What is Community-based Marketing?
CMO, June 2005
by Vicki Powers
Community-based marketing is a tactic some companies employ to gain insight into their customer base by providing a neutral online venue for consumers to communicate opinions and experiences with each other and the organization. The dialogue that takes place in this space is natural and authentic, and it can help engender customer loyalty and brand advocacy. Two of the most successful builders of customer communities online still reign: Amazon.com and eBay.
Why would customers want to be part of a community?
Customers join communities for a variety of reasons. First, they enjoy being part of a group—even if it's a group of people they've never met. Customers who are passionate about certain products or services love to share their enthusiasm. And through community-based marketing, customers create connections with others who share a common bond.
Many customers are also drawn to online communities for product information, member discounts or loyalty rewards offered by the company. King Arthur Flour's online community—dubbed the Baking Circle—used these tactics to attract nearly 100,000 members in just three years. These customers, who have a passion for baking, use the community to share recipes, upload pictures of baked goods and "meet" other bakers in a virtual world.
Why should companies consider community-based marketing?
Kim Daus, coauthor of Customer.Community: Unleashing the Power of Your Customer Base, believes successful Web business models have prevalent community elements. Daus describes a number of ways companies can create value from customer communities, including peer-to-peer customer service, affiliation, customer-to-customer commerce, product testing and offline events.
These elements can also help with customer retention, according to Thomas Sweet, the former director of Internet marketing and operations for King Arthur Flour and the brains behind the Baking Circle. "If you want to retain your customers, it's an electronic way to make them feel warm and fuzzy like they're in a retail store," says Sweet, now CEO at IT consultancy Tritco Industries.
What are the benefits of this kind of marketing?
Frequent interaction with customers encourages loyalty and often reduces the organization's need to "push" direct mail campaigns. Ultimately, increasing customer loyalty affects the bottom line by helping to boost sales and reduce costs.
Baking Circle members order three times more per year online from King Arthur Flour than they do through the company's catalogue—which goes out to 9 million households—and they spend $10 to $12 more per order. In 2003, diehard community customers helped The Baker's Catalogue achieve a staggering 20 percent growth and King Arthur Flour climb to number one among whole-wheat flour manufacturers in the United States.
How can organizations get started in community-based marketing?
Begin by determining how involved a community component the company is willing to support. It's best to start small and scale up as needed. A beginning stage might be just adding a communication forum to your website to encourage customer interaction, or supporting an existing fan website or blog. The key to success is in listening to customers, reacting to them and letting them build their own community.
Should I worry about what customers will say?
No. The benefits far outweigh the chance for negative comments. Criticism also represents an opportunity for a company to understand what's not working for customers and to fix it. "Community-based marketing is powerful," Daus says, "because the community is not paid to sell a product. The voice of the community leads the marketing. And this will build an incredible machine that is greater than anything the organization can do.