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Customer communities: Gathering data and reaping rewards

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12th Nov 2008
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Online communities are becoming an increasingly popular way of bringing customers into the fold. And, as Gary Schwartz discusses, information gleaned from these communities can also deliver tangible commercial value.

Customer communities

By Gary Schwartz, Confirmit

Building communities of interest has become a key objective for many marketing departments, especially those within the fast moving consumer goods (FMCG) sector that struggle to attain a direct customer relationship.

The online community enables a massive step forward from the use of demographic data to drive tailored marketing campaigns, to the creation of opportunities for truly relevant one to one marketing and the building of relationships between a brand and its consumer.

Indeed, creating a community should be just the starting point. Organisations need to work out how these communities can actually deliver tangible commercial value and how membership of the community can provide value to its members. This online community is a vital source of marketing insight that should be used to drive the customer experience in real-time – from proactively managing customer complaints to leveraging cross- and up-selling opportunities and improving the relevance of product development campaigns.

Creative marketing fun

The last few years have been fun for creative marketing teams given unprecedented freedom to trial the new opportunities available online. The goal has been to use innovative online campaigns to build customer loyalty, create communities of interest and foster brand loyalty. But to what end? How, for example, is the company leveraging the expensively created consumer community to drive up sales or improve product development?

"How is the company leveraging the expensively created consumer community to drive up sales or improve product development?"

Organisations have worked hard to hone their techniques for driving customer and potential customer traffic online. But it is becoming increasingly expensive to achieve good results. While the inherent measurability of pay per click, banner ads, affiliate and email campaigns should deliver a tangible return on investment, the cost of delivering online campaigns is now escalating. This is due both to the inherent growth in competition associated with increased online marketing budgets and the growing sophistication required to reach an increasingly savvy consumer base.

Indeed, internet advertising expenditure in the UK broke the £2 billion barrier in 2006, with a 41.2% surge in growth, according to figures from the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC). Yet the challenges are becoming significant: email marketing campaigns are struggling to fight through the spam filters; the use of competitions and sweepstakes may enable organisations to create large consumer databases but they are failing to achieve any real value because the individual has no engagement with the brand.

It is, therefore, becoming ever more important to maximise the value of the communities that have been created – and that does not mean undermining the atmosphere of the information led site with revenue generating banner ads.

Community interest

Instead, leading-edge organisations are now looking to capture the day-to-day experiences of their communities and use this information to deliver business value. Communities provide an opportunity for consumers to become truly entrenched within a brand or organisation – from product creation to response to complaints. By increasing engagement with consumers, organisations can forge far tighter purchasing relationships and significantly build on brand value.

This constant, relevant communication also provides an excellent platform for the creation of personalised, relevant promotions, creating a win-win that further builds the relationship.

"Leading-edge organisations are now looking to capture the day-to-day experiences of their communities and use this information to deliver business value."

Nevertheless, irrespective of investments in customer relationship management (CRM) and marketing resource management (MRM), marketing’s actual interaction with the business is, at best, a sporadic provision of leads to the sales team. Many organisations today still lack the tightly integrated framework required to truly maximise the value of the community.

Organisations need to understand the affect of customer interaction not only on actual buying behaviour today but also on evolving attitudes that will determine future buying behaviour. By driving immediate understanding of customer attitude into core business processes, a company can undertake rapid remedial activity to prevent churn or to maximise cross selling opportunities.

Customer attitude

Many online communities are fiercely loyal and are keen to share experiences and expertise, as demonstrated recently by Egg, the world’s largest pure online bank. It was able to reduce the time to market for a new, innovative customer proposition from 6-12 months to 5 weeks by surveying 30,000 customers in its community for input.

Key to this process was the fact that Egg’s customers were already accustomed to regular online contact, as the company has been using enterprise feedback management technology for five years to manage the customer experience across a range of products and touch points.

"Egg, the world’s largest pure online bank, was able to reduce the time to market for a new, innovative customer proposition from 6-12 months to 5 weeks by surveying 30,000 customers in its community for input."

To be truly valuable and integrated into core business processes, these surveys need to be personal not anonymous. Since most online communities are happy to interact if the incentive is right, this shift in survey behaviour is generally gaining good response. From the financial benefit offered by online coupons to the customer service benefit of immediate response to a problem or change in status, consumers are increasingly demonstrating their willingness to throw off the desire for anonymity.

Indeed, the value to the consumer becomes rapidly apparent. Whilst combining KAIs with traditional KPIs provides an excellent platform for the accurate measurement of marketing performance, more critically it enables segmentation to be based on attitude as well as past behaviour, delivering far more relevant customer offers and services, further enhancing the value of being a community member.

For the business of course, a greater understanding of customer attitude can only benefit operations, from highlighting customers at risk of churn to identifying those that represent an attractive additional sales opportunity.

Furthermore, focused surveys can transform the speed, relevance and value of product development campaigns whilst fostering unprecedented customer loyalty and commitment. This information is critical to transforming the value of the consumer community, currently an untapped asset. Not all surveys have to be online either as feedback is best captured over the channel that’s most convenient for the customer.

To maximise the value of this asset, real0time assessment of customer attitude should be embedded within core business processes. Organisations can build in immediate alerts to the sales team, customer complaint handlers, account managers and the board of directors, for example, that reflect customers’ current attitude and perception. These alerts can then prompt immediate action to mitigate the risk of customer loss or add incremental value.

By combining this real-time understanding of customer attitude with true business integration that marketing will, finally, begin to leverage the good work done in creating a strong online community.

Gary Schwartz is SVP of marketing at Confirmit.

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