Source: nike.com/nike-app
What will it take for brands to build digital communities?
A university study details how digital communities can support more personal and less transactional relationships with consumers, but also carry inherent challenges and risks.
Establishing flagship platforms, according to researchers at University of Cologne, often involves two processes:
Consumer crowdsourcing: Consumers draw value from platform participants such as the brand, other consumers or third-party businesses.
Consumer crowdsending: Consumers provide value to platform participants.
Consumer interactions were grouped by the researchers into five platform building blocks: transaction, community, benchmarking, guidance and inspiration. For example, Nike’s Run Club addresses the overarching consumer goal of living an active, healthy lifestyle by offering exclusive products (transaction block), sports events (community block), tracking and competitive features (benchmarking block), and personal coaching (guidance block).
Brands can then tailor the degree of consumer involvement through three different states:
Capitalizing relationships: Involves intense crowdsourcing focusing on the guidance block and integrating a variety of third-party sources, such as the way Nike recruits coaches and nutritionists to guide consumers’ active and healthy lifestyle goals.
Catalyzing relationships: Involves intense crowdsending playing up community and inspiration blocks and involving deep integration of consumers into the value creation process, such as Lego.com.
Nurturing partnerships: Involves intense crowdsourcing and crowdsending as the platform “becomes a co-creator of a consumer’s identity as much as the consumer co-creates the platform offering.”
University of Cologne professor Julian Wichmann explains, “The more frequently and more intimately that consumers interact with the platform, the more intensely they crowdsource and crowdsend and the more the relationship transforms from purely transaction-focused to highly self-relevant, committed and durable.”
Risks in developing such platforms include “the dilution of the core brand due to the inclusion of third parties, platform hijacking through consumers and high operational costs.”
For managers, flagship platforms shift the market focus from products to entire category spaces. They also require measurements that extend beyond brand performance to interaction quality, and demand new resources and skills that enable the ongoing orchestration of interactions and relationships.
Werner Reinartz, also at University of Cologne, said, “Companies will need to decide whether they want to stick to the traditional pipeline model, complement other platforms, or embrace the opportunities and challenges of operating their own brand flagship platform.”
Discussion Questions
DISCUSSION QUESTIONS: Is creating a digital community a practical or far-fetched goal for most brands? Does the study appear to sufficiently assess the upsides and downsides?
Poll
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Liz Crawford
VP Planning, TPN Retail
Shawn Harris
Board Advisor, Light Line Delivery
Creating a digital community should be the baseline goal for brands. Consumers are evolving in real-time and retailers that are not considering seamless connectivity across physical and digital engagement channels are missing the boat. Meeting the customer where they are, where they shop, where they workout or cook or entertain is standard practice and if retailers are not getting on board, they are losing.
A brand is so much more than transactional – it should be more than just a purchase. If a retailer doesn’t “get this” then they are living in the past.
Operating a brand-owned platform is a stretch and is possible in reach for only the biggest. I do not forsee it on a short-term pipeline but perhaps it’s something coming in the future.
Digital communities – including Metaverse communities – are the next big thing for brands — but only for those in high involvement categories. I imagine there will be less enthusiasm for say, a brand of cleaning fluid than for athletic wear.
Creating a strong community is a surefire way to create raving fans of a brand. Seth Godin refers to this as a tribe. Consumers are able to connect with other like-minded people. However realistically speaking bigger brands will have an easier time creating large communities (Nike, Lululemon, Build-A-Bear) than smaller brands. Nonetheless, we’ll see more “micro” communities from smaller brands, if nothing more than an online group or forum.
Like we have seen in enterprise technologies, this sounds like the move from products to solutions. Creating a digital community is a consumer solution and a must for brands if they want to build and maintain a relationship with consumers, otherwise they will be intermediated by social media or other shopping aggregators, subsequently needing to pay for access to their own customers. Deeply understanding why shoppers choose your brand is critical to aligning on what technique will enable you to double down on your core value to shoppers.
Creating a digital community of loyal fans is a great way to create an emotional bond with the brand. While it might not make sense for brands that sell commodity products, digital communities are a great fit for experiential brands by providing consumers a platform to share experiences, ideas and tips with the community. Brands that are an ideal fit for digital communities include those focused on fitness, beauty or cooking products where the products are experiential.
For most brands, it is core to what experiential retail is all about. Too many limit what experience is to the interaction and ultimate conversion goals. However, building a community requires selfless investment and a genuine interest in each customer/prospect that is meaningful to them primarily — with the business outcomes a natural result of doing it well.
Kohl’s partnering with Amazon primarily targeted convenience and allowed me to help my parents with returns — that for an 88 year old can be daunting. However, Kohl’s offered me the opportunity to help my parents save time, money, effort, and anxiety by making it simple for me to help my parents. That experience and others like that go beyond conversion and impacted my life in a meaningful way — which builds brand image and a loyalty as a derivative.
Building digital communities will be an essential element in a brand’s marketing strategy. Care is required in selecting the categories and third-party partners. Flagship digital communities bring significant benefits, but carry unique risks vis-a-vis traditional marketing approaches. The largest brands will find flagship digital communities more feasible to build than smaller brands that are likely to implement some elements of this strategy.
In today’s era, digital communities are essential for building customer loyalty to brands. These communities must be lively, truly cohesive, closely knit, and highly engaged. But it is true that creating and nurturing a digital community is no play. A brand must know its customers’ needs, wants, and desires. And create one such digital community that can cater to these elements irrespective of the product or service.
Creating digital communities in this way is not only practicable but also a high ROI initiative for the brand. Being customer-centric or customer-first is the key. But with a good digital community is far-fetched if a brand becomes product-centric. The product is only one piece of the puzzle; the rest is determined by the customer’s interaction with the brand.
The study does an excellent job of highlighting the challenges and pitfalls of digital communities. However, no study can really capture the entire picture. It undoubtedly clarifies consumer behavior on digital platforms. However, rather than the hard truth, it should be viewed as a great source of insights.