Community-Generated Revenue – Maximise Your Community ROI
You might be facing pressure to show your community doesn’t just reduce costs, but directly generates revenue.
In the long term, this pressure may be useful. It’s always a little awkward to ask for more money to support a program designed to reduce costs.
But in the short term, it presents a challenge; how do you generate revenue through community?
This is a question we should welcome and definitively answer. Cost savings are limited by definition. However, there is no cap on the ability to generate more revenue.
Better yet, the more revenue your community generates, the more internal stakeholder support you’re likely to get.
How Can Brand Communities Generate Revenue
Brand communities typically generate revenue in three core ways.
- Retention (keeping customers you have). Brand communities directly improve the retention rate. This includes improving trial completion rates, increasing the lifetime value of customers, or improving retention of specific niches.
- Direct sales (selling your members). Communities create opportunities to sell new products to existing members and drive greater product adoption.
- New customers (attracting new business). Communities attract new customers (and audiences) to the brand’s products and services.
Each method has clear drawbacks. Retention is hard to prove, direct selling can be irritating to members who didn’t ask for it, and it’s not easy to attract customers of rival brands to a community. Yet it’s possible to navigate through each approach and harness the community to show great results.
Driving Product Retention Through Community
We all know brand communities can increase customer loyalty (i.e. retention).
But this isn’t achieved simply through members engaging with one another. Often the most engaged members are the most loyal customers, to begin with.
Instead, we have discovered there are very specific mechanisms that increase retention. You can see these below:
We won’t cover every activity, but retention is achieved when members experience:
- Initial success using the products as quickly as possible.
- Learning how to get the most value from the products.
- Satisfaction with the brand experience.
Each of these, as you can see above, can be influenced by things you directly control.
Here are a few things to consider:
Set Up Groups For Product Newcomers
It’s common to set up a group for newcomers to the community. This isn’t a terrible idea, but it’s not the best idea either. People don’t want to learn about the brand community, they want to learn how to get started with the product. It’s far better to set up groups for people who are new to the product. This is a place where they can be encouraged to ask as many beginner-level questions as possible and get mentored by others.
This works best when you collaborate with sales and success teams who will guide new customers into newcomer groups. If members are on a trial period, it’s critical to guide members into groups where they can experience results as quickly as possible.
You should ask members to frequently share updates and progress, solicit questions on areas which members often don’t understand, and have top community mentors who can provide immediate-hand help to resolve any issues.
Measurement: Track the % of newcomers who complete the trial in a newcomer group compared with those who don’t.
Prioritize Questions Of Trialists
You can also improve the retention rate of trialists by prioritizing their questions. This is the audience most likely to give up if they experience frustration. Every hour they have to wait for a response to a problem, their frustration increases.
Set up an automated or manual system to highlight questions from community newcomers (first 30 days) to a superuser group or internal Slack channel. Work with your top members to prioritize responding to these questions and guiding members to provide the best possible responses.
Measurement: Track the satisfaction rate of trialists invited to the community vs. those who aren’t.
Build A Library of Great Examples
In our experience, members love seeing great case studies, examples, and breakdowns showing the best (and most innovative) ways to use a product. They use these to guide their own work and get more value from using the product.
Instead of badgering members to share their best advice in wikis (or tribal knowledge base), it’s far, far, better to encourage members to share how they’re using your products and services. Especially if they have a unique approach to it.
A single great case study or breakdown provided by a member of the community is worth dozens of responses. It’s one of the most valuable contributions members can make to your community. You can use a tribal knowledge base tool, interview members, or simply invite members to submit articles for the blog or newsletter.
The key to making this work is ensuring the reward vs. effort equation is in their favour.
Measurement: Regression analysis showing the relationship between article views and retention rate * customer lifetime value.
Upgrade Members Near Renewal Time
If you are managing a community where members renew their subscriptions each year, make sure you provide increased value to members closer to this time.
Create an automated system where a few months before a member’s renewal is due, invite them to a private group of peers to celebrate their one-year anniversary. This should be a group at a more advanced level and ideally where they can find peers to help them with the next stage of their journey.
This provides unique value to members and targets this value at the moment when members might begin considering whether or not to renew their subscriptions.
Measurement: Track the renewal rate of members who receive these notifications vs. those who aren’t.
Direct Sales To Community Members
The idea of selling things to community members feels like an anathema to many of us. This is often the result of painful internal discussions where we fight to keep the hounds of salespeople out of our community.
However, if you’re in business, you’re always in sales in some capacity. Don’t shirk from this opportunity, embrace how you can showcase products in a manner which feels authentic to you and your community (e.g through UGC videos, user group meetups, etc). The key is to ensure you’re selling what members truly need and check the sales process adds value to members.
When done well, this is the most direct path to drive immediate value and show the quickest results. You don’t need fancy math to show direct value generated from selling to members.
The easiest option is to charge a fee to be a part of a community (or to access unique areas/features of the community).
The downside of this approach is it immediately limits the size and level of engagement within the community. Yet, it may be possible to create unique user groups, membership tiers, or features that members are happy to pay for. Sometimes this can be wrapped into a broader support package.
You might, for example, pay a small fee for top members to share their best expertise in a private group that only paying members can access. Or offer members unique customisation opportunities to engage in a certain way.
Perhaps the most common approach is to charge members a fee to attend community-hosted events and activities. When this is done well, it can be a tremendous revenue driver. You can attract sponsors, new customers, and members paying hundreds, even thousands, of dollars to attend.
The downside is events are cost-heavy. Many community events are loss leaders to attract new customers and build goodwill. While there are great examples of community events being spun into their own business unit, the scale required to make this work (and the variable cost model) makes it a challenge.
A far better match for most organizations is to develop training courses members can take.
If this is structured as an on-demand course, you can offer members courses that may be related to your product but not about your products.
You might not even need to create all the content yourself. Some organizations, like CXL (a client), pay top industry professionals a fixed fee and package access to all courses as part of a unique membership tier.
Courses could also be sold individually. You can reach out to three to four relevant industry experts and pay them a fee to create a course. You then sell the course to community members (or with a special discount to members).
Affiliate and Partner Sales
Perhaps the least common route in a brand community is affiliate sales.
When you have access to a large audience, there will be plenty of organizations that will pay a fee to reach them. Sometimes this is directly achieved through advertising. But few brands want advertising in their brand community.
But advertising is just one of many approaches. I know one organization in the pharmaceutical sector which generates millions of dollars a year by recruiting community members to participate in focus groups for a partner.
In this approach, you find partners in your industry who would like to reach your audience. You work with them to offer a strong discount (i.e. the unique value to members), and you gain a percentage figure for every product sold. Be mindful that any promotion is limited in frequency and offers tremendous value to members.
If members begin to express dissatisfaction, this approach should be discontinued.
Generate Business From The Community
Your brand community can also generate new business.
If the previous section explained how to sell new products to your existing customers, this section describes how to attract new customers to your existing products.
Of the three approaches, this is by far the most popular with organizations in today’s economic climate.
Brand communities can attract new customers in two primary ways. They can attract new leads and increase the likelihood of existing leads becoming customers.
Generating leads is probably the easiest activity to directly show new business.
Theoretically, every registration is a lead. The problem for most brand communities is the majority of members are already customers of the brand.
The challenge is to attract people who aren’t already customers to join and participate. This raises an obvious question (one which many people launching a new community fail to answer); why would someone who doesn’t use our products join our community?
1) Create A ‘Thought Leadership’ Zone
A common answer to the question above is to create a community about the topic, not the brand.
In theory, this can work well (and there are plenty of great examples).
In practice, it’s hard to do. Most efforts struggle. Members don’t have the same urgency to engage and participate. And the people who have the best expertise to share often want to do it in channels where they can build a following.
To do this well, it’s important to make sure you recruit experts early and ensure they’re getting what they want from the experience.
In this approach, you can open up a section of the community (or create a distinct area) for industry-focused topics and, as long as you are transparent, you can attract leads through registrations in the community.
2) Create Gated Resources
A simpler approach than creating an entire community to attract leads is to create resources and activities non-customers would be eager to submit their email addresses to access.
In this approach, you can collaborate with your members to create shared resources (or host events). These can then be promoted to non-members through advertising, social media, and other channels. Every registration can theoretically be counted as a lead.
3) Lead-Scoring Through Community Behavior
A powerful, but technically complex, approach is to identify leads from community behavior. In this approach, you might identify leads (or, more likely, upsell opportunities), by seeing how members engage in the community.
This can occur through lead scoring. This means specific behavior in the community is assigned a score. When a member achieved a certain score, they’re considered a lead and receive an invite to the next stage of the process.
A less complex version of this is to manually identify leads. For example, if you notice members discussing a problem one of your products can solve, you might flag this to a salesperson. We used to do this in the FeverBee Experts community.
4) Drive Traffic To The Website
A final approach is to optimize the community for search and leverage the community to maximize the traffic it drives to your primary company website.
There are plenty of ways you can optimize a community for search. This includes archiving old and duplicate content, optimizing titles for search, and ensuring most questions receive an accepted solution.
If you get to a point where your community is the secondary driver of traffic to your company homepage, you’re in a great position.
Who would want to reduce support for the community if it has a serious negative impact on web traffic?
Communities can also play a unique role in improving lead conversion. Sometimes it happens naturally. People want to get backchannel feedback or insights on the product/service they want to purchase. The community lets people ask questions and get help from others who have been in their position. In a branded community, they can also see how they will be supported as an admin and/or user of that product.
You can also stimulate improved lead conversion several mechanisms.
1) Showing Community Content On Product Pages.
You can use community-generated content on product pages and throughout the company website. This lets you use the natural social proof created by your community within the product pages where they will have maximum impact
Sephora (a client) is a good example of this.
Looks, reviews, and discussions sourced in the community appear on product pages – this directly increases conversion.
2) Surfacing Community Data in Presentations.
Having a thriving community should be a powerful reason for a potential customer to select your product over another.
If you have a community of 30k members who answer hundreds of questions a day and your competitors don’t, that’s a major differentiator.
The problem is the community data often isn’t communicated to prospects – at least not in a decisive way. The size and scale of the community should be prominently mentioned in sales materials as a major strategic differentiator and a reason to purchase.
Make sure the sales team is provided with good, useful, data they can use to highlight the unique value of the community. You can find out exactly what statistics might be most impressive and provide them with data and examples which might be a great fit. If you can build a list of great examples (discussions, case studies), this is a huge benefit.
Resource: Competitive Benchmarking
3) Testimonials, Reviews, and Case studies.
Your community is a fantastic tool to generate testimonials, reviews, and case studies which can be used in sales material and featured on comparison sites to directly attract more sales.
If you source 50 reviews for a comparison site from your community, it’s likely you will instantly jump to number one within that category. For an enterprise product, this can generate millions of dollars in sales. It’s one of the quickest possible wins.
To make this work, you need to make this part of the community management process. Regularly invite top members to create case studies, share testimonials, and leave reviews on relevant sites.
Make it as easy as possible by creating a template they can use. The more reviews and testimonials you can source from your members, the more leads you’re likely to convert. You can begin by asking your sales team which kind of testimonials would be most impactful and work with top members to do precisely that.
(p.s. make sure you have a large group of community members willing to serve as reference calls for prospects as well).
4) Community-Recommended Products
If you’re selling multiple products to members, encourage members to share their product stack / recommended products with one another. This is especially useful for retail brands.
Better yet, show related products next to relevant community discussions and track purchases from these discussions. Having a list of community products recommended by members helps reduce the perceived risk and may increase sales.
5) Create Product Hubs / Pages Within A Community
You might also consider creating a product hub or page within a community which pulls together community discussions, one-pagers and data-sheets, feature requests/ideas, videos around key products. This is a highlighted, curated, collection of community and company products all within the same place.
Create Community-Generated Revenue
Don’t hide from the revenue discussion. If you have a successful brand community, it’s likely already generating revenue or there are a few small changes you can implement to drive tremendous revenue.
Try a variety of things and uncover which works best for your audiences (colleagues and members). Not every activity will hit, but you will be able to find a combination which works to turn your community into a revenue-generating machine. Make sure you track the results and consistently show how much revenue the community is generating.
It’s one thing to say a company should invest more to reduce costs, it’s a lot easier to show a company they should invest more to drive more revenue.
Feel free to contact us for consultancy help. We’ve helped clients generate millions of dollars from their community efforts. We would love to help you too.
Template: How Do Communities Drive ROI?
Guide: Measuring The ROI of Online Communities
Book: The Indispensable Community
Article: The Million Dollar Community Page
Article: How To Get Experts To Contribute To Your Community
Article: Why You Should Build A Thought Leadership Community
Article: How To Get Experts To Contribute To Your Community
Article: Community Content Creates Trusted Product Pages
Article: How Quickbase Became Number 1 In Their Category
Community: The CXL Playbook Community