When you’re talking about growing small and medium-sized businesses, you cannot overemphasize the importance of customer retention. According to Bain & Company and Harvard Business Review, boosting customer retention by 5% increases profits by 25% to 95%. Due to the high cost of acquiring new customers, extending the life of existing customer relationships is measurably more profitable than having to replace revenue of customers who left you.

Increasingly businesses are implementing online customer communities to be the cornerstone of their customer engagement and retention strategies. Data from market intelligence firm, IDC, indicates that building online communities is the top social business initiative for companies in 2013.

While the flexibility and broad reaching benefits of online customer communities are attractive to executives, launching and managing an online community to improve customer retention takes time and dedication. Creating a community that provides value to both your customers and your company demand specific strategies and community management processes with which many business leaders don’t yet have experience.

Looking for a framework for getting started? The following are four keys steps in your path to keeping more customers using your customer community.

1. Grow the community to critical mass

Critical mass is the point in which your online customer community sustains itself through peer-to-peer interactions rather than the content and activity of your company. While entire books can be written on how to grow your customer community to the point of sustainability, it is important to note that this process is a critical first step.

Without ongoing customer participation in your private online community, your company cannot use it to improve advocacy in the market, customer retention, and product innovation. People need to use your customer community in order for both your target audience and company to derive value from the platform.

2. Help customers become more successful with your products

Creating and growing an online customer community is exciting. It can serve a variety of departments in your company. However, the focus must be on bringing customers, partners, and employees together for the success of your customers.

Your customers are busy. They will not participate in your customer community for the sake of using a shiny to social tool. Customers will engage your community to advance toward goals in their daily jobs and long-term careers.

Align the features, content, and discussions in your community with solutions to customers’ most pressing problems. This critical step differentiates your business from competitors that are trying to steal your customers and ensures your customer community maintains a high level of added value in the lives of your customer base.

3. Use social data to be proactive

Online customer communities provide your business with a significant advantage when it comes to understanding the intent, mood, and goals of your customers. It also sheds light on how your customers view your company or its products.

Traditional CRM painted you a picture of your customers’ demographic profile and transactional history. Your customer community combines demographic and transactional information with social and behavioral data from their activity in your online community.

By knowing what customers are asking, which content and videos they are consuming, and the discussions groups in which they are participating, you can make much more accurate assumptions about the needs of your customers. Feeding that data to your account management or customer support teams enables them to reach out to customers to address their concerns long before high degrees frustration with your product sets in.

Along with identifying and helping customers at risk of ending your relationship, monitoring your online community allows your company to more easily find satisfied, vocal advocates to recruit into your customer reference program.

4. Test within your community to make data-backed decisions

What if you could send up a test balloon for all of your company announcements, product enhancements, and messages for customers? Testing new directions and messaging with a segment of your online customer community can make big difference in getting customers excited about change – something that many customers typically resist.

Your business can use your online community’s built-in survey tools, discussion forums, and idea submission features to gather data about how new ideas will impact, and be received by, customers without making a widely-publicized announcement first.

Even if an unpopular company or product change continues to more forward, the data from your customer community will afford your team the opportunity to prepare additional resources and support specific customer segments differently in order to mitigate potential customer retention problems.

Online Customer Community Takeaway

There are many things that lead to customer retention problems – from challenges getting tangible value from your company’s products or services to changes that contrast with why customers chose to do business with your company. The versatility of your online customer community integrated you’re your CRM system provides a platform to identify and address many of the leading causes of customer churn.

First, your customers must use and rely on your online community in their workdays. Only then, can your company engage your customers to help them get more value from your offerings, solve their most critical problems, make market-based decisions about product strategy and messaging.

About the author

Jpaul_headshot_highresJoshua Paul is Director of Strategy and Marketing at Socious (@SociousSoftware), a leading provider of online community software to businesses and user groups. For the past 15 years, he has worked with digital strategies and technology product management to help companies grow through business model innovation, content marketing, and social media. Josh is a popular blogger and speaker on customer engagement, online communities, and social technology. He blogs at http://blog.socious.com.


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