Big Brands Tap Into Private Online Communities

The question for marketers today is not whether to make online communities part of the marketing mix, it’s how to tap them and what kind to create.

Communispace is creating private online communities designed to uncover valuable research metrics to stimulate marketing efforts, while also serving as a customer relationship management tool.

The company is part of a U.S. online research market that totaled US$1.8 billion in 2005, up about 17 percent over 2004, according to Inside Research. While there are many different types of online market research, private online communities are catching on with Fortune 1000 companies.

Indeed, companies like Charles Schwab, Unilever, Reebok and Starwood Hotels are capitalizing on consumers’ passion for sharing ideas and being part of a virtual community with private online venues that protect confidentiality for both the company and the members. These companies are doing things like testing new product ideas, advertising campaigns, evaluating Web sites and generally collecting all types of customer feedback.

“Anytime an organization can create an engaging moment — and what’s more engaging than sharing opinions and feeling that your opinions matter to an organization — they are creating value for the brand,” Janelle Barlow, Ph.D., co-author of “Branded Customer Service,” told the E-Commerce Times.

Creating Customer Communities

Robbie Kellman Baxter, president of strategy consulting firm Peninsula Strategies, works with companies like Netflix, Sun, PayCycle and Yahoo. Her latest initiatives for big brands include incorporating chat, IM and other community building features onto their next generation Web sites as a means of building closer customer relationships.

“I have been struck again and again by the importance of creating and supporting communities of customers. This is so important, particularly for high-emotion products. This technique creates loyalty among those customers because the customers’ peer groups are so tightly linked to the company’s products,” Baxter explained.

Listening to Consumers

When you are thinking about how to build a business, you want three things from your investment, Baxter suggested. First, you want to get customers to visit your site, then you want them to buy, then you want them to repeat and refer.

The private online community increases the likelihood of future purchases, but it also increases the customer’s identification with that company, which increases the likelihood of referral, she said. Research backs up Baxter’s theory.

A recent Communispace study called “What Companies Gain from Listening” reveals 82 percent of community members said they were more likely to recommend the client company’s products since joining the community. Seventy-six percent felt more positively about the company; and 52 percent reported that they were more inclined to purchase products from the company.

Protecting Customer Confidentiality

Protecting confidentiality is critical because it makes customers feel safe enough to really share ideas and problems, which also increases loyalty, according to branding experts.

“People need to know that what they are saying is private if you want to create a trusting environment,” Communispace CEO Diane Hessan told the E-Commerce Times. “These invitation-only communities make customers feel special, like their voice is important. They are more likely to participate if they feel they are part of an elite group.”

In this protected environment, companies can learn how their customers perceive and use their products and services, and what the company could do to make the customer happier. By keeping it private, they may also keep their competitors from finding out what customers don’t like.

“If the conversations don’t happen on the company’s Web sites, they will happen elsewhere, and there are now bulletin boards, groups and chats for virtually every special interest,” Baxter pointed out. “Companies need to see the trend and evolve, before it passes them by.”

Not a Science

Private online communities do come with a warning, though. You can’t take the results as set in stone. They do not represent scientific statistical samples. You may be able to gauge reactions, but you shouldn’t make multimillion-dollar decisions based on user feedback in these communities, Hessan admitted.

“If you are looking for texture, if you are looking for a quick hit on something, if you are looking for an early read, if you are looking for great ideas, if you are looking to try to get only a certain target audience, that’s when you would use a community,” Hessan explained.

Toymaker RC2 Corp. used Communispace to test its prototypes in the hands of kids and their moms. The information collected about names, pricing and packaging helped the company make hundreds of decisions about its toys and retail programs. RC2 even added more shapes and textures to its line of Click Bricks, which debuted last summer.

Community Risks

The only downside to making online communities part of the marketing mix is pie-in-the-sky customer expectations, Barlow noted. That is, just because a customer gives feedback about something they want done, the event isn’t necessarily going to occur.

“So, the organization will have to do some type of summary back to the customers, so they know they have been heard, though not necessarily granted their wish. The part of this that needs to be thought through carefully is how to staff the interaction,” Barlow explained. “The company may suggest to the customer that they are listening, and then nothing happens. That could be off-brand.”