SUMMARY
With increasing choice, the task of maintaining a customer base has increasingly become an uphill battle
it has been proven beyond a doubt that the ROI of a retained customer far outweighs that of a new customer
While consumer retention comes down to keeping the wallet share, brands are striving harder to win the mind share
People don’t just want to buy a game today, and a discount isn’t good enough anymore! The game today has evolved into an entry point for a group experience where they want to interact with others who have the game, hear what tips and tricks other players have developed, someone to discuss doubts and learnings with, and so on.
Do you see where this is going?
As the modern consumer exposes themselves to more brands, content, and experiences, the definition and scope of customer engagement have started to expand massively.
Imagine this, 2024 started with one of the largest music festivals in Mumbai with multiple popular international artists and names embracing the event. However, surprisingly, the biggest talk of the town post the event is not any artist or performance but an ultra-exclusive lounge set up inside the festival by a leading fintech platform.
From redeeming loyalty points for artisanal cocktails & branded merch to private intimate gigs with artists- the lounge had everything, exclusively for its customers – talk about customer experience (CX).
If one zooms out, dissects and observes more such instances, it would become clear that building & nurturing communities is the emerging trend for elevating the CX and the key to an engaged, loyal, and retained customer base.
Why the song and dance about loyalty, one might ask. With increasing choice, the task of maintaining a customer base has increasingly become an uphill battle and yet the most critical one, especially given the rising customer acquisition costs.
Furthermore, it has been proven beyond a doubt that the ROI of a retained customer far outweighs that of a new customer. So all signs point to retention, and in this day and age, the key is loyalty!
Loyalty And Growth Lie In Community
While it can sound scary, there is a wonderful opportunity for brands here. Consumers use the product, loyalists keep returning, but a well-designed community brings advocacy. A community is almost like having an army of brand ambassadors, customer success managers, social media executives, and more.
The ground rule of community is to be value-first. Before brands start asking users to give them information, they need to answer this – what are we doing for our customers?
It is essential that brands take action for them, and invest in the users. Secondly, brands that side-step the urge to offer one-off discounts and coupons that are a-contextual, but focus their energies on devising long-term recurring plays, are more likely to succeed in creating a sense of community.
Lastly, a sense of community is born when users feel connected and involved in the decision-making process, pre-releases, exclusive launches, beta testing, curated meetups and other such ways that allow them to be in touch.
Reasons Why A Community-Led Approach Works
On observing consumer brands, apps and products that are strongly betting on community-led growth the pattern that emerges is that people resonate in communities for three reasons: earning, learning and belonging. Consumers take pride, ownership and responsibility of brands that they love, they want to be involved in building it.
One of the classic examples of this is Google Maps’ local guide program that encourages users to gain points for contributing to the product & improving its efficiency, to the extent of having a huge tiered program for guides with rewards going from exclusive merchandise to international community meetups.
Insights from founders in emerging and premium categories point out that consumers are seeing the community as a means to upskill and bridge the gap to their aspirations. Multiple brands in the D2C space from gourmet dishes, sneakers, personal hygiene, and clean labels to sexual wellness are all heavily investing in educational content to serve and engage their branded communities beyond the product.
While consumer retention comes down to keeping the wallet share, brands are striving harder to win the mind share. Engaging the community via co-creating new products, collecting early feedback, enabling fellow consumers, and continuously inventing ways to increase touch points.
Strategically, at a time when data security and privacy concerns are at an all-time high, community-led initiatives create trust and avenues to collect much deeper first-party data.
While in an ordinary case, consumers would shield and perhaps even give incorrect data, contextually designed community initiatives are seeing incredible width and detail in the information that brands can capture.
Imagine a food brand asking dietary questions with no clear reason, versus another brand that runs a closed community that shares weekly recipes for people with special diets.
Enter Martech – The ‘How’ Of It All
Data, however, like oil, isn’t useful by itself, and this is where martech comes to the rescue. All community initiatives are built on top of a strong martech stack that allows brands to service them at scale.
These tools can be very powerful in being able to collect and analyse data, aid in segmentation, and draw insights specific to them.
Further, engaging community members and cascading the culture to different consumers can look different, martech allows to hyper-personalise the same and execute community initiatives at scale.
One of the biggest reasons for initiatives not taking off as desired is that it is difficult to track, engage, and analyse the progress – all things martech can solve well.
As I conclude, some things merit being pointed out, while thinking about community-led customer engagement. Communities are often a sum of micro-communities, and therefore not all of the initiatives can necessarily be scaled.
Secondly, pre-planning the scale and ceiling of different strategies, while creating the right handover points is critical to this process.
Lastly, exclusion is something that often gets overlooked while designing a community approach. Arriving at the right cohorts or segments and ensuring that each can be treated significantly differently will be a game changer. The equation is simple: Community → Loyalty → Retention → Growth
