02.15.2017

Where does community live in a business?

What is the value of community? What’s the ROI?

These are questions that we hear every day in the community industry.

Businesses have been building communities for a very long time, but have historically looked at community as a cost center, diverting support center costs or helping cut advertising budgets.

Today we’re witnessing the Renaissance of the community discipline, and community has come to be seen and utilized as so much more than forums or support communities. In fact, reducing support costs is only cited as a primary reason for launching community in 10% of branded online communities (see below). While both of these applications remain an important and needed value of community for business, you can see that they are just one piece of the larger puzzle of defining community’s business value.

Primary Reasons for Launching a Branded Online Community

Unlike many other distinctly defined professions, community can live in its own business department, or it can live under many different departments. It’s a strategy that can be applied to almost every aspect of a business.

So what areas of your business can you scale through community? Where does community fit in your business? And how do you define the value that you can expect from the specific community application in your business? That’s what we’ve been working tirelessly to uncover, and what our 2017 Community Value and Metrics Report has uncovered. The possibilities can seem dizzying for those building communities from the ground up or trying to organize existing members. But we’ve created a simple framework you can now follow.

Introducing the SPACE Model for Defining Community’s Business Value

All communities can derive their business value from one of the following areas:

CMX SPACE Model for Defining Community Business Value

Let’s dig into each one.

1. Customer Support/Success

Members answer questions and solve problems for each other in order to be more successful.

This is an area of community that most of you are probably familiar with. It can take the form of a support forum where people are showing up with product questions and the community answers it for them.

It can also be a customer success platform, where members are helping each other to use your product more successfully.

Metrics to measure and show business value:

  • The most popular metric people are looking at, according to our 2017 research report: number or % of answered questions in the community
  • $ decreased support costs
  • % increase in user success or retention
  • % increase customer happiness/NPS score

Examples: Apple, Sony, Udemy

Tools: Zendesk, Get Satisfaction, Vanilla Forums, Desk

2. Product Ideation, Innovation & Feedback

Members share ideas and feedback in a community that will be used to drive innovation and product improvements.

By bringing their users or customers together online (or sometimes offline), companies can leverage the collective insight of their community to get ideas for innovative features and identify the most important changes that will improve their products.

Some companies take this even further that bring their community into every step of the product development process, from design to development, to ensure that the voice of the community is present in everything they create.

Metrics to measure and show business value:

  • The most popular metric people are looking at, according to our 2017 research report: Number of product ideas implemented from the community
  • # of bugs and feedback submitted/applied to product
  • % increase in Customer Lifetime Value (CLV) as a result of new feature or product adoption
  • % improvement in sales pipeline as a result of better product offering

Examples: Dell IdeaStorm, Vimeo, Salesforce MVP Program

Tools: Uservoice, DNN, Salesforce Community Cloud

3. Acquisition and Advocacy

Creating a network of ambassadors and advocates who drive awareness and growth for the business.

This is where community and marketing most closely intersect. Sure, the company can tell people to buy their product. But much more powerful is when community members become advocates and promote a product or experience for you. More and more companies are recognizing that they have huge advocates already. If they can connect them with each other, and give them the tools to be successful, they can drive massive growth and loyalty for the brand and product.

Metrics to measure and show business value:

  • The most popular metric people are looking at, according to our 2017 research report: New user or member sign-ups
  • # of referrals, sign-ups to product
  • Change in sales revenue
  • Reduced marketing and ad spend

Examples: Lululemon, theSkimm, Marketo

Tools: Influitive, Ambassador

4. Content & Programming

Building a community of the people who are contributing the content that makes up the product or other assets.

Distributed models are changing the way businesses function. Collaborative consumption, crowdfunding, user-generated content, marketplaces, open source… these are all examples of distributed models where the value is created by the masses, and the business is just creating the platform. A community strategy is critical for all of these kinds of businesses, which explains why all successful companies in these spaces (Airbnb, Kickstarter, Product Hunt, Lyft, Mozilla, to name a few) all have community teams, some with hundreds of community pros on their team and a VP at the top.

Metrics to measure and show business value:

  • The most popular metric people are looking at, according to our 2017 research report: Number of active users or members in the community
  • # of content submitted and approved
  • % increase in content contributions per user
  • % increase in retention of content creators

Examples: Duolingo, Airbnb, Kickstarter, Product Hunt, Lyft, Mozilla, Genius

5. External Engagement

Building a community of people who have a common interest that is related to or focused on your brand or product.

Some companies just get that if they identify the common interests and needs of their target customers, and build a community around that passion, that it will lead to increased loyalty, advocacy and – ultimately – sales. This can be a hard sell internally, but it’s working for a number of large brands today.

Community is powerful because it gives people a common sense of identity and belonging. If the brand is the leader that gives them that sense of identity, it doesn’t matter if the community is focused on their product or not, members will feel a stronger connection to the brand.

Nike has a community for people who love running. Sephora has a community to talk about beauty. HubSpot has a community for inbound marketers. As a result, they’ve seen big increases in customer spending, and the community drives other secondary community values by fueling ambassadors, product feedback, and more. According to Lithium, the platform that runs Sephora’s BeautyTalk forums, “Sephora’s BeautyTalk superfans spend 10x more than community members who spend 2x more than their average customer.”

Metrics to measure and show value:

  • The most popular metric people are looking at, according to our 2017 research report: Customer retention
  • % increase in customer conversion to sales
  • % increase in lifetime value
  • # of ambassadors created/feedback collected

Examples: Nike, Sephora, HubSpot

Tools: Lithium, Jive, Vanilla Forums, Higher Logic, and many more platforms covered in the CMX Guide to Community Platforms 

6. Internal Engagement

Building a community of internal employees, suppliers, or vendors to deepen engagement for those who are working with the brand.

As organizations become more distributed, global, and complex, internal engagement is going to become even more important to build. Many companies are doing this behind the scenes today and you’d never even realize it as a consumer.

Financial institutions like Wells Fargo and Silicon Valley Bank build internal communities of subject matter experts; hospitals and insurance companies do the same; tech and space giants like Microsoft and NASA build internal communities to connect employees across the globe; small startups are spearheading powerful internal communities on platforms like Slack.

Our research has shown that this is still a nascent area of community building (out of over 530 respondents on our most recent research report, only about 20 were building this type of program currently), but it is low-hanging fruit for many who are wasting precious time and resources trying to connect the dots internally between suppliers, subject matter experts, vendors, and employees across the board.

Metrics to measure and show value:

  • The most popular metric people are looking at, according to our 2017 research report: Retention
  • % increase in internal sense of belonging
  • # of internal ambassadors or advocates

Examples: NASA, Microsoft, Wells Fargo

The Current Landscape 

According to our research of over 500 community builders, here is the state of where companies are deriving their community’s business value in 2017:

The Primary Business Value Community Drives

This doesn’t mean that the values that have lesser percentages are any less valuable. It does mean that these areas are likely not as developed and served with software. But it also means that your opportunity there may be ripe for investing and serving your customers with new value that they have never before experienced. We delve deeply into this in our research.

How to Apply the SPACE Model

Now, how do you put all this into action for your community strategy?

  1. Use the SPACE model to get buy-in for community by clearly explaining where community will bring concrete value into the business.
  2. When starting out, focus on just one area of the SPACE model. Trying to accomplish too many things with your community will make it difficult to define and track its value. Most communities start with clear definition and their influence grows from there.
  3. Once you define which area of the SPACE model your community lives, you can identify the metrics that correlate with that focus.
  4. Often, different areas of the SPACE model will require a different strategy, community platform and possibly a different team.

Dive Deeper with Our Research on How to Measure Community Metrics and Value

2017 Community Value and Metrics Report by CMX

 

Download the report right away.

Dive Even Deeper with Our Webinar on How to Align Community to Meet Your Business Goals

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David Spinks

David Spinks | @DavidSpinks

David is the Founder and CEO of CMX. He's been building digital communities since he was 13, and has trained a number of the world's leading businesses in community strategy. He created CMX to unite the community industry, and bring community professionals the resources, network and training they need to thrive.