Building a Business Case for Customer Community

One of the biggest issues we see today with branded customer communities in the enterprise is the creation of digital islands failing to foster an engaged community.  We often find this issue is due to lack of careful planning that accurately illustrates the level of commitment required to build and sustain the community.  Many companies dive right into building a community before realizing just how time- and budget-consuming such an initiative will be.  Building a branded community ain’t cheap, ain’t easy and ain’t fast. Take the time to plan for success and build a detailed business case for community.

  1. Intimately know your customers:  Really get to know the customers the community will potentially serve.  Leverage in-depth interviews in addition to surveys.  What do customers need?  What problems do they have?  What communities do they belong to and how do they participate?  What do they like and not like about those communities?  Ask how a community sponsored by your company can enhance their experience.  Don’t overlook asking customers if they even want to participate in a community sponsored by your brand.  Ask customers their opinions about what role should the brand play in the community.  We have found customers typically expect the brand to play an active role – it’s a matter of how active.  Is there an interest a large group of your customers share that can be leveraged as the foundation for bringing together a community?  Conduct a conversation audit to know what consumers are saying about your brand online.  Leverage this listening data to anticipate the types of conversations that will occur in your community
  2. Define the target audience:  Based on customer research, which customers will benefit from community the most?  Will the community serve different types of customers?  Are certain customers the focus of key business objectives?  Map this out on a whiteboard to understand all the options and determine where to focus the community.  Once the target audience is defined, figure out how to best reach this audience and the type of community it prefers.
  3. Connect community to specific and timely business objectives:  This seems like a no-brainer.  Still, so many businesses are blinded by ‘all of our competitors have a community.’  The community is mistaken as the end when it is really the means to an end.  What are business objectives and what type of customers are the focus?
  4. Review competitive communities:  Determine what communities already exist that target a similar audience and solve for a similar problem.  Join these communities if possible to assess their strengths and weaknesses.  Determine how your community will differentiate.
  5. Build to solve both a customer and brand problem:  Branded communities are the bridge between customers and organizations.  Communities have to serve the needs of both in order to survive.  What are the unmet needs of customers?  What are the biggest challenges for the business?  Where do customer issues and businesses challenges intersect?  What problems can a community realistically solve for?  What processes need to be in place to support the community is solving these problems?  For example, a community to gather customer feedback on products and services without the feedback loop and processes to support the business in acting on this feedback will turn into a branded community of haters.
  6. Design for desired behaviors: Many companies make the mistake of launching a community out-of-box before thinking through the desired customer behaviors the platform features need to support in order to achieve business objectives.  A good exercise I recently conducted with a brand is to outline in detail the required community features and functionality based on customer preferences and the online behaviors we wanted to see exhibited in the community.  For example, if you want the community to persuade customers to buy more product, how will the platform encourage and enable this behavior?  If you want the community to promote word of mouth, how will the platform support sharing within and outside of the community?  How will these sharing behaviors be tracked?  Launching a community with all the bells and whistles without a plan for how the features and functionality should be used is a recipe for failure.  Customers will not use the tools without guidance for what to do and what’s in it for them.
  7. Develop a measurement plan:  What are key performance indicators for the community?  What are the community health metrics?  How will these measures prove achievement of business objectives?  Are there dependencies on other groups and websites for measuring success?  For example, how will you integrate web analytics to know where community members go when they leave the site?   How often will you analyze and report on these metrics?  Will the community reporting be incorporated into a larger customer analytics dashboard?
  8. Create a content plan:  Community is about its members, but great content is what it takes to attract them and keep them coming back.  Creating engaging content can be the biggest challenge for brands.  This is mainly because companies put the community manager in charge of creating content.  Community content creation should not be taken lightly.  It’s a huge task to constantly create new content for a community and get it approved by Compliance – one best assigned to a person or team that already specializes in content creation.  (Tip: Content creation can be outsourced.)  The content plan needs to define the purpose, tone of voice, style and formats for community content.
  9. Plan for promotion:  How will you promote the launch of the community and attract your target audience to the site?  Think through all possible channels, both on and offline, to socialize the existence of the community.
  10. Sell the community internally to garner support:  Customer communities require the support of the entire organization.  No one can predict exactly what a customer will say or do here.  It’s safe to say customers will post a complaint or ask for help – issues that the community manager cannot and should not handle alone.  It’s best to gain buy-in from other internal groups and educate them on the commitment of time needed to support the community before it launches.  A major component to selling the community internally is learning to speak the language of each external group approached to support initiative.  The community sponsor should translate how the community will help achieve the goals of other departments. We recommend enterprises create a community task force that includes a representative from Marketing, PR, Research, Analytics, Content/Production, Customer Service, Legal, Compliance, IT, and even from Agencies or Consultancies involved in customer initiatives.  (Tip: Meet with Legal as soon as possible because this is where most of the community project delays occur.)
  11. Determine the platform provider:  Picking the platform provider to host the community should be one of the last things you do in the planning process.  While most of the providers appear to support similar features and functionality on paper, how they support these features and functionality is what differentiates them.  Will you consider an open source solution or use a full-service, third-party provider? Do certain providers have more experience serving clients in your vertical industry?  Do certain vendors have a culture and style you prefer?  Do certain vendor platforms require more costly customization to meet your needs than others?
  12. Scope the business requirements:  The community sponsor needs to take the time to think through all of the business requirements to support the community.  Define the FTE staffing model, internal processes and workflows, professional services, and technology required to support the community at its various stages.
  13. Forecast the budget required to build and sustain community:  The budget includes technology platform costs (setup and ongoing maintenance), technology systems integrations costs (e.g., single sign-on, CRM integrations), FTE people and agency costs, content costs, marketing and advertising costs (to promote community), and more.  To understand the ROI of community, the sponsor needs to meticulously track exactly how much budget is allocated to support such an initiative.

Disclaimer: There are a million different details to planning for a customer community not included here.  This is a high-level outline for how we approach building a business case for a customer community.

Interesting comment to this post on Dachis Group Collaboratory here.

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How Investor Relations Should Get Started in Social

Seventy-nine percent of Fortune Global 100 companies are using at least one social media platform.  But according to a survey by BNY Mellon, only 9% of global senior level investor relations professionals are using social media for IR communications.  Investors are a critical audience for a company to engage and data suggest blogs and social networks are appropriate channels. So why is investor relations shying away from social?

A research project I conducted last month for Dachis Group indicates that many investor relations professionals are not leveraging social media because they lack the following:

  1. Clear corporate guidelines that address the disclosure of financial information and IR participation
  2. People, processes and technology to support IR participation
  3. Understanding of how social media adds value to investor communication given the required investment of time and resources

The need for clear corporate guidelines

Interest in leveraging social channels by IR is constrained by the perceived risks of violating the disclosure process regulated by the SEC. Although the SEC has issued guidelines to recognize ‘interactive websites’ (i.e., corporate blogs or forums) as sufficient channels for public disclosure, the language citing the conditions these websites have to meet to fulfill the requirement remains vague and outdated to know how it will be enforced. The SEC first introduced Regulation Fair Disclosure in 2000 to prevent selective disclosure of material information that would lead to the benefit of only the few who were informed. The new regulation required companies to publicly announce material information in a way that would be broadly disseminated.  In 2008, the SEC provided additional guidelines to include interactive websites as an acceptable channel for this information.  We have included an excerpt from the 2008 Regulation Fair Disclosure update below:

“Thus, in evaluating whether information is public for purposes of our guidance, companies must consider whether and when: (1) a company web site is a recognized channel of distribution, (2) posting of information on a company web site disseminates the information in a manner making it available to the securities marketplace in general, and (3) there has been a reasonable waiting period for investors and the market to react to the posted information.”

Additionally, the 2008 guidelines state that a company (or employee acting on behalf of the company) is responsible for all statements he or she makes on these ‘interactive websites,’ but a company is not responsible for the comments made by third parties on its website.

To be fair, the SEC guidelines are not preventing investor relations professionals from leveraging social media.  It’s more the fear of how to leverage such an unregulated and uncontrollable medium in a regulated and controlled environment.  The perceived risks put Legal departments on edge and many investor relations see the task of incorporating social media into reporting practice an uphill battle until the SEC or company executives provide greater guidance.  In my experience working with clients in regulated industries, I have found the combination of social media policy and training to be the most effective way to encourage participation.

The need of supporting infrastructure

Most investor relations departments do not have the people, processes and technology in place to support the use of social media specifically for influencer and investor communications.  Furthermore, no investor relations professionals I interviewed last month have dedicated budget for social media.  Investor relations budgets are primarily dedicated today for funding website upgrades, annual reports, road shows and conferences. Therefore, investor-related messages promoted via social channels are driven by Corporate Communications/PR most of the time – as this is the department who is responsible for maintaining and managing the corporate social media account.

The potential issue with this arrangement long-term is that investor relations remains one step removed from the conversation by relying on Corporate Communications/PR to disseminate and respond to messages in social channels. This seems like a recipe for less authentic investor-related messages that sound more like broadcasts rather than conversations. This arrangement also poses challenges to synchronizing investor-related messages across all websites. Already we see signs of this divide.  A recent IR Web Report audit of 200 investor relations websites showed that 90% of them still ignore corporate presence on social media, even when other sections of the corporate website promote these channels.

The need to know the added value

According to the BNY Mellon survey, IROs are split as to whether social media even offers value.  Social media fosters conversation but most investor-related social messages are written as broadcast announcements that point back to the IR website for more information.  Therefore, most investor relations professionals are trying to figure out what additional value these messages offer to investors who have been trained for years to visit the corporate website for the most accurate and up-to-date information.  The issue is that value has to be defined by each IR department, but most IR departments are not involved in corporate social media participation to know what to expect.  If the goal of each investor-related social media message is to drive traffic back to the IR website, for example, then this activity has to be tracked, measured and reported back to IR for them to understand the value.  The coordination of these activities is challenged when IR is not involved in the message creation and dissemination process.

I recommend that investor relations professionals seeking to incorporate social media into future reporting practices follow the five steps outlined in the graphic below to know how best to get started in social.

Source: Dachis Group, http://www.dachisgroup.com/2010/12/social-investor-relations/, December 2010.

In my experience, I find that taking the time to thoroughly research the external and internal social media landscape as well as define participation guidelines and goals provides a solid foundation from which to build a successful social participation program.