Customer acquisition is the lifeblood of any company. Without an influx of new customers, any type of business is going to find it difficult to survive.
That being said, the simple act of finding customers isn’t enough. You must identify and convert those new customers in a cost-effective way. At the very least, you want your lifetime value per customer (“LTV”) to be greater than your customer acquisition cost (“CAC”) per customer. With the rule of thumb being that your LTV/CAC ratio should be greater than 3.0, it is your responsibility to increase your LTV and/or decrease your CAC.
So what can you do?
One of the best strategies to reduce your CAC, generate more sales, and increase customer retention is to create a robust online community.
Online communities are fantastic ways to build strong, long-term relationships with all types of individuals. Whether you want to introduce a new prospect to your company or build upon an already strong relationship with a current customer, a strong online community can help you accomplish your goals.
Online communities are fantastic ways to build strong, long-term relationships with all types of individuals.
In effect, online communities can be a killer digital asset that you use to nurture prospects, educate your audience about your company’s core product or service, upsell that audience on new products or services, and ingratiate new customers into your tribe. While they take some time to develop, they are valuable digital assets that can pay off in spades for years to come.
What is an online community?
At its most basic level, you can think of an online community as a central public square that is hosted by your company. The great thing is that, as an online community controlled by you, you get to influence what occurs in that public square. While the specific activities in that public square may vary, it is centrally organized around a specific purpose or interest.
If you are coming across the term online community for the first time, you may naturally think that it is close to something like a Facebook group or LinkedIn group. There are some similarities in that they are collections of individuals that are united around some topic or idea. However, there are plenty of differences.
For example, in an online community, there are often stricter rules and guidelines. While there are few (if any) speech restrictions in a Facebook or LinkedIn group, there may be more content moderation in a company’s online community. But on the other hand, online communities are more action-oriented compared. Instead of merely talking about issues or subjects that interest the group members, online communities are focused on putting ideas into action. Every member uses that overarching purpose or interest to drive action toward some goal that they have.
Finally, online communities are significant in that they are more closed off. With most Facebook groups or LinkedIn groups, joining is relatively easy. You can simply click one button and you are a member of the group. With online communities, however, the bar is raised. You may need to submit some detailed information to become a member. While the higher bar may deter some potential members from joining, the benefit is that your members feel more secure and more confident.
How online communities can help you grow and scale your business
As you can see, online communities are somewhat similar, yet very different to things like Facebook or LinkedIn groups. With that understanding in mind, let’s talk about how online communities can be so valuable to your business.
For starters, online communities help your company build strong search engine optimization (SEO). No matter the size or sector of your business, strong SEO is one of the best ways to find new prospects and customers. You can think of it as creating a trail of breadcrumbs that lead directly to your door. Those breadcrumbs rarely expire and have essentially zero marginal cost.
Online communities leverage your company’s SEO because the online community members are creating content for you. While your digital marketing team may need to spearhead conversations or tasks in your online community, your members’ contributions are indirectly benefiting your website’s SEO. By continuously creating content, your website can rise up the rankings, thereby attracting even new prospective customers and members of your online community.
Along with this supercharged SEO effect, online communities can help you vet prospects. Yes, the specifics depend on the online community that you are creating. For instance, your online community could solely be for paying customers. However, if you have an online community that is open to prospects, you can subtly qualify some of your members through some pre-sales questions or tasks. You can also monitor the group’s conversations to see if any members are searching for solutions to certain “jobs” in their work.
Compared to SEO, you and your colleagues will need to be more active in vetting prospects. You may need to spend a few minutes per day looking through the community’s discussion and responding to certain questions or comments. Nonetheless, your community’s questions, comments, and insights can be useful data that you can use to qualify potential customers. It is certainly a more cost-effective way of finding new customers than purchasing expensive ads and broadcasting them to the world. In fact, according to one study by Aberdeen, online communities help companies obtain a 33% increase in their return on marketing investment.
Finally, online communities can be an easier source of referrals. If your online community is providing enough value to members, they will naturally want to tell their friends, family, and colleagues.
However, you can go one step further and create something like a referral or ambassador program. As part of this program, you can give your members digital rewards (like badges or certificates) or even monetary rewards. Essentially, you are incentivizing already-satisfied members of your community to spread the word about that same community. It is yet another way to lower your CAC and strengthen that online community at the same time.
Some strategies on using online communities to acquire new customers
Simply put, online communities can provide massive value to both your organization and the community members. Even though there is an upfront investment in building that community, the benefits from that work can be substantial.
Considering this, let’s talk about some ways that you can build an online community for your company. There are certainly nuances in doing so, as all online communities aren’t created alike. However, there are some general principles and strategies that can help you build the best possible online community and achieve your business goals.
To start out, leverage tools that are already out there. The great news is that even if you aren’t “technical,” you can easily get an online community up and running for your business. As just one example, Circle is a tool that lets anyone easily create an online community. By becoming a Circle user, you can easily create a central hub where your community members can exchange ideas and collaborate.
Circle is just one example. The bottom line? You don’t need to reinvent the wheel when creating online communities. It’s better to get started with the tools already out there versus deliberating over what to include in a brand new online community. In the beginning, good is better than perfect.
Next, focus on community moderation. The key benefits of online communities don’t occur automatically. In the earliest stages, you and your colleagues need to play an active role in generating discussion and value in your community. If you don’t, you’ll find that your community is disappointingly quiet.
Source: Creatopia Community
Essentially, you can think of community building as like building any type of social network. There are network effects here. To have a chance of growth, you must ensure that the community provides value from day one. This likely means that you’ll need to be more active in the early days, whether that is responding to every single comment or galvanizing discussion yourself. Taking a more active approach will ultimately increase your odds of success.
Finally, don’t hesitate to offer incentives for referring members. As mentioned above, you can grow your community by offering both monetary and non-monetary incentives. Things like referral programs can accelerate your community’s growth.
That being said, make sure that the incentives are aligned with the outcome that you desire. Growth for the sake of growth isn’t always ideal. You want to ensure that new members entering your community will positively contribute to that community. Therefore, while incentives can galvanize your community’s growth, tread lightly here. Sometimes, slower growth is better than faster growth.
Get started today
Whether you are trying to find new prospects or increase brand awareness for your business, online communities can be a massive help. Even better is the fact that we are still in the early innings of online communities. By creating a robust online community, you can separate yourself from competitors and provide immense value to your audience.
With all of that said, none of this happens by default. It pays to take action right now, whether that is looking for digital community-building tools or starting to build hype for the eventual launch of your online community. In the end, the best time to get started is today.