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Despite, or maybe because of the current economic climate, companies (as well as government agencies & industry bodies) are investing in branded online communities (also known as social networks). The reasons why are simple; when compared to traditional marketing methods, managing customer relationships and fostering collaboration, online communities are highly efficient vehicles for better understanding, engaging and serving your audience. Many of these communities are, however, failing to achieve their potential (2008 report Deloitte).

These are some ways to avoid wasting resources and secure a better return on your investment in digital media.

Define the goals

When preparing for your online community project, first define your goals. Common goals for an online community include increasing awareness of your organization, improving customer or member retention, reducing customer support costs, elevating search engine optimization performance, growing advertising revenues and promoting thought leadership. Identifying the goals will help you make the business case for the community, by showing how it will bring value (both “hard” and “soft”) and save costs.

Define the target market

Is the digital community available to your entire customer or member base, or is it for a specific segment, such as a platinum-level membership or customers of a particular product line? Are there secondary target audiences that can coexist within your online community without diluting its overall direction, such as prospective customers or current employees?

With the target market defined, it’s time to focus on the members. You need to ask yourself the four “how and why” questions about your audience.

1. How and why will they join?
2. How and why will they participate?
3. How and why will they return?
4. How and why will they engage in ways that affect business goals?

These questions are commonly referred to as acquisition, activity, retention and valued activity.

Don’t start with features and functions

Most web consultants can create a 20+ page list of cool widgets, features and functions they’ve seen on the Web and think would be great to include in “your community.” Resist the temptation and start with the four key questions listed above. The answers to these questions will drive your community; the sexy features can be added as and when they’re needed. The technology is simply a tool to help achieve your objectives.

Determine the metrics

If you aren’t measuring it, you can’t improve it. Create a list of metrics that measure both your business goals and online community goals. Many companies focus only on page views and member counts. However, it’s difficult to tie these numbers back to business goals. By defining particular metrics up front, you’ll enforce guidelines that will not only keep you apprised of the community’s progress, but will also come in handy when you request additional funding for future expansion. Some examples of metrics include:

• Customer, member or employee retention rates for community members versus non-community members
• Number of new customers or members acquired through the community
• Number of support calls or questions diverted from customer service staff
• Improvement (measured in various ways) in organic search results
• Increase in employee productivity (as measured by reduced duplication of research projects or time saved)

Some examples of metrics used to measure an online community’s progress include the following:

Activity (general activity in the community)

• Page views (both for the community and those resulting from click-throughs to your other Web properties)
• Total number of members joined
• Number of visits by members
• Page views by members
• Number of active members (members who visited in a particular month or quarter)

Valued activity (activity that is more specific to what drives the business goals)

• Amount of content pieces created (best practices blog posts, answers to questions)
• Actions (items rated, product feedback provided, training videos viewed)

Place importance on community management

Many organizations underestimate the importance of having qualified personnel focused on managing and promoting the community. Building a successful online community is not a phenomenon where if you build it, they will come. You need people dedicated to its development and growth.

As online communities grow, they generally go through three phases of need: seeding, feeding and weeding. When a community starts, it needs to be seeded with content and people. After early members arrive, it’s important to start a dialogue with them. Listen and respond to their questions and requests. This makes them feel valued. Once a community’s membership base hits critical mass, it begins to self-perpetuate. At this point, it’s important to start weeding out destructive or non-constructive behavior so that the community’s health and focus are maintained.

Having a community manager who can create well-thought-out community guidelines helps to set the tone. We’ve found a direct correlation between community membership growth and allocated community management resources.

Gain executive buy-in

Creating a successful community often requires coordination with other groups and changes in behavior across the organization. Gaining buy-in from key executives up front will help as you launch, promote and grow your community. You may need assistance from your web team or marketing group, and executive buy-in can help align these resources. Additionally, you don’t want to find yourself at the eve of your launch date, only to discover that the legal department has just gotten wind of your project and is ordering a full review. Gaining support from key executives up front will help facilitate internal collaboration and give you cover when needed. Besides, social media is a hot area, and many executives like to be in the loop on what their company is doing to take advantage of it.

Building a successful online community takes a bit of work—planning, measuring and managing. However, when done well, an online community not only expands your organization’s position in the marketplace, but can also make a tangible difference to its bottom line.

Reproduced from an original article by Michael Wilson, the founder and CEO of Small World Labs. These are also the themes 41 Days covers in our Social Media Briefings.