focused on topic of the community or those focused on the desire to connect with other community members.
Answering the primary question: Yes, since we’re talking about community in a business context, the value of a community (for a business) must be considered specifically through the product or service that the business provides. Let’s look at a few specific examples.
Communities dedicated to products
A typical example of such communities is a support forum (Apple, Microsoft, or any other company). Why were those communities launched? To effectively collect product feedback, solicit new ideas, build a knowledge base, and etc.
I’d like to point out that a community isn’t the only way to solve the tasks mentioned above. Instead of running a community, you can collect product usage statistics, hire technical writers, conduct email surveys, and much more. However, all of this will likely be much more expensive, complex, and time-consuming. With a community, you can iterate on your product much faster; users will provide support to each other, and some folks will voluntarily talk to your product managers about the problem your product solves.
Communities in which the community itself is the end product
Reddit, Wikipedia, Stack Overflow, and similar projects are all about the community itself.
The primary value created by such communities is the result of users’ interactions, which usually is high-quality content in large quantities. Wikipedia was launched as a free alternative to the Encyclopedia Britannica, which was not only distributed in print but also cost a considerable amount of money. Stack Overflow was, in a sense, an alternative to documentation. Before these projects, both encyclopedias and technical documentation were written by hired writers, which was expensive and time-consuming. For example, writing and formatting a single post (question or answer) on Stack Overflow takes about half an hour, assuming you already know what you’re writing about. With an average hourly salary of €50 (for a software developer), you’d need to pay at least €1.5 billion to create such a knowledge base. Meanwhile, the management team responsible for community development at various times consisted of 5-15 people. Which is two to three orders of magnitude cheaper.
Gaming communities
Any game is a product, and everything you know about product development applies to games, including working with clients. Almost every game developer today launches their own forum/chat or has a section dedicated to their game on a third-party forum even before the first release of the game. Why? Because, beyond all the things about products we’ve already mentioned, the cost of player acquisition has grown exponentially over the past 15 years, and player retention is even more critical for games than with other types of products (think of free-to-pay!)
The outcome?
We could list the “different types of communities” for the whole day, but no matter what type, a community will always create additional value for the business and/or reduce its costs while it’s managed properly.
Just a friendly reminder that we help companies to transform their community initiatives from time-consuming guesswork into a data-driven process that delivers measurable business value. We will be happy to help you too! Send me an email to have a chat about your community.