On Community-Based Marketing — and Why It’s Not the Marketing You’re Thinking Of

Photo by Mika Baumeister on Unsplash

As we navigate through the troubles of 2020, one concept has repeatedly made it through the noise: “community is what it is all about”. We have heard this term used in a multitude of contexts: in business, in politics, in health — used with widely different semantic meaning, but with the same bottom line: when we get together, we have the extraordinary power to be more, and better, than the sum of our parts.

This is also the baseline principle of community-based marketing — a term, specific to the business/management context, that describes the practice of creating, sustaining, managing, and using a community for business purposes. Famous examples of community-based endeavors are Sephora’s Beauty Insider, Lego’s Education community, and countless Open Source companies that self-sustain thanks to the efforts of their community members.

Community-based marketing is, on the surface, incredibly appealing. For starters, it sounds very easy, very flexible, and very cheap. As a business, you probably already have marketing professionals: they can take over the community-marketing management. And it’s 2020: if you have an internet connection, you can set up a community environment in a few clicks. Your customer base, which already exists on a variety of channels, will follow.

However, these few steps, in their simplicity and appeal, contain a variety of managerial mistakes that can all be traced back to the fact that community-based marketing can be fundamentally different from traditional marketing. So, instead of giving one-size-fits-all (therefore, possibly damaging) checklists, let’s try to understand what some of these differences are.

We can start from the definition of marketing by the American Marketing Association, and then do some backward-induction on the differences between community-based and traditional marketing:

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. (AMA, Approved 2017)

Difference #1: Creating (Business) Value

For traditional, non community-based products or services, it is relatively easy to measure and quantify the return from an investment. One common metric, used both in academic papers and in industry, is sales volume. A marketing investment typically “pays off” if sales increase (and offset the costs) as a result of the investment.

The first, big difference between traditional products and community-based products is the difficulty to measure returns on community investments. This is because the biggest gains from producing community-based products tend to be mostly indirect.

Yes, there are paying customers also for community-based products. They may be paying for the platform, for the consultancy, for a standard or premium version of branded products, or a combination of these sources of revenue. In fact, there is scientific evidence of significant increases in customer expenditures attributable to customers joining a brand community (Manchanda et al 2015).

However, most gains from community investments come from continuous returns on intangibles — like R&D, word-of-mouth and public relations, brand equity, and brand personality. Research in marketing has shown that engagement in online brand communities shows positive correlations with brand trust, commitment and loyalty (Dessart et al. 2015, Kang et al. 2014). A systematic review by Barger et al (2016) also reported that user-generated content had statistically significant effects on brand awareness/associations, brand loyalty, and perceived brand quality.

These gains stay long-term, but as such, are hard to measure in the aftermath of an investment. They also make many traditional marketing metrics obsolete, sometimes useless. This makes it difficult for community managers to justify additional expenses and investments: how can the company invest more money on the community, if the returns from previous investments are still unmeasurable or uncertain?

Difference #2: Delivering (Customer) Value

From a customer’s standpoint, the consumption of community-based products is very different from the consumption of traditional products. The main reason for this difference can be summarized in one concept: social network.

Depending on the product specifics, the gains from consuming community-based products are often dispersed and networked. For example, community members who are also susceptible to other people’s negative opinions and judgment will have a much different (probably worse) consumption experience than members who are not so susceptible. We know from research in human and consumer behavior that social identity and group norms impact members’ intentions to participate in a community (Zhou, 2011). And as we saw earlier, community engagement in turn affects customers’ attitude towards the brand, brand engagement, and ultimately purchase patterns.

To make things more complicated, the effects of social influence on consumer behavior depend on how connected a person is in their community’s social network, who their network-neighbors are, and how strong their connection is (Dholakia et al, 2004).

This is definitely not the case with the consumption of many traditional products, in which customers have to deal with themselves (or at most, a limited number of other parties). Due to these differences in value-generation processes, some marketing frameworks become unusable against community-based products.

Difference #3: Communicating Value

The influence of social network neighbors and the susceptibility of community members to each other’s opinions create problems also in the communication department.

Traditional marketing tools for communicating value, such as segmentation and targeting tools, lose their power in community contexts if not integrated with information about members and their social networks.

And we know that social network structure is crucial in spreading information, forming public opinion, and choosing who to target with advertising (Haenlein & Libai, 2013; Watts & Dodds, 2007). Then, why should community managers consciously ignore social network structure when communicating with their members?

It is still unclear what is the best way to approach customers-as-members — or even if there is a best way. Academic work on the matter is in progress, and soon we will be able to quantify the harm from ignoring social network in community-based communication.

Difference #4: Exchanging Value (and Knowledge)

The last difference between community-based and traditional marketing lies in the asymmetry in resources available to the competent managers to navigate new challenges.

“Traditional” marketers face an abundance of management frameworks for decision-making — and sometimes, their decisions are backed by up to 50 years of relevant research. Community-based marketers don’t have access to such knowledge wealth, simply because there is not as much research.

And yet, more and more companies — especially in tech — are finding that communities are necessary for their competitiveness against big rivals (Bussgang & Bacon, 2020; Vogl & Jones, 2020). The increasing need for decision-making frameworks, the rise in importance and relevance of consumer communities, and the quickly changing community-marketing landscape make it imperative for academic research to pay attention to the urgent needs of community managers.

In Summary

• Community-based marketing falls entirely under the 2017 AMA definition of marketing. However, it works under principles that are very different from the marketing we are used to know and love.
• The differences between community-based and traditional marketing lie in each and every aspect of the AMA definition of marketing. Community-based marketing is different in creating, communicating, delivering, and exchanging value for its customers and for the managing businesses.
• Understanding these differences is necessary to maximize the value created by the community and delivered to the business and its customers.
• There are still many questions to be answered — hopefully, academia and industry can work together to fill these gaps in management science.

Academic Help Wanted:

I am looking for community-backed companies to collaborate on a research project on community-based communication. If you’re interested in collaborating, let’s get in touch!

References

• Barger, V., Peltier, J. W., & Schultz, D. E. (2016). Social media and consumer engagement: a review and research agenda. Journal of Research in Interactive Marketing.
• Bussgang, J. & Bacon, J. (2020).When community becomes your competitive advantage. Harvard Business Review. Retrieved at https://hbr.org/2020/01/when-community-becomes-your-competitive-advantage.
• Dessart, L., Veloutsou, C., & Morgan-Thomas, A. (2015). Consumer engagement in online brand communities: a social media perspective. Journal of Product & Brand Management.
• Dholakia, U. M., Bagozzi, R. P., & Pearo, L. K. (2004). A social influence model of consumer participation in network-and small-group-based virtual communities. International journal of research in marketing, 21(3), 241–263.
• Haenlein, M., & Libai, B. (2013). Targeting revenue leaders for a new product. Journal of Marketing, 77(3), 65–80.
• Kang, J., Tang, L., & Fiore, A. M. (2014). Enhancing consumer–brand relationships on restaurant Facebook fan pages: Maximizing consumer benefits and increasing active participation. International Journal of Hospitality Management, 36, 145–155.
• Manchanda, P., Packard, G., & Pattabhiramaiah, A. (2015). Social dollars: The economic impact of customer participation in a firm-sponsored online customer community. Marketing Science, 34(3), 367–387.
• Vogl, C. & Jones, C. M. (2020). How Brands Like Google, Twitch, and Sephora Built Brand Communities — and How You Can, Too. HubSpot Blog Post. Retrieved at https://blog.hubspot.com/marketing/how-brands-build-communities?utm_content=buffer7e887&utm_medium=social&utm_source=AMAsocial&utm_campaign=buffer
• Watts, D. J., & Dodds, P. S. (2007). Influentials, networks, and public opinion formation. Journal of consumer research, 34(4), 441–458.
• Zhou, T. (2011). Understanding online community user participation: a social influence perspective. Internet research.