Marketing Expert's Corner
This article written in 2002
Part 3: Harvesting and Monetizing Your Community
Community-based marketing is really the only economical way to achieve market education, build credibility, and establish grass-roots visibility. In part two, you set up mechanisms for repeated and reliable contact with your members to reinforce the vitality of the community and your credibility within it. Your goal has been to make the community as valuable as possible for the members, to increase the "stickiness" of your site. Growing the community trust and loyalty takes at least 120 days, but with measurement and nurturing the process builds on itself. Now it's time to start to make some money.
The first question is, harvesting what? Harvest techniques depend on your objective -- you don't harvest wheat the same way you do tomatoes.
The most basic harvesting you can do is community knowledge, such as code examples (development tools--MSDN, Borland), customizations and extensions (videogames / consumer software "skins"--Electronic Arts, WinAmp), best practices (system management / security tools -- TripWire, Semantec), content (Kazaa), or domain expertise (any product requiring implementation or service partners). Harvesting knowledge isn't particularly tricky because it isn't very demanding of the community. It's in the member's best interest to contribute because the network effect is in play: the more knowledge a member contributes, the more benefit they will get out of the community.
Even so, you must make it very easy and efficient for community members to contribute. If they make a contribution, it needs to be stored and organized in a way that other members can rapidly find and use it. The contributor needs to receive a thank-you email, and get points in the system for community privileges. The contributor needs to see their nick-name in lights -- with the most useful contributors highlighted on the community home page. It's not a bad idea to offer a quarterly and annual prize for the most admired contributors (get members to vote on this -- another trick to instill loyalty and enthusiasm among members). Usually, this can all be done via a web content management system and a bunch of PERL. But extreme examples such as Kazaa have written entire client-side software applications to facilitate harvesting.
The next level of harvesting is to get something of a "lite commercial" (non-monetary) nature from your community, such as quotes, references, case studies, or leads. You need to be a lot more careful here as you don't want to wear down your community in the course of achieving your goals. One of the easy ways to harvest while building trust is to publicly honor participants who give their time or credibility to you. Have a "community celebrity" conference call or do an interview and publish it to the community. Have an annual dinner for them. Or, just send them a ticket to their state's lottery as their "thanks a million."
You can encourage broad participation in reference programs by starting a contest for the most creative usage, the thorniest problem solved, or the quickest payoff. If there's some user skill involved in your product, have a competition for the most capable user. Collect the initial information confidentially, and only ask for the permission to use it then after the contest is over (it's surprising how much more willing people are to give permission after they've won something). In addition, make entrance into your highest level of community participation (e.g., "gold circle") contingent on supplying these kinds of details. Be aware of local customs when trying this internationally: Asian cultures and the financial services industry tend to be very reticent about giving any kind of reference.
Cross-over communities are phenomenally effective for commercial-lite harvesting. While crossing over from the web to books, magazines or radio is quite difficult, crossing over gives your community a reach, credibility, and depth that is otherwise impossible. Look at Rush Limbaugh, TechTV, or Car Talk for examples.
The tough stuff: harvesting orders
Let's look at some of the most successful web-harvesting communities in the world: Amazon.com, eBay.com, and Dilbert.com. What these organizations have in common is a really large audience that enables an "unassisted sales robot" (also known as, "no people involved"). They also have in common an ability to make the commercial stuff unobtrusive and efficient. They work hard on order-fulfillment speed and consistency, and they apologize profusely (via robot emails) when there's a slip up. Even though their customer service may not be that great on an absolute scale, customers usually don't notice because they feel attended to so quickly.
While they are heavily branded and are pulling money out of your pocket, they don't feel heavy-handed. They manage to communicate a sense of fun. The entire experience feels different because the shopper is a member of a community, not just a random person buying at a store like jcpenny.com. The vendor engages the member before and after the sale, and they have rating systems for the merchandise, the transaction quality, the seller, or the product value. The vendor makes you feel like they care through the behavior of their robot.
Of course, most companies don't have a potential audience in the millions, so the conversion rate of even the best web marketplace will not drive sufficient sales volume. So you need to supplement your web community with offers and personal outreach to make revenues happen. In setting up your commercial offers, here are some things to get right:
- Entice people with real-world contacts or events. Purely web-based harvesting has a low yield rate and an unpredictable sales cycle. To make things happen, you'll need human contact via a very well run email system, telesales group, or member events at trade-shows, user groups, birds-of-a-feather sessions, or other public venues.
- Integrate your store with telesales and your account team. Every customer transaction needs to be fed into your SFA or CRM system so that your salespeople know of member/customer activities. Your telesales or account management team needs to access a member's activity report before they make any call. Look for buying patterns over time (longitudinal reports), and measure the most effective timing and messages for telesales to use when following up after an on-line sale. (We'll expand on this next month.)
- Make it more than just an on-line order. While you absolutely want to use off-the-shelf software or ASPs to run your order processing system, you don't have to make it dull. If you have a lot of items to sell, catalog organization and visual merchandizing are critical success factors. Auto-upsells and "you might also like" offers work incredibly well if you have a huge number of SKUs (e.g., Amazon or eBay). But if all you have is one product line, you can still offer buying advice, tips, reading materials, and other information relevant to a customer who hasn't decided which specific item to buy. The visual decorations of your ordering area need to match the tastes of your audience: look to relevant portals and magazine sites for appropriate norms.
- Encourage partner products and services. It's really helpful to have an ecology of partner products and services to add to the "bandwagon effect." The credibility of your community and the attractiveness of your products grow as you have more partners, even if some of the partner products are partially competitive with yours.
- Keep the store separate from the user forum. While the store may have information or quotes gleaned from your users, it's important to keep the user forums (discussion groups, contribution areas, BLOGs) cleanly separated from commerce. Of course, you'll want to communicate special offers to your community, but you must avoid the forums feeling like an aisle of your store.
- Encourage vendor-neutral comments. Of course you'll encourage active debate in the community's forums without vendor bias, but in your store area it's a good thing to have member-review areas with commentary about products, sellers, buyers, and related service providers. You have to closely moderate these commentary areas to keep the slander out, but you should make it clear that an accurate but negative rating or comment is just as valid and valuable as a positive one. Gain credibility by being willing to show negatives.
- Use promotions that encourage membership and loyalty. Remember coupons? It's a good idea to offer members special promotions, first-looks, and limited access items. You should consider having different promotions for each of your community membership levels. Even if you can't afford a lot of discounting, you can offer code samples or user hints as freebies for your members. The point is to encourage repeat visits, extra transactions, and a feeling of special membership.
- Link contests and events. Contests of various types (e.g., most creative use-case) or even sweepstakes (random drawings for a prize, without requiring purchase) can stimulate first-time and repeat business. It is amazing what people will do for a great T-shirt, poster, or MP3 player. The tricks of the Direct Mail trade (such as "limited time" offers) work just as well in a web community as they do in snail-mail. Events such as member-appreciation parties, sponsored user groups, or other "non-cyberspace" venues should be carefully orchestrated and extensively promoted within the community to increase the positive feedback loops.
- Have "instant" customer service. Customer satisfaction studies have shown that people feel more impressed by how quickly the vendor gets back to them after they report a problem, than they are with how soon the vendor actually solves the problem. In the on-line world, make sure that any problem is acknowledged (defensiveness never pays), and that the report is instantly responded to via email (with a tracking number). Offer on-line-chat (instant messaging) with your support team for customers and prospects.
- Follow up once for every order, twice for any problem. Following the Cluetrain Manifesto, business is a conversation. Every transaction is a good excuse to have a conversation with your customer. In your order-acknowledgement email, provide a mechanism for immediate feedback on the product or the transaction. A few days after the order, send a follow-up mail making sure that everything went ok. If there's an unresolved issue, send a periodic (daily?) "keep alive" message. The ROI of preventing or fixing a dissatisfied customer has been proven to exceed 200%.
The key to successfully harvesting your community is to make the purchase transaction a natural extension of membership -- the ultimate form of participation, something that seems like a privilege and a benefit. Whether on the web or via telesales, purchasing must feel like participating in a user group.
If this can be done for products as dissimilar as Visual Basic, The Sims, and Linux, it can be done for your product line too.
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