How Brand Communities Create Value

On the day that Steve Jobs introduced the iPhone, Apple’s market cap was about $79.5 billion.

“Every once in a while,” Jobs said, “a revolutionary product comes along that changes everything.”

On that day, Jobs didn’t just reveal a product – he built the foundation for what would become one of the world’s largest brand communities – an ecosystem of products, customers, and partners that would help fuel the company’s future growth.

In the years that followed, lines would form outside malls, big box retailers, and wireless stores around the world whenever a new device was released. Customers took selfies inside stores. Unboxing videos became a thing – the most popular amongst them reaching 14 million views. Enthusiasts built secondary communities online, in local libraries, and in pop-up stores.

According to Forbes, iPhone sales reached about $6.7 billion in year one. This year, they might earn more than double that selling AirPods alone. Apple hit $1 trillion market cap in 2018.

In a retail landscape where some brands struggle to maintain margin, brand communities represent a potential competitive advantage. In this article, we help to define a brand community, examine the role of brand communities at specific stages of the value chain, and demonstrate how brands can effectively manage communities to create a competitive advantage.

What Are Brand Communities?

Broadly, a brand community is a mechanism for interaction between brands and audiences with common interests. These interests can be reflected in a number of ways, including participation in online groups, product support, and social evangelism.

Rather than providing top-down support, brand communities are often customer-driven (‘middle-out’) entities where community members share knowledge and solutions. Though some brands may hire community managers to engage with audiences in important channels, many choose to promote certain experts within the community to provide structure and moderation.

Brand communities represent a multi-platform ecosystem of customers with a diverse set of needs. For example, Tesla’s brand community includes company-owned properties such as the official forums as well as third-party channels such as Meetup groups, Quora, and Twitter.

Commercial Value

The commercial benefit of brand communities goes well beyond crowd-sourced customer support, and a company with a robust brand community can unlock incredible value:

  • Lower CAC: Well-organized brand communities can lower a company’s customer acquisition costs by leveraging member advocacy as an alternative to high-cost demand generation tactics. For example, Tesla’s Project LoveDay had members of the Tesla community submit fan-made videos for a contest. The eventual winner of that contest produced a video with over 1.2 million views on YouTube, and he alone has referred over 300 customers to the brand.
  • Higher CLTV: In recent years, some luxury brands have gone down-market by introducing lower barrier-to-entry products in an effort to expand their market footprint and increase lifetime value. Because product ownership does not necessarily preclude community membership, brand communities can provide a zero-barrier-to-entry way to share experiences, which has the potential to increase customer loyalty and retention over time as fans become customers, repeat customers, and advocates.
  • Market & Production Research: A brand’s community contains some of its most enthusiastic and loyal customers. These communities can be queried for everything from product development to, as in the example below, where to put a company’s next factory.

Building Meaningful Communities

In The State of Community in 2018, Fabian Pfortmüller, co-founder of the Together Institute, relates that a commercial adaptation of communities (as in, brand-driven communities) has resulted in a dilution of the meaning of the word.

Most brands ultimately are not committed to the humans in their communities, but are driven to increase sales, conversion and retention.

In many cases, this is true: email audiences, Facebook business pages, influencers, and other centralized assets (most of which are marketed as ‘communities’) are generally driven by business objectives that would more closely align them with sales channels rather than actual human communities. Simply labeling a platform or channel as a community does not assign meaning to it.

Brand Communities
Many brand communities are simply over-leveraged marketing channels.

Human Value

So how can brands create meaningful communities without compromising commercial interest? The answer may be in understanding some of the reasons why people join communities in the first place:

  1. Communities help people form integrated identities: Brand attachment is a key construct in the study of consumer psychology. It has been demonstrated that consumers form strong emotional ties to the brands they value most. To that end, brand communities have the potential to connect people with others who share these values, which may contribute to a positive affirmation of character and feelings of communal attachment.
  2. Communities provide consistency: Communities lend structure to a disconnected world of likes and swipes. People join communities seeking consistent relationships with both people and ideas without pretension.
  3. Communities allow people to express their values: Communities provide the unique opportunity for individuals to take ownership of ideas, feel heard, and to collectively solve individual problems. Soliciting community feedback – and more specifically, taking action based on community feedback – is an important way for brands to engage with consumers and make their voice feel heard.

By focusing on delivering human rather than commercial value, brands can help to shepherd organic communities that are far more inclusive, diverse, and dynamic than sales-driven communities could hope to be.

Since meaningful communities are often organic entities onto themselves, they cannot be planned like a marketing campaign because planning lends to a centralized model that is both growth-inhibitive and unlikely to create human value.

That said, brands can provide some structure to customer-driven communities by:

  • Being responsive and adapting to the concerns of the community
  • Delegating leadership roles or co-leading with enthusiastic community members.
  • Deploying a flexible plan to support community interests as they evolve.
  • Including the community in the construction and communication of the brand’s vision.

Summary

Commercialized communities are the subject of spirited debate: on one hand, strong communities can deliver measurable value to the brands they support; yet the notion of communities is often not well understood by organizations, and their resistance to centralized control only makes it them more difficult to corral and apt to fail.

Ideal brand communities are diverse, inclusive, consistent, middle-out entities that exist to deliver human (rather than commercial) value. Communities help people form integrated identities which can include brand-alignment, and this effect is amplified when other members provide positive affirmation.

For business leaders interested in constructing and shepherding brand communities, check out the Community Canvas, which provides a useful framework for building people and organizations together to create human value.


SHARE