New research from data-driven loyalty and engagement platform, LoyaltyLion has revealed that online retailers might think they are investing in engaged customer communities, but the proportion of members who are actually valuable to them is alarmingly low.
- Just one in six community members are considered valuable “Insiders”.
- Creating unique posts, interacting with content, and chatting to other community members are considered the most important actions that lead to the highest ROI.
- A greater understanding of what a brand stands for or believes in (57%) was also given as important motivators for consumers undertaking community-based actions.
Recent data1 shows that the average brand community – a business’s social media following, online account holders and email subscribers – has the potential to deliver an ROI of over 4,000% – a number that increases each year a community is active.
However, according to LoyaltyLion’s new Community Matters report, this is rarely the case because many businesses do not yet understand what makes up their community and how to engage their most valuable members.
The study2, which involved a survey of more than 4,000 consumers aged 16+, explains that most people fall into one of four customer personas, and one specific persona is particularly key for a higher ROI.
The four personas identified in the research are:
- Insiders: make up 18% of a community base. They are the best and most valuable community members you can get because they advocate for your brand publically and participate in conversations about your brand without needed incentives.
- Supporters: make up 51% 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.
- Lurkers: make up 17% 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.
- Drifters: make up 14% of a community base. They are unengaged, inactive members that may have made a purchase in the past but have no emotional relationship with the brand.
LoyaltyLion’s research suggests that “Drifters” (typically one in seven community members) are unengaged and offer the least value to an online retailer, while “Insiders” (one in six members) regularly interact and drive continuous, incremental gains.
Community member actions that are typically deemed most valuable to a business include: positive social media posts about the business; liking, commenting on, and sharing social media posts; chatting to customers; writing positive reviews; and clicking through on marketing emails.
The analysis also revealed that there are three key areas that drive more customers and community members to behave like “Insiders”.
- Transactional: Getting monetary benefits or savings for registering and participating
- Brand alignment: opportunities to establish emotional connections with the store
- Experiential: The ability to improve their own shopping experiences
As members move to become “Supporters” and “Insiders”, experiential drivers are understood to become more important than they are for “Drifters” or “Lurkers”.
The research also highlights that consumers are often driven by the transactional, with eight in ten (81%) consumers saying they would be motivated to undertake valuable community-based actions by financial incentives and discounts, and 43% by free delivery.
A greater understanding of what a brand stands for or believes in (57%), a greater understanding of a brand’s history (50%), and the ability to contribute to a common cause (61%) were also given as important motivators for consumers under-taking community-based actions.
In addition, seven in ten (70%) 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 ten (61%) by the opportunity to access content on topics they’re interested in, a third (32%) by early access to sales and products, and a quarter (25%) by the opportunity to test new products before others can.
Retailers are also encouraged to understand the importance of value exchange, with a loyalty program cited as a key tactic to help incentivise and encourage the key behaviours that turn customers from “Drifters” or “Lurkers” into “Supporters” and “Insiders”.
Loyal customers are also considered most likely to undertake the high-value, community-based actions that deliver the greatest ROI on an ongoing basis: 82% of “Insiders” are also members of their preferred brand’s loyalty programs, vs just 28% of “Drifters”.
Fiona Stevens, Head of Marketing, LoyaltyLion said: “While consumers may be driven by the transactional, we were pleased to see that emotional connections are also of great importance. 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.”
“What is key from our research is that once a business has determined what customers make up its community, it’s time to figure out how to move them towards “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 hard to justify. However, today they are a key vehicle for businesses, and creating “Insiders” who have the highest lifetime value and bring the greatest gains back to a brand should be a priority.
”Your community really does have the potential to give you one ROI-driven, meaningful outcome which you can direct your marketing activity towards.”
To download the full Community Matters report from LoyaltyLion, visit: https://info.loyaltylion.com/community-matters-lifting-the-lid-on-customer-communities