Failure. 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.

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