Gartner reports that 50% of brand communities will fail. And by "fail," I believe they mean "shut down." That leaves the other 50% still live. But are they successful? How many “ghost town” communities are out there? Over the past couple years many progressive brands have explored social media and community marketing initiatives — Twitter, Facebook, blogs, viral videos, forums or fully-fledged online communities. With the comeback of the term "community" and the hype and buzz of Facebook, many other brands are likely contemplating everything from establishing a Twitter account to launching a Facebook-like community within their site. The promise is high customer engagement — which the CFO could care less about, but marketers often believe drives sales and loyalty.

I applaud exploration, experimentation and “fail fast” initiatives. But now we’re entering into a time where the key phrase is "show me the results." The focus on measurability is leading many brands to take a hard look at what they launched, and step away from things that didn’t work. It's a critical time for these brands, and for any others considering a move into social media. These failures don't mean that online community-building is a waste of time, or that it can't be done. But it's complex, and the appropriate strategy could be markedly different from one brand to the next. Before beginning the virtual barn-raising in a new community initiative, tread carefully and consider what success means to you.

Jake McKee, chief strategy officer at Ant's Eye View, likens the whole process to personal relationship building. "We date many more people than we marry — i.e. There’s bound to be plenty of failures in our question to create something grand," he says.

The Community Concept Isn't to Blame

You should know I’m not anti-community. I’ve been involved in “community” my entire career. In 1995 wrote a book on marketing with computer user groups (the analog to today’s online communities). In 1997 I launched and managed the ThirdAge.com community (chat and forums for baby boomers), I led product management for Dell Support Forums, and I’ve been a participant in Compuserve, eWorld, AOL, blogs, Facebook, Twitter, etc. From these experiences I’ve concluded that communities succeed if they solve a need, share an interest/passion and/or connect me with people I care about. Facebook works because most of your and my friends are there — it solves the need to connect and stay up to date, thus carrying more weight as a "social resume." Dell support forums work because they allow asynchronous conversations to solve a technical problem for a frustrated computer user. The ThirdAge community (chat and forums) worked in certain topics where there was passion and birds of a feather could discuss that passion.

From a marketer’s perspective, the idea of a brand community sounds great. The expectation is that it will be a petri dish which will virally grow customer engagement, and this type of engagement will lead to sales. The problem is, few customers jump into that petri dish, fewer still will stick around, and the community interaction usually has no contextual bridge to purchasing. That's three strikes. Most brand communities serve a very, very small set of customers (in relation to their customer base or market size) with either a lot of passion or a lot of time on their hands. And let's face it, not every brand has the potential to inspire lasting passion and sustain a Facebook-type community. Exceptions are cult brands that have passion and community built into their product ethos, such as Harley Davidson or Apple. But you can’t create that by putting up a community. That starts way upstream, with the product and the brand.

What's a Community For?

Brand communities are configured to create social interactions between customers, allowing them to share opinions and interact via blogs, wikis, polls, forums and private messages. There are a lot of technological bells and whistles that the product manager can get excited about, but let’s look at it from the customer’s point of view. I'll repeat what I wrote earlier…the reason people participate in communities is to:

1. Solve a problem / need (or help others do so)
2. Share an interest or passion
3. Connect with people of interest (develop social capital)

#1 is the reason support forums exist, and these reduce support costs, but don't drive sales. #2 and #3 are usually what Brands are looking for, expecting community to drive engagement and sales. But when visitors are not passionate about the topic, they are less likely to jump in. If the community audience is small and unfamiliar with one another, a prospective visitor's motivation to build social capital or help others dissolves. In both cases, the vibrance and participation in the community are next to go. This causes the next visitor not to join, which in turn decreases the passion and audience size of the community. This domino effect leads most brand communities to turn into a ghost town.

A study from Deloitte reports that two of the top three obstacles to making communities work have to do with getting people to engage or visit — and the remaining issue doesn’t help solve this problem:

1. Getting people to engage
2. Finding enough time to manage
3. Attracting people to the community

The solution may lie in reframing the objective. A fully-developed Facebook-like community with thousands of regular participants is probably an unachievable — and in some cases undesirable — goal for many brands. I say undesirable because the resources required to build and maintain such a community may not be in line with the returns that they produce. Something smaller scale may not be as glamorous or provide as many opportunities to brag to your digirati friends on Twitter, but it may be just right for your brand and your customer base.

There are a few potential ways to go small. Ask yourself some questions. If you have a million customers and there are 100 community members posting occasionally, is that success? Or is it a ghost town? Gartner may be reporting that the community sticks around, but how much impact can those 100 people, or the few thousand that "watch" the interactions, have on your business? And even if those few thousand are more engaged, is the conversation related to your product or service leading to sales influence? Or is it unrelated?

Research from Communities

There's nothing wrong with creating a community with the purpose of interacting with the few. A hundred or a thousand participants in a community may not make a sizeable impact on your sales, but they can provide valuable insight. If your objectives are for research or product co-creation, then a community that facilitates that interaction between your brand team and your customers can be very successful. Customers are much more engaged when they know the purpose of the community is for the company to listen to their ideas. A very focused version of this is Dell IdeaStorm or MyStarbuckIdea.com, where customers post an idea and others vote it up or down. Simple. The measures of success there are insights gathered in a much more scaleable and frequent way than traditional market research.

Communities like this have their place, but they don't necessarily have a direct impact on sales. At least until that product co-creation happens — and most marketers probably have a shorter time-horizon to show ROI, especially in the current economy.

Sales from Social Commerce

To build a boom town — community features with a direct impact on sales — marketers need to pursue a strategy that creates interactions and contributions around the product or service they're trying to sell. This Social Commerce model fosters opportunities for the creation of content that helps others make purchasing decisions, driving more sales and resulting in a quicker ROI. This type of strategy needn't require a person to register or become a full-fledged member — they should be able to write a product review, ask or answer a question, or write a story without feeling like they have to make a commitment. Whether that contributor feels like they’ve joined a community by participating is not the point. Their contribution is useful for the visitors to the site, who came to learn more about the brand and get their questions answered — not to "friend" people or help others. And yet, once a critical mass of content is shared, a community of shared interest will start to form. People will write the 101st review because there's a community around a product! This "accidental community" starts to form, which amplifies the engagement to the content and profiles.

It's a challenging time in the social media world. Marketer interest — fueled by hype over Facebook and Twitter — in community-building is rising, just as consumers begin to tire of joining yet another social network. Rather than spending time and energy developing something that's destined to be the next brand ghost town, consider smaller ways to use social media techniques on behalf of your brand. Perhaps you want to build a community of brand loyalists to act as a focus group for product development. If you're looking to drive immediate sales, incorporating a user contribution system — reviews, Q&As, and storytelling – around products on your own Web site is the path to success (especially in the eyes of your CFO!). The trendy Facebook-clone route, however initially exciting and attention-getting, may lead to crickets and tumbleweeds, while a more measured approach may result in a thriving little settlement.

The theme of the Summit was “The New ROI: Return on Influentials”. Executives and managers from top retailers, manufacturers and financial companies came to the new AT&T Conference Center in Austin (on UT’s campus) for 3 days to learn how to build and show the impact of customer voice in their business. See the agenda here.

In the coming weeks we will blog cliff notes from the sessions. But you can also see the stream of Twitter notes here.

I didn’t hear everything (I was running around emceeing the event), but here are some of the biggest takeaways I had:

• Anyone can be an influencer. You can unearth them by facilitating their contribution and amplifying its impact.
• Measurement and marketing impact is easier than most think. Measure the impact of UGC on existing marketing campaigns (examples from Helzberg, Sephora, others)
• Getting C-level buy-in dramatically accelerates the evolution of transforming the business with the voice of customer (ex: Sam Taylor, CEO of Oriental Trading pulled together cross functional team to leverage reviews in supply chain and strategy)
• Brands realize that the voice of the customer is transformational, but are challenged to accelerate organizational change.
• We are all working on a comprehensive way to operationalize and measure all the impacts of social commerce initiatives.
• There’s a big opportunity in merging social content and data with email strategy. Bazaarvoice Social Alerts with JCWhitney had 100% open rate and 50% click through!
• We’re scratching the surface on the database marketing opportunities with influencers. Those who contribute can help identify others who contribute. Some thought leadership discussed with our partner, Merkle.

And we had fun too…

• We were in Austin…so we’ll start there!
• During the sessions, Sunni Brown drew graphic recordings on each session (will post soon).
• Tuesday night we took buses out to the Salt Lick Pavilion (best BBQ in TX, in my opinion) and hosted the Bazaarvoice Bull Ride contest again.
• Leslie from Williams Sonoma took the prize this year (Omare from Geico won last year).
• We had live music from Jeff Hughes and Chaparral
• We played Chicken Shit Bingo (sorry…that’s just what it’s called!)
• Attendees grabbed their beverage from the backs of Beer Donkeys!
• As an unorthodox way to evangelize our message to clients, last year we debuted the video “More than Words”. This year we created two videos, “The Influencer Abduction” and “Freedom! ’09 (Let Their Content Free!)”. Share them with colleagues that need to ‘get’ social commerce!

Abduction of Influencers

Click here to view the embedded video.

Freedom! '09 (Let Their Content Free!)

Click here to view the embedded video.

To give you a Bazaarvoice “inside perspective” on the event…

Last year’s event received a Net Promoter score of 9.3 out of 10. We were excited to get such positive feedback on our first event, but it also meant we had a high bar to jump over. We want to continually improve. We’re tallying the on-site surveys now, and we’ll be sending out an additional email survey, but just based on our experience and comments from clients, we were thrilled with the results. The majority of the event experience was based on the presentations and interaction between clients, as we learn from each other. One of my favorite quotes “the Summit is an amusement park of ideas.” And because so many clients came, our community management, support, implementation, and sales team members were able to put faces to voices. The entire Bazaarvoice team worked on making this successful. It takes a lot of work and requires juggling a lot of details. I want to give special thanks and recognition to the three folks on my team who were the producers of the event: Sarah Loyens, who quarterbacked the invitations and logistics to get folks there; Chris Wellington, our designer who took the event experience to the next level and tied it all together (including the Polaroids in the notebook!); and Amber Quist, who was the overall Producer of the event with RedVelvet Events. And of course, thank you to our partners who added to the content and made the event possible.

Stay tuned for cliffnotes of the content! For those who attended, stay tuned for presentations and conversations posted to the SCS Community.

p.s. If you're in Europe or the UK, register for our Social Commerce Summit London on September 22!

The action-packed agenda includes presentations by Emma Jenkins, Head of Interactive Marketing at Procter & Gamble UK, Ian Jindal, Editor in Chief of Internet Retailing, and Jessica Greenwood, Deputy Editor of Contagious Magazine.  Also catch sessions on increasing community participation, measuring the impact of social commerce, and the Bazaarvoice product roadmap hosted by our very own Bazaarvoice executive team.  View the full agenda.

With a day full of magic, educational sessions, research findings, industry networking, and ice-cold fun at ABSOLUT ICEBAR, Bazaarvoice Social Commerce Summit London is sure to be the only event to mix Social with Results.  So get your parkas and magic wands ready – we’re Revealing the Secrets of Social Commerce…in London!

Here is a 1.5 minute video showing some highlights from our U.S. Social Commerce Summit (with a Texas-theme).

Click here to view the embedded video.

First, think about how any social technology will impact the prospect or customer’s “purchase momentum.” There are social technologies that create connections and communities, but the ultimate goal is driving purchases. Evaluate how salient any type of UGC or social participation is for researching, shopping, narrowing, comparing, and building confidence for prospects to buy. The closer the interaction is to a prospect’s “task,” the closer it is to helping people make their purchase decisions.

The importance of the second factor (X axis, below) is something I’ve come to realize after years of change leadership at startups, at Dell, and during the last two years seeing how the right investments in customer dialogue accelerates our clients’ social strategies. This is the depth and speed of acceptance of the proposed social initiative. I call this factor the “cultural momentum” of your initiative, and it relates to how quickly you can build excitement internally, bringing “customer oxygen” into your corporate culture! Let me explain…

Social commerce and user-generated content initiatives are new, unproven, and scary for most companies. However, I’ve seen our clients go from anxiety level “9” to hundreds of employees embracing UGC alerts, review, question, and answer reports, and actively engaging with our community managers every week. The right social initiative can create a halo effect around the whole idea of “social” for your company. If you choose the wrong initiative, though, the “social” activity becomes a fringe activity, destined to be cut.

Executives who start with ratings reviews usually start with high anxiety level, but, when they see that  85% reviews are positive, interest peaks. They start looking at the data and content. They see for the first time — perhaps because it’s now right there on their site — how customers talk about their products. It’s enlightening and relevant because it’s about the products they sell (their day-to-day jobs). The voice of the customer spreads throughout the organization and changes business decisions. It just takes one brand, category, or product manager to share a success story of how UGC changed his strategy, buying, negotiation, or merchandising. That story spreads throughout the organization, senior management applauds, and everyone jumps on board.

To evolve, you have to have this kind of momentum to get buy-in for future social initiatives and experiments. Other people in the company have to get excited about this new strategy, because as your social commerce strategy evolves it will start to tap more functions (and it should). So the first social program you enact should be one that drives this cultural momentum.

When evaluating social technologies and programs, you can plot and debate them on this simple 2×2 matrix:

What drives purchase momentum?

Write down what your customers need before they make a purchase. How do they research, shop, and evaluate? Where do they go, who do they consult, and what information do they need?

Then evaluate the social initiative on its ability to meet those shopping needs where the customer is looking. For online retailers, your customers go to shopping portals, they ask friends questions, they search Google, or they go down the purchase path of your site. Would a social network ”walled garden” on your shopping site help the majority of these customers? Would a blog? You might do those for other reasons, but they’re not in the bulls-eye of helping drive purchase momentum for the majority of customers.

Today, Ratings and Reviews are table stakes for retailers because multiple research studies have found that 70-90% of customers seek or want reviews before purchase. Customer search Google for reviews, and you want to be found. Customers use reviews to sort and filter to determine which product to buy. They need to read some level of negative reviews to feel they’ve ”vetted” the product and done their research. They need an “excuse to buy” with their spouse, and a sound bite from some reviews is as good a justification as any! Customer reviews are very aligned with purchase momentum.

What drives cultural momentum?

Three things drive cultural momentum – that internal “buzz” around social initiatives.

1) Results

The language of a business is the P&L. If your social technology can show results as close to the P&L as possible (i.e., revenue, margin, cost reduction), even the CEO will be interested. Bring your results into a senior executive meeting and they will applaud you in front of their managers and peers.

2) Data

Can you make  customer dialogue data and content useful and accessible to multiple functions in your organization? I get about four emails a week with product ideas from our clients, and the majority of them revolve around our workbench, reports, and alerts. We knew from the beginning that wide use of the customer voice and data is what would drive adoption. It’s what I’ve called the “customer oxygen” that corporations need. It drives wide interest in customer dialogue and UGC.

3) Cross-functional relevance

If you do a program that is just interesting to the online, marketing, or eCommerce teams, you’re missing a huge opportunity to engage merchants, product development, catalog, stores, customer service, training, research, and other departments. Your goal is deep and wide adoption of social marketing, so the program that has utility for other departments will accelerate cultural momentum. We see clients using answers from our Ask & Answer application for training, research, and copywriting. Reviews can be used by store managers and merchandising in email, catalogs, and advertising. The cultural momentum from these three factors increases the interest in the next investment in customer dialogue.

Where there’s ROI and high internal interest, then investment and resources follow. Simply put, that’s why you prioritize social programs that have purchase momentum and cultural momentum!