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Seven Failures of Companies That Unplug Their Online Communities

FailFailure. It’s not a word anyone likes. Yet it is becoming a common occurrence these days with companies that launch online communities to get closer to their customers. The web is littered with online community ghost-towns. In fact, Gartner predicts 70% of these will fail by 2014 after generating little or no return for their owners, which include some of the world’s largest companies.

But this obscures the solid returns that many companies are generating from their online customer communities. Consider Autodesk, the $2.3 billion design software company that serves architects and engineers. Autodeck’s online customer community has cut support costs by $6.8 million annually. National Instruments has saved $7.8 million through an online community that has reduced the number of calls to its contact centers.

Some online communities are not only cutting costs, but are also generating revenue. Three years ago, Madison Electric Products introduced an online community so that customers could help the firm develop new products. From the ideas that customers have submitted thus far, Madison has launched six products and has three more scheduled this year. As a result, the new products have helped lift Madison’s sales 30%.

But for every online community that generates revenue, cuts costs, and/or cements loyal customer relationships, many more have become online embarrassments. Companies offer numerous reasons for their online community failures. The most common ones are a) members weren’t ready for online discussions, b) the software platform was too difficult for members to use, and c) internal subject matter experts didn’t produce enough content. But these explanations skirt the root causes of most online community failures, of which I’ve seen seven:

1. Community goals are skewed to company—not customer—needs.

Every customer community must serve customers. That may seem evident but it is infrequently practiced. If a company launches an online community to reduce customer service and marketing expenses, it is not likely to attract or keep customers because there’s little in it for them. More online communities need to be like Analog Devices’ Engineer Zone, a community of 12,000+ that helps them solve electronic design problems. The vast majority of community members (84%) say the community helped them speed their design process, and three-quarters were more likely to buy from the company because of the community.

2. “Tool talk” precedes strategy.

Organizations have a propensity to make the online community software purchase without carefully considering their goals for a community and customer needs. Companies should begin evaluating community software only after they have clear and market-tested the community features with prospective members. Otherwise, their online community will only provide what the tool has to offer—and not what customers need.

3. Mausoleums are built instead of sherpa tents.

An online community requires continual enhancements driven by member feedback. Many make their online community planning into a long, drawn-out process. That’s a recipe for disaster. Communities are in constant flux from changing member needs, business objectives, technical improvements and social norms. Community plans should focus on short sprints—not a big-bang approach.

4. Failure to feed the content beast.

Online communities need a flow of new, valuable content. SAP’s network of 2 million members come to read the 30,000 pieces of content from members and experts posted annually. But great content takes great effort, like getting a company’s thought leaders to put pen to digital paper, conducting studies, and inviting members to provide their expertise. Without it, members won’t come or stay for long.

5. Poor community management skills.

Community management is becoming a profession. Yet the average pay of online community managers is $65,000 a year—just $11,000 more than what the average executive assistant makes. Community managers need superior communications skills, the ability to cultivate strong relations, project management prowess, a research background, and social media proficiency. But rather than be treated as the skilled managers they must be, they are often regarded as administrative people who can be trained in an afternoon. Rule of thumb: If your company wouldn’t let your community manager speak with your top clients unsupervised, she shouldn’t be running your community.

6. Chasing only business metrics and not member-driven ones.

Companies often track metrics that don’t matter to the business but are the easiest to gather. “Likes” and fan numbers only go so far in determining what community members value. If customer satisfaction and retention is a core goal, how has the community helped customers better resolve their problems and avoid your call center? Have community discussions bubbled up product or service defects? Measure what matters.

7. No community zealot at the top.

Online communities need a strong executive champion. One reason why SAP’s communities have been huge hits with customers and top management is because a senior vice president, Mark Yolton, led the charge. At McAfee (an Intel company), Barry McPherson, executive vice president, worldwide support, supply chain & facilities, oversees the firm’s vibrant online support community.

An online customer community can transform an organization. But getting there demands prudent planning, keeping customers’ goals paramount, and acting on the numerous nuggets of customer data that emerge every day.

Photo Cred: StockMonkeys.com via Compfight cc

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About the author

Vanessa DiMauro

CEO of Leader Networks, a research and strategy consulting group focused on helping organizations build deeper B2B relationships with key stakeholders, thus creating significant competitive advantage and outstanding business results through online communities.

4 comments
RoisinSound
RoisinSound

Hi Vanessa, 


As far as I can see you've covered all the possibilities for failure really well so I'm going to assume you mean additional drivers to set up an online community rather than drivers for failure. Cutting support costs and building relationships are definitely two of the biggest in my opinion but one reason to set up an online community that hasn't been mentioned here is that they allow for company transparency. 


I think we're seeing more and more now that companies need to be as transparent and honest as possible to really gain the trust of their community. An online community provides a great platform for a company to do just that. You can show the flow of user requests, to them being considered, to it actually becoming implemented, it's really motivating for users to see that and means that they become much more involved and willing to share feedback. This is something we try very hard to do and it really pays off! 


Cheers :) 

Vanessa DiMauro
Vanessa DiMauro

Roisin,

Glad the article hit the mark for you.  Are there any additional drivers that should be added to the list in your experience?

Best

Vanessa

RoisinMcCormack
RoisinMcCormack

Great read Vanessa! Freakishly relevant to what I'm working on right now :)