This is the first post in a deep dive on community as an area of investment. Make sure to check out parts II and III.
What is community?
A group of people with common interests that are living and working together, on a grassroots level, for an individual and collective benefit.
- A good community has:
- A clear purpose that benefits the members
- Rules for engagement to keep the conversation relevant
- Has a dedicated space for information sharing
- An opportunity to learn from and work with other members in the community for collective benefit
- Instills a sense of belonging
Communities are essential to businesses because they provide tangible benefits that impact the bottom line. Healthy communities openly share information with each other that can increase customer lifetime value, increase sales leads, lower customer acquisition costs, and result in more growth for your organization. While they have existed to help us prosper as a society, they haven’t always existed in business.
Communities provide a space for users of a product or service to share information amongst each other. Historically, this started with John Deere in 1895 creating a publication called The Furrow Magazine to help farmers learn best practices, tips for using their equipment, and new strategies to succeed in business. Farmers read stories about other farmers in over 17 regions. They discovered that it’s more effective to have customers tell the story of their products and services.
Communities in business have evolved immensely since the founding of The Furrow. What was once a one way conversation between brand and customer became a two-way conversation due to digital innovation. Social media shifted the power structure between businesses and customers, by letting the customers give real time feedback. Smart phones allow people to interact with a brand and each other instantaneously. Consumers could forgo the trip to the mall by ordering online. Together, these advances in technology built digital communities that provided a space for customers to experience a brand together. This fundamentally changed the way that businesses sell to customers. People began to long for connection in a world of endless communication channels and sales began to take place within an ecosystem.
People are searching for connection.
Web 2.0 opened the doors to sharing between people and businesses. Customers and companies leverage new technologies to communicate quickly and directly with each other and other stakeholders. Content is king – from blog posts, to webinars, to paid influencer ads. We are spending more time online, particularly among Gen Z and Millenials. People are bombarded every day to buy and people’s behavior online is changing as a result. The share of people who use social media to document their lives has decreased to 20% in 2019 from 27% in 2014. So what are people doing when they are spending so much time online?
Finding connection. GlobalWebIndex and Reddit conducted a study in 2020, mid pandemic, to study online communities. They discovered that participants yielded more value from communities than social media. Communities made users feel more self confident, more validated, and less intimidated. What’s more, is that people don’t mind brand’s building communities on existing communities sites or their own.
Through more meaningful conversations with a narrower group of individuals, communities encourage meaningful connections. Traditional marketing that pushes messaging on consumers does not work in this context. Businesses had to adjust by encouraging conversation. This caused a shift in selling for ecosystems of buyers and stakeholders.
The shift to ecosystem selling.
Sales, today, happen in an ecosystem. Selling is social thus increasing the complexity of sales regardless of the customer type or business model. The ecosystem participants are different institutions or groups that have common interest in a set of products and services and all can influence a buying decision. These participants are all interacting and communicating constantly, thanks to advances in technology. To employ an ecosystem selling strategy requires participants to build relationships and establish alignment with one another in order to succeed. One to one communication and relationships shifted into multiple communication channels across stakeholders. Community as a strategy allows businesses to address all channels and participants, regardless of goals.
An early example of a very successful company that leveraged its ecosystem for sales is Salesforce. They work with many ecosystem partners to sell add-on products it’s marketplace that deepen the customization of an instance, therefore deepening the dependency on their products. Salesforce supports communities to increase user participation and understanding of a product. They even build channel sales agreements with partners. Partners gain customers and Salesforce creates deeper relationships with customers, everyone wins.
The reason why community is so effective for ecosystems is that community reinforces the value of the product to as many players in the ecosystem at once. Community members gain knowledge and build relationships with one another. The collective benefit of community instills belonging in members, which is sorely needed in today’s world.
Both ecosystem selling and changing consumer sentiment make the market primed for community. The time to invest in community is now.
Stay tuned for next week where I will dig into a few areas and companies that I am excited about in the community space.
Resources:
This report from Pew Research on online behavior was invaluable.
This report from Reddit on community adoption was also extremely helpful.
This journal article from the Journal of Marketing was was the foundation for ecosystem selling.
