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How to get the best ROI from your customer community.

by maria

By: Fiona Stevens, Head of Marketing, LoyaltyLion

Did you know that the average customer community1 – the people that make up your business’s social media following, your online account holders and your email subscribers – has the potential to deliver an ROI of over 4,000%? And this can even grow each year your community is active.

Many aren’t aware how much value their community can add because they don’t yet really understand who makes up their audience and how to get the most value from each member.

Here at LoyaltyLion, we recently produced a new Community Matters report, which involved a survey of more than 4,000 consumers aged 16+. We wanted to find out more about how people engage with brands, and what drives people to complete valuable transactions.

Our research explains that most people fall into one of four customer personas, and one specific persona is particularly crucial for a higher ROI.

  1. 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 publicly and participate in conversations about your brand without incentives.
  2. 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.
  3. 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.
  4. 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.

“Drifters” are usually pretty unengaged and offer the least value to a business, while “Insiders” regularly interact and drive continuous, incremental gains. Naturally, as a business you want as many “Insiders” in your community as you can.

When we talk about “valuable actions”, what we mean are things such as creating user-generated content, referring friends to the brand, posting positive social media posts about your business; liking, commenting on, and sharing your posts; chatting to your other community members; writing positive reviews; and clicking through on marketing emails.

It is worthwhile assessing your own community to see what blend of personas it’s made up of, and determining if your members are delivering the greatest possible return on investment – they probably aren’t, yet…!

But how can you get more of your community members to behave like “Insiders”? Our research revealed there are three key drivers that motivate people to do actions that are beneficial and valuable for your business:

  1. Transactional: Getting monetary benefits or savings for registering and participating
  2. Brand alignment: Opportunities to establish emotional connections with the store
  3. Experiential: The ability to improve their own shopping experiences

As members move to become “Supporters” and “Insiders”, it is clear that those experiential drivers are more important than they are for “Drifters” or “Lurkers”.

It’s not surprising that consumers may be 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.

But what is perhaps more unexpected is that having 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 important motivators for consumers undertaking those valuable community-based actions. Emotional connections are important, and 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. Covid-19 in particular has shifted people’s perceptions of brands, according to various notable studies.

In addition, seven in ten (70%) told us they 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.

It has never been more important to understand the significance of value exchange, and a loyalty program is a key tactic to incentivise and encourage the key behaviors that turn customers from “Drifters” or “Lurkers” into “Supporters” and “Insiders”. Loyal customers are 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”.

What is essential as a takeaway from our research is that once you have determined what customers make up your community, you really want to move them towards that “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 justify, however, today they are a key vehicle for businesses. Creating “Insiders” who have the highest lifetime value and bring the greatest gains back to a brand should be a priority. Your community has the potential to give you one ROI-driven, meaningful outcome which you can direct your marketing activity towards.

About Fiona Stevens: Fiona Stevens is the Head of Marketing at LoyaltyLion, a data-driven loyalty and engagement platform for fast-growth ecommerce merchants. Fiona has over ten years’ experience in Marketing, having worked in-house and agency side across functions including PR, SEO, and content. She has specialised in loyalty for retail and ecommerce brands for the past five years.

About LoyaltyLion: LoyaltyLion helps fast-growth ecommerce merchants turn unengaged customer bases into active communities that power longer-lasting relationships and sustainable growth. Use loyalty data and insights to connect and accelerate your marketing efforts and drive more revenue from a subsection of highly engaged, highly valuable customers.

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