Community Members Buy 48% More!

A bold statement for sure if I wasn’t confident in the results and the exercise our team went through. Getting funding for social business initiatives is never easy and I learned this many years ago that until you can associate revenue to your initiative you will never see an incremental investment to further your programs. So, you need to link your social engagement activity to booked revenue in order to come up with a measurable ROI and justification.

My initial research was based on new community registrants over six months in the first half of 2012. Community members that had registered with the community were associated to their respective company where possible mainly by using their email domain however, you will have to clean up the data to exclude the gmail, Comcast, yahoo accounts. Once that list was compiled then we were able to compare the average purchase price of those companies who had members in the community to those companies who did not. This allowed us to conclude that customers with members in a community had an average purchase price 48% higher than those customers who were not engaged in the community. I have talked a little about the Amazon model before so think about it this way. How do we, as consumers buy?

We, as consumers, typically start with researching a solution to a particular challenge. So, we search the internet for items that we think we need to address that problem. Once we think we have identified a product that fits our needs, we want to validate that the purchasing decision and confirm this is indeed the right choice. So, we look to others or “Peers” who may have already purchased that product and have written a review. I may find out that the product I wanted might have bad support, isn’t reliable or maybe just wrong for my use case. However, other reviews within discussion forums might recommend another solution and advice on how to improve it. For example, if I am looking to buy a camera my research might lead me to selecting a digital SLR with a 50mm zoom lens. But I still may not know what brand is the most reliable so I engage peers for reviews and recommendations. Once I have confirmed my selection, I will likely want accessories to go along with that camera; say, a tripod, lens cleaners, case, batteries or larger memory card. Suddenly, my original camera purchase just became 48% more because community peers and reviews have made me more informed and educated about the particular solution. Because of this engagement  I have established a level of trust with that peer and take their recommendations into consideration.

So, While my research can’t establish exactly why community members purchase 48% more there is enough evidence to conclude that community members are more educated on your company’s products, are engaged with other peers that are collaborating to solve the same challenge and then share best practices on what is needed to help improve on the solution. I think this is typically referred to as “product drag”. Those who may buy one product will look to buy additional support, services, add-ons and accessories to further compliment the solution they have selected. And that they selected because a brand advocate (not a sales/marketing person) helped validate their decision and ultimately shorten the sales cycle. The next exercise I am going to measure is match the length of the buying cycle for those companies who have community members versus those companies who don’t. My assumption is there will be a correlation and enough data to demonstrate the buying cycles are shorter with those who engage with other community peers for solution validation.