Study: Why Most Online Communities Fail

Josh Catone
Josh Catone

According to a new study by Deloitte consultant Ed Moran of more than 100 businesses with online communities, most of those communities fail to live up to expectations. As the Wall Street Journal reports online communities are currently a hot investment for businesses who hope that creating a community site around their business will help customers feel more connected to their brand. That’s probably true, but most of these sites are failing to attract visitors, and the reason, according to Moran, is that businesses are focusing on the value the community can bring rather than investing in the actual community.

Moran’s study revealed that even though 60% 6% of businesses put over $1 million into branded online community building efforts, 35% have less than 100 members, while less than a quarter have more than 1,000. Moran outlined three reasons he thinks that that majority of online communities are failing to gain traction with customers.

  • Businesses are being enticed by fancy technology. Mesmerized by bells and whistles, many business are foolishly blowing their entire budgets on technology. Moran’s advice is to reach out to community members and let them do your R&D for you, rather than blowing it on fancy tech you may not really need. If the goal of a community associated with a brand is to get people to evangelize your products or services, put money and time into reaching out them rather than developing a fancy site.
  • Lack of proper management. The Deloitte study found that 30% of online communities have just part-time employees in charge, and most have just a single PR person running the show. Advice: hire a social community manager with experience running and building an online community. Managed communities are a lot less likely to grow organically the way general mainstream social networks do, so you need someone who knows how to build one in charge. My former colleague Marshall Kirkpatrick wrote a great post earlier this week about the merits of online community managers.
  • The wrong measurement metrics. Moran noticed that most businesses are measuring the success of their communities in the wrong way. Though their stated goals are usually to create viral, word-of-mouth marketing and increase brand loyalty, the metric they use to gauge success is unique visitors. If all you’re after is growing visits to the site, then you’re missing the point. You’re not trying to compete with mainstream social networks, so you don’t need to chase eyeballs. Rather you need to build interaction and create a level of comfort among your most loyal users so they will evangelize your products for you. The best way to measure this might be by looking at things like blog mentions and Twitter tweets.

A fourth reason why many branded online communities fail that Moran didn’t mention is noise, lots of it. We live in an age where information overload is a real problem for many people, and signing up for yet another social network site, especially one focused on a single brand, may not be attractive. This is out of your control, but it is another reason why unique visitors is a lousy metric for this type of project, and why hiring someone who knows how to best reach out to and grow your core use base (i.e., “true fans”) is imperative.

It’s also a reason that creating a branded social network should not be the only part of a company’s social media strategy. Companies should also have a presence on mainstream networks like Facebook, MySpace, etc. Let your die-hard fans come to you in the environment their most comfortable with.