Greg is one way to make money out of social media: three extras

It’s been claimed that customers are three times more likely to buy when engaged in community1. So here are three connected thoughts on how to make and lose money from your online community I’ve come across over the long weekend, following on my recent post around the tricky issue of monetizing your community. That last one links to Lithium’s Dr Michael Wu’s final post on targeting influencers:

1. [For social media marketers, 2010 will be the year that…]…they have to deal with the three Cs of backlash: consumer, community and client. Consumers (a.k.a. “human beings”) are already expressing frustration with community members who turn out to be marketing shills. Community managers will crack down on marketers-posing-as members because of the impact on trust and participation in their sites. And clients will either pull back or redirect their social media efforts when they discover that, surprise! marketers don’t have the answers on how to actually reorganize their customer relations and R&D teams to meet the demands that social media marketers have awakened.

Alexandra Samuel, from Social Signal, quoted in ‘Collective Wisdom: Some expert thinking on five social media questions as we enter the first decade’

2. RT @rhappe: Big decision point – is the community meant to make money itself or does it play a supporting role or as new channel –@adamzawel

3. Boost influencers’ cred with your users by making their content more searchable, & promote it via tweets & bookmarking: http://ow.ly/1FUtM

As a real world analogy for the role of the community manager in earning member’s trust and in turn helping monetize the community in a sustainable way I like what Altimeter’s Jeremiah Owyang says in the introduction to ‘The Community Roundtable’s State of Community Management – 2010’ report:

“To be successful, companies, and their internal cultures, need to empower community managers to help customers and employees – just as they would in a physical store.” This is nicely reflected in a survey by ComBlu which revealed one of the best online communities (B2C) they came across comes from retailer Sears: “One of these standout communities was “MySears”. Its tag line, “Get advice before you buy,” reinforces that this community is about helping consumers, not selling specific products.”

Indeed to come full circle to the reason for this post the report’s authors acknowledge while “some areas of social media and community strategy have shaken out, other areas are still being discussed for their efficacy in various situations”, including “when and how to monetize, as well as, what is the right mix of products/services”.

What I’m sure would help in the subject of monetization is a way of measuring with the majority of readers (‘lurkers’) of a community, whether they use information they read to guide their purchasing decisions. There’s a nice (B2B) use case example below from Siemens reference in the report which points to how offline and online conversations can assist cross-selling. Jump to page 18 of the slideshare to get straight to the example.

The bottom line is that online communities can deliver value in a number of ways, you have to figure out what works best for you.

In closing consider these community ROI stats  from Bill Johnston to underline the potential value of your community:

a. Community users remain customers 50% longer than non-community users. (AT&T, 2002)

b. 43% of support forums visits are in lieu of opening up a support case. (Cisco, 2004).

c. Community users spend 54% more than non-community users (EBay, 2006)

d. In customer support, live interaction costs 87% more per transaction on average than forums and other web self-service options. (ASP, 2002)

e. Cost per interaction in customers support averages $12 via the contact center versus $0.25 via self-service options. (Forrester, 2006)

f. Community users visit nine times more often than non-community users (McKInsey, 2000).

g. Community users have four times as many page views as non-community users (McKInsey, 2000).

h. 56% percent of online community members log in once a day or more (Annenberg, 2007)

i. Customers report good experiences in forums more than twice as often as they do via calls or mail. (Jupiter, 2006)

References
[1] The claim that:  “Customers are 3X more likely to buy when engaged in community” was reported in the Online Community Unconference: Book of Proceedings, June 10, 2009 in Mountain View, CA.

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