How to Get the Best ROI From Your Customer Community

Did you know that the average brand community — the people that make up your social media following, your online account holders, and your email subscribers — has the potential to deliver a return on investment of over 4,000 percent? And this can even grow each year your community is active.

Many aren't aware of how much value their community can add because they don't yet really understand who makes up their audience and how to get the most value from each member.

Here at LoyaltyLion, we recently produced a new Community Matters report, which involved a survey of more than 4,000 consumers aged 16-plus. We wanted to find out more about how people engage with brands, and what drives people to complete valuable transactions.

Our research explains that most people fall into one of four customer personas, and one specific persona is particularly crucial for a higher ROI.

1. Insiders make up 18 percent of a community base. They're the best and most valuable community members you can get because they advocate for your brand publicly and participate in conversations about your brand without incentives.
2. Supporters make up 51 percent of a community base. They share a brand via word-of-mouth and engage with marketing activity, but they need more incentives and attention to bring about bigger incremental gains.
3. Lurkers make up 17 percent of a community base. They like the brand but are passive members that see marketing efforts but need more back from the brand to complete high-value community-based activities.
4. Drifters make up 14 percent of a community base. They're unengaged, inactive members that may have made a purchase in the past but have no emotional relationship with the brand.

“Drifters” are usually pretty unengaged and offer the least value to a business, while “Insiders” regularly interact and drive continuous, incremental gains. Naturally, as a business, you want as many "Insiders" in your community as possible.

When we talk about “valuable actions,” what we mean are things such as creating user-generated content; referring friends to the brand; posting positive social media messages about your business; liking, commenting on and sharing your posts; chatting to your other community members; writing positive reviews; and clicking through on marketing emails.

It's worthwhile assessing your own community to see what blend of personas it's made up of and determining if your members are delivering the greatest possible ROI. They probably aren't ... yet!

So how can you get more of your community members to behave like Insiders? Our research revealed there are three key drivers that motivate people to take actions that are beneficial and valuable for your business:

1. Transactional: Getting monetary benefits or savings for registering and participating
2. Brand alignment: Opportunities to establish emotional connections with the brand
3. Experiential: The ability to improve their own shopping experiences

As members move to become Supporters and Insiders, it's clear that those experiential drivers are more important than they are for Drifters or Lurkers.

It's not surprising that consumers may be driven by the transactional, with eight in 10 (81 percent) consumers saying they would be motivated to undertake valuable community-based actions by financial incentives and discounts, and 43 percent by free delivery.

But what's perhaps unexpected to many is that having a greater understanding of what a brand stands for or believes in (57 percent), a greater understanding of a brand’s history (50 percent), and the ability to contribute to a common cause (61 percent) were also important motivators for consumers undertaking those valuable community-based actions. Emotional connections are important, and this is something we expect will continue to grow in importance as consumers become more aware of and interested in social, environmental and ethical causes. COVID-19, in particular, has shifted people's perceptions of brands, according to various notable studies.

In addition, seven in 10 (70 percent) told us they would be motivated to complete community-based actions by the opportunity to find out more about products from those who have already bought them, six in 10 (61 percent) by the opportunity to access content on topics they’re interested in, a third (32 percent) by early access to sales and products, and a quarter (25 percent) by the opportunity to test new products before others can.

In my opinion, it has never been more important to understand the significance of value exchange, and a loyalty program is a key tactic to incentivize and encourage the key behaviors that turn customers from Drifters or Lurkers into Supporters and Insiders. Loyal customers are most likely to undertake the high-value, community-based actions that deliver the greatest ROI on an ongoing basis: 82 percent of Insiders are also members of their preferred brand’s loyalty program vs. just 28 percent of Drifters.

What's essential as a takeaway from our research is that once you've determined what customers comprise your community, you really want to move them towards that Insider status. For the effort you put into transforming Lurkers into Insiders you get more brand awareness, more advocacy, practical feedback, and increased trust. These all benefit your bottom line. Meanwhile, the community you've built gives members financial and experiential benefits that motivate them to behave more like Insiders.

Customer communities might once have been hard to measure and justify, however, today they're a key vehicle for businesses. Creating "Insiders" who have the highest lifetime value and bring the greatest gains back to a brand should be a priority. Your community has the potential to give you one ROI-driven, meaningful outcome which you can direct your marketing activity.

To download the full Community Matters report from LoyaltyLion, visit https://info.loyaltylion.com/community-matters-lifting-the-lid-on-customer-communities.

Fiona Stevens is the head of marketing at LoyaltyLion, a data-driven loyalty and engagement platform for fast-growth e-commerce merchants.