Looking at the importance of getting your crypto community on board seems to be a relatively easy ask for most blockchain startups. Using existing well known platforms like Telegram and Slack makes it seems a ‘no-brainer’. But could there be more to the value of community involvement suggested by the usual mix of airdrops and competitions? Or maybe as Michael K. Spencer argues in his skeptical piece “from Ethereum ICOs to ConsenSys the fallacy that community has value is a hack”:
The fallacy that community has value
“In the real world clients and users are important, in crypto fairyland they try to build ‘communities’. However, such communities are more prone to pump and dump and aren’t actually loyal followers. That is, crypto’s failure might be tied to the failure of crypto tribalism, false hype, and ridiculous valuations of that actual value of such communities.
“How is crypto hype of this kind not misinformation? How many failed ICOs, exit scams and shitcoins do we need to have endured to understand the Telegram-Bitcointalk-Reddit hoax — communities alone are not valuable. You actually need real-world products and real clients…Crypto saying that its community is its best resource, is like Facebook saying it’s valuable because it has over 2 Billion users,” Spender concludes.
On Yavin, the founder and CEO at Cointelligence, a leading company in data research and analysis for the crypto economy says the problem with ICOs continues with today’s exchanges. “We were surprised that a lot of the exchanges are not willing to disclose the details of the team members. We had 60 at least of the exchanges out there not willing to tell us who is behind the exchange!
“Some of them are giving really stupid answers. One exchange actually answered “Yes it is a great team” we we asked for the team details three times.”
The power of decentralization
To answer those understandable criticisms I would like to take a step back to the ideals of decentralization. Ideally, closely involving your community goes to the heart of what the vision of decentralization can deliver, sometimes referred to as “user empowerment” or in marketing jargon as “getting closer to the customer”. As Ajeet Khurana CEO of Zebpay explained in a recent Off the Chain Podcast: “What a lot of those (techno-led blockchain enthusiasts) people are missing out on, if you were to think of blockchain only as a computer scientist it is possible you would not be as impressed as if you think of it as a social phenomena.
“So the social dimension to blockchain which is what you talk about in the form of community adoption and community behaviour; the human/community aspect of the blockchain is what makes it so special; people who miss out on this part and probably want to look at the technical specifications only, are probably never going to get it.”
Unleash the art of the possible
Thinking about how the new decentralized technologies engage with customers, and what this means in terms of how marketing and your community is organised, brings us back to how businesses are looking to use its potential in the first place. Dante Disparte, in his recent Forbes article on navigating the blockchain wars put it nicely:
“Perhaps the most important blockchain design principle is to unleash the art of the possible. If indeed blockchain is a foundational technology like its cousin the internet, then it would stand to reason that merely looking for back office efficiencies (especially with such computationally intense properties such as proof of work, stake or other complex algorithms) may be a fool’s errand.
“Rather, leaders would be wise in thinking about blockchain as an augmenting technology, one that can push the boundaries of a firm’s reach, derive and deliver value in entirely new ways, while creating a stakeholder lock-in based on trust, transparency and permanence – three things that are in perilously low supply in both private and public enterprises.” (Update 18 June: Dante is now Head of Policy and Communications at the Libra Association, set up by Facebook and partners to promote its new cryptocurrency).
Community means business
But there’s a real hard-headed business reason to look to community, says ‘Off The Chain Podcast’ host Anthony Pompliano – those who that control the audience, control the future: “As crypto networks become more popular and pervasive, I anticipate that this community/network building skill set will become more important. Teams will start to sink significant dollars into building repeatable, scalable models that produce these audiences.
“We started to see this with the ‘Telegram community building’ during the 2017 ICO boom (teams would race to get as many people into their Telegram messaging chats and then brag about it to investors as a sign of traction), but that was just the tip of the iceberg.
“Audience is a new currency. Those that have it, have incredible power. Those that don’t are starting at a disadvantage. Whether entrepreneurs are building crypto networks or for-profit companies, those who control the message, control the future,” Pompliano concludes.
A community of crypto customers?
Looking at the power of community from the ‘bottom up’ to drive the token economy, leading blockchain marketer Jeremy Epstein, explores “the potential for a group of distributed, incentivized, and aligned token holders to execute micro-marketing campaigns” in his downloadable paper, The Decentralized Marketing Organization.
As Epstein explains, “the purpose of the Decentralized Marketing Organization is to partner with the decentralized technology organization (building the innovation) to create a ‘crypto-customer’.
“The concept of a crypto-customer in the context of a decentralized protocol is different than in a traditional organization. In a decentralized network, the overall value (i.e., market cap) of the protocol loosely trends to Metcalfe’s Law. That is, the most valuable customers are the people who engage most deeply with the protocol and bring in more nodes to the network.”
In operational terms “this means that an effective marketing strategy for a decentralized project will enable a series of multi-pronged demand pulls, which target the wide array of roles that play into protocol adoption (developers, designers, token buyers/investors, social media influencers, regular users, partner integrations, etc.). The pace of change combined with the diversity and distribution of the market requires the utmost agility. This is why it needs to be decentralized,” Epstein concludes.
Community management expert David Spinks made the point in a recent tweet – while community-driven business makes sense, the real challenge is finding the data:
The value of community is clear.
What can a business accomplish with 10 employees?
What can a business accomplish w/ 10 employees + 1,000 ambassadors&contributors?
Community-driven companies scale exponentially faster. The (solvable) challenge is getting data to prove it.
— David Spinks (@DavidSpinks) May 1, 2019
Community-driven companies scale exponentially faster
Here’s the take on that challenge from co-founder and chief advisory officer of one of the leaders in crypto community building AmaZix, Luke Saunders:
“Communities have become a valuable asset to companies in many ways. From gaining traction via user acquisition to crowdfunding, having a community allows companies to scale, growing brand loyalty along the way. We’ve worked with projects who have been able to scale up quickly with the support of communities such as WePower, GoChain and GBX.
“Through our experience, we found communities are most powerful when integrated as part of a unified strategy across all departments. Our recent expansion reflects this by working with our clients across the entire process, including digital advisory, corporate finance, legal, and marketing. All of these have a community or investor component at some level.
“Getting industry level data to prove the power of community, though, is challenging. A key difference maker we’ve seen from successful communities is their willingness to be transparent. It’s shown us that there is plenty of room for improvement in transparency on an industry level. We believe it’s about transparency not just in blockchain itself, but in how companies operate. The space is maturing quickly, and we believe the rise of STOs are a step in the right direction. We’re extremely excited to usher in that new chapter in crypto.”
Proving the ROI of community?
Online communities have been around for many years before crypto came on the scene with a bang in 2017. So what’s the view of Rachel Happe, co-founder of The Community Roundtable, helping community managers and businesses make the most of their community efforts since 2009?
A key finding of The Community Roundtable’s report for 2018 was that community programs “show an average ROI that exceeds 2,000%. They enable behavior changes that directly impact profitability and revenue generation, while also having an overwhelmingly positive impact on brand and cultural sentiment,” she says. The report’s recommendations to improve ROI have strong practical lessons for the crypto industry too:
Your customers, your community
To me this sounds like a call to engage with your community/customers from the start, thinking of your customers needs alongside technology innovation. With that kind of vision, set in an increasingly decentralized business world with a community marketing approach to suit, clearly anything is possible!
Stuart G. Hall
Click the bottle above – for my 2013 article on the scientific theory behind growing online communities drawing on the insights of Robert Kraut. See my online community slide notes below for a simplified view of how to grow your community!