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In my update on the 2008 Tribalization of Business study on business communities that we are doing with Deloitte and The Society for New Communications Research last week - I pointed out how some companies are totally misaligning their measurements of community effectiveness with their goals.

As you will see from the slides, many companies measure effectiveness by looking at page views and time spent on the site. Yet not one company listed ad revenue as a goal for the community - which is what page views and time spent on the site would be good for. Let’s assume that your goal is to have a support community - one in which people can help one another or get help from some your employees. If you could deliver the support in a way that never required people to come to your site, you would still achieve your goals. In fact, if you build your community so that people do not have to come to it, chances are that you will have more people participating in it. There are only so many destinations that a person will visit on a regular basis, and chances that your business community becomes one of them are fairly slim.

Another interesting wrong-headed metric-related finding from the study is that a majority of respondents found that “getting people to engage” was one of the biggest obstacles to making a community work. Now if you have a small community, chances are that you could get a fairly high engagement rate. The larger your community becomes, however, the more its profile will resemble that of large public communities - 1% of hardcore contributors, 10% of active users and 80-90% of lurkers. Now does that mean that the lurkers do not get value from your community? In the case of the customer support community, lurkers who do not contribute could still find the help they need and feel better about you than if they had not found it and also save you the cost of a call into the call center. So measuring community effectiveness by measuring engagement is just not a representative metric of community success.

Now the real issue with all this is that if you have a community development team who is being measured by those wrong-headed metrics, they will invariably develop bad behaviors in order to maximize these metrics. They could in fact develop community features that will stand in the way of success for your communities, or close down communities that are in fact doing really well.

If you missed it, there is a dynamic conversation on managing communities going on right now…Chris Brogan kicked it off and Nancy White wrote some interesting musings and also kept track of many of the other interesting links.

Based on research in the field of virtual communities, most business thinkers will agree that there are 4 fundamental pillars to successful communities - content, members, member profiles and transactions. If managed properly, these 4 dynamics can lead to economics of increasing returns that characterize most successful communities. The more members you have, the more content they will create. That in turn will increase the value to the community members and attract more members. If you capture information about your members and you make it easier for them to find stuff in the community based on their profile, the higher the value of the community to the members and the more members you will attract. It’s easy to understand the workings and to get the benefits of the dynamics of increasing returns that happen in successful virtual communities. Many of those were first described by business thinker and management consultant John Hagel in Net Gain more than a decade ago.

There are other aspects that drive and define communities, such as the social and technology infrastructures of communities as well as the business processes that they support. But none of those characteristics have the power to create the positive value creation loops that the original four can.

While most successful communities will have a mix of all of the ingredients - we can characterize communities by their dominant dynamic.

First there are content-based communities, where members interact with one another primarily in the context of content - either consumer generated or licensed/acquired. News sites or blogs are communities that would fall in this category.

Then there are communities that are primarily member-based. Member-driven communities can take on many different forms. Brand communities like the Harley or the Ducati communities are clearly member-centric communities, even though some companies mistakenly think that the brand is at the center of those communities, and not the members. Networking communities like LinkedIn and Facebook are clearly communities that have members at their core. Many developer communities in the tech world also fall within this category.

Lastly there are transaction-centric communities. eBay and Amazon.com come to mind when talking about those communities.

Of course, all of those communities have content, and all have members, and most have transactions - it’s just that they are more heavily tilted towards one of the community ingredients than another. And in some cases communities with the same end-goal can take on very different forms. Brand communities could also be set up as content-centric communities or as transaction-centric communities. Customer support communities or developer communities could also be started as content-centric communities - and perhaps evolve into transaction-centric communities.

The reason it’s important to understand the different types of communities is because of the requirements to get them started. You cannot start a member-centric or a transaction-based community without a critical mass of members or offerings - something most companies do not have. Without a critical mass of members or offerings, there will not be enough content generated (i.e., customer reviews, etc.) in order to make the interaction for the community members valuable. So if you have a total potential number of users ranging in the hundreds, you will never be able to set up a vibrant customer support community as Intuit. Microsoft or Apple can. That does not mean that you cannot leverage customer support communities, it means that you have to start them up as content-driven communities. Instead of relying on the community members to re-write your manuals and to create meaningful FAQs, you may have to hire a few people to kick-start the process on a for-hire basis.

While the economics of increasing returns may be somewhat diminished with a smaller number of members and some hired guns, they are still very much present. Most likely they will handily beat the economics of diminishing returns that most business practitioners face when trying to interact with customers and prospects in the old-fashioned interrupt-driven way.

Some of these thoughts have been triggered by the many conversations I have had the pleasure to have as part of the Community Effectiveness Study that we are conducting with Deloitte and the Society of New Communications Research. Some of the preliminary results of this study will be discussed at the Society for New Communications Research Forum in two weeks and more detailed results will be unveiled at the Community 2.0 Conference in May.

As a senior research fellow with the Society for New Communications Research I can extend a special discount to some of my friends who want to attend the forum. Email me if you want to attend at a special rate (francois [at] emergencemarketing [dot] com). Note that there are also 1/2 day flex passes available for those who can’t attend the full event.

The Online Publisher Association announced that it added Community as a category to its Internet Activity Index (IAI). So they will now measure how much time consumers spend online with Content, Communications, Commerce, Search and Community.

The OPA defines community as:

“Web sites and applications that combine user-generated content with communications in order to foster relationships between individual members and groups of members. Many Community sites are content driven, and they were previously accounted for in the Content category. However Community’s content is largely user-generated, and when merged with communication, creates a specific category of online activity.”

The IAI numbers for January show that consumers spent 42.7% of their online time interacting with content, 28.7% with communications, 16.1% with commerce, 7.5% with community and 5.0% with search.

AdAge picked up on the story, declaring “When It Comes to Time Spent Online, Content Trumps Community.”

But wait a minute here, adding community as a category at the same level as content, communications, search and commerce, is like comparing apples and oranges. Or better yet, comparing apples and oranges with air or water. Communities are combinations of content, commerce, communications and search. And communities affect the usage pattern of all the above categories and vice versa. So if I am spending time on Amazon.com, am I spending time with commerce, content, search or community? Obviously the end result is commerce if I buy something, but it could also be searching without buying or interacting with content (both user generated reviews and published content) without commerce. The fact that Amazon is a community which leverages my personal profile very well (another component of communities) is determining my interactions and time consumption on that site. The same can be said for many other sites that combine content with community. If I am spending time on the WSJ Health blog, I am spending time with content or community? If as a car buff I spend time on Carspace.com, I am spending time with commerce, content or community? Would I spend as much time conducting commerce, searching for stuff or interacting with the content on those sites if there were no community component to them?

Probably not…

Besides the fact something does not sit right with the categories, many conclusions drawn from the new numbers by AdAge and the IPA are equally flawed. Jim Nail at the Cymphony’s Influence 2.0 blog captures those flaws in detail in his post today (well worth the read). A couple of highlights include:

• The fact that page views per person in content dropped 225 pages suggests that a number of content sites were just moved to community.
• Content sites show 480 pages per month per user vs. 380 pages for community sites. So from an ad perspective, the reach may be just the same.
• Another factor not reflected in the new numbers is influence. If a third of people below 30 don’t make buying decisions before checking with their social networks, the impact of communities on the commerce is obviously not reflected in those numbers.

We should of course remember the agendas that both organizations are representing - those of advertisers and publishers.

The BRITE conference at Columbia was a great one. Much has been written about it already by David Berkowitz, Tom Guarriello, Max Kalehoff, Lois Kelly, Valeria Maltoni, Amanda Mooney, Christine Whittemore and then also on the BRITE blog.

Here are some of my (heavily biased) takeaways from the conference:

• Many companies are truly in need of help - their traditional marketing programs to attract and retain customers have become much too costly.
  And when a competitor in their space figures out the secret formula, the benefits to that competitor are game-changing, not just level-setting.
  There were some good examples of that at the conference - including Eli Lily (more on them in a future post), Cisco, GE, P&G and Lego.
• Companies have to radically rethink how they do marketing and how they staff it - marketing can no longer be viewed as a collection of programs, but instead as way of behaving in the marketplace.
• Many marketers are complaining that in the new social media world there are not enough opportunities to reallocate their traditional fat advertising budgets - i.e., not enough keywords in search marketing, etc. Forgive my French, but isn’t this looking at marketing in the social media age totally ass-backwards? Maybe you do not need the same traditional fat budgets to achieve the same results - what do you think it cost to produce the coke/mentos video, which resulted in increased sales of 5-10% for Diet Coke and 15% for Mentos? Sure, programs like this may not be replicable, but neither are the results of ad campaigns. Another good example is Amazon – with zero “interrupt” marketing dollars in their budget – which does not mean they don’t do marketing, in fact they are a marketing machine.
• It is clear that agencies are trying hard to redefine themselves, which is a must if they are to survive. Most of them are just using new buzzwords to talk about the same old programs that they’ve been doing for ages. Saying that you will be delivering 3D marketing programs – the right message to the right person at the right time and in the right place does not make it so. Interrupt marketing messages delivered on a computer screen, a cell phone screen, even if powered by GPS, or in an electronic game will work no better than they do on a TV screen or in print. And to say that TV viewing has not gone down as a way to continue to justify non-measurable expensive ad campaigns is totally ignoring what really happens in that marketplace.
• Many marketers have learned that they need to put the customer at the core of their offering, not their company nor their product. It does not matter how a person feels about your product; it matters how they feel about themselves in the context of your product.
• In an attempt to fix the fact that 90% of all new product introductions fail - mostly because they do not address the right market requirements - there may be a bit of an over-correction in the direction of getting your customers involved in designing your products. In certain product categories as with disruptive innovations, getting your customers to help you design your products may in fact not yield the best results. Do you think we could have had the walkman or the iPod through customer co-creation? All that said, an over-correction is still better than the alternative.
• The barriers to marketing innovation are still based on the same fundamentals – which are mostly organizational and cultural in nature. Maybe we need to invent a new marketing department – one in which either nobody reports to the CMO, or one in which most people report to the CMO. And like Eli Lily, maybe we need to change our event horizon and measure it in years instead of in quarters.
• While most companies are confused about what communities really are and how to leverage them, some examples presented at the conference, including the Eli Lily communities, the Lego community, or the P&G innovation communities, clearly demonstrate the power of those communities on achieving game-changing results or results that would just not have been possible without them. You need to be willing to let go of control, go where your most ardent community members hang out, and be supportive but not necessarily provide incentives.

So all in all BRITE was a great conference, with some thought provoking session & presenters, some great insights, and best of all – good discussions and conversations among the audience members. Let’s hope that the blog conversations will extend the life of those great face-to-face conversations.

The Society for New Communications Research released preliminary results of their New Influencer Study at the SNCR Research Symposium last week.

While there is no question that social media is rapidly gaining importance, it was interesting to see how they are (or not) measuring the effects of social media initiatives. Only 51% reported to be measuring the effects, and of those, the metrics they most value are enhancement of relationships with key audiences, enhancement of reputation, customer awareness of program and comments/posts relevant to organization/products.

As was brought up in the discussion following the presentation last week - it is interesting to see how soft most of those measurements are. First off, how many companies really measure “enhancement” of relationships or reputation? And how many measure customer awareness? Sure, large consumer-facing companies probably still do some of that - but aren’t those yesterday’s measurements cooked up by the advertising industry? Those that were meant to hide the fact that advertising cannot be effectively measured?

Surely we can come up with better metrics to measure the impact of social media initiatives - what about new customer acquisition, customer loyalty and customer lifecycle value, new product innovation success ratios, return on information, and customer referral ratios & values.