Do Branded Online Communities Fail?

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by: Matt Rhodes

Today a lot of people are talking and writing about a new report from Deloitte looking at online communities, the 2008 Tribalization of Business Survey. The report is based on interviews with 100 firms that are sponsoring branded online communities, looks at what they are doing and what benefits they are reaping.

Of all the coverage of this report today, the Wall Street Journal prompted a debate on why most online communities fail. The claim is based on findings that 35% of the communities studied have fewer than 100 members and that apparently 60% of the firms has spent over $1 million on the site. This leads the analyst from Deloitte to comment that:

“A disturbingly high number of these sites fail”

At FreshNetworks we build and manage branded online communities, working with firms who want to launch a community and helping them to get the strategy right, set up the platform and then manage the community. I was surprised and shocked to read some of the comments on this report. We’ve seen quite a few communities that fail, but have seen and been involved with even more that are successful. This led me to try to consider what it is that makes a community work and how to reconcile my own experiences with the Deloitte report.

The first indicator was Deoloitte’s finding that 30% of the firms did not employ a full-time and professional online community manager. It would be good to understand if these firms were also those whose communities had fewer than 100 members. From our experience, a good, experienced and committed community manager is critical to the success of the community. This is more than just a moderation role, it’s more the role of the party host, helping the community to thrive and grow, bringing together members and discussions and focusing activity. An analysis of the types and levels of community management that was involved and how this correlates to the success of the community would help to understand this situation more.

I also noted that even though 35% of the communities studies by Deloitte had fewer than 100 members, a not dissimilar number (25%) had more than 1,000. To have 1,000 active members takes significant planning, management and activity on the site. When we work with clients we help them to understand that in many cases it will take a while for the community to reach maturity and to build large active membership bases in all but the biggest brand name or issue-based communities. But size isn’t necessarily the most important consideration. Different people set-up communities for different reasons. You may want a small and private online research community, you may want a place for your most loyal customers to interact with the brand, or you may want to attract advocates and amplify word of mouth. For some, a large and vibrant public community will meet their needs, but size really isn’t everything.

If we are to understand the success of branded online communities we really need to look at the objectives that firms went into the endeavour with. Different firms will have different endeavours and so what may look like a ‘failure’ on the basis of external and arbitrary factors, could be a perfect success for the firm that set it up.

The benefits people see from branded online communities can be huge and varied. Significantly improved natural SEO, greater product advocacy, amplified word of mouth, insight into customer opinions, help innovating products. The list goes on and will be different for different brands and different communities.

We work with a lot of clients to help them get their strategy write, build the community that best meets their needs and then to manage the community to build and grow it in an appropriate way. These three elements are critical to get right and involve bringing in the right people at the right time, both within an organisation and external help where it’s needed. Branded online communities that are set up and managed correctly don’t fail.

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