When we conducted the 2008 Tribalization of Business Study, we discovered that those companies that were most satisfied with their community efforts were those that measured the impact of their community programs on their business processes the same way they would measure the impact of any other program on those same business processes.

So if you measure the impact of a certain program by increased store sales, or by improved customer satisfaction – then measure the impact of social media programs on those business processes the same way. Even if you think the current measurements are wrong. If you do not like how customer service is being measured by the average time people spend on the phone – it does not matter. Don’t try to change it when you roll out a social media program. The fact that the current measurements are well understood and often hardwired within the company culture will ensure that people will understand and embrace your social media programs rather than marginalize them as exotic new hype-driven non-mainstream programs.

Taking this a step further – the faster you can get the various departments that benefit from your programs to co-fund them, the faster your programs will become mainstream.

All that being said – how do you measure the impact of your social media programs? What works? What doesn’t work? As we are gearing up for the next iteration of the Tribalization of Business Study, what would you like to find out?

PS – If you prefer discussing the topic instead of just commenting on it, join the Marketing 2.0 community where I started a discussion on the topic.

Someone asked me what the three most under-leveraged opportunities for companies who offer online communities are.

I answered:

• The ability for companies to engage all their constituencies in transforming their core business processes – including employees, customer champions and also their detractors.
• The ability for companies to leverage online communities in a way that enables them to truly move the needle – as I discussed here.
• And the opportunity for companies to completely transform the office of the CMO – as I discussed here.

What do you think are the three most under-leveraged opportunities in online communities and social media in general?

The 2008 Tribalization of Business Study that was released last week led a lot of people to conclude that online communities do not work and that companies are spending too much money on making them happen.

Well – there is some of that and then there is a whole other side to the story that we uncovered as part of the study.

Let me use this post to clarify some of the misunderstandings in the interpretations of the business community study results.

Do most online communities indeed fail?

In fact we found many very successful community examples in the companies that participated in the study – many of them well known and well documented case studies, some less so. We should also point out that most communities that were part of the study are less than 1 year old – so we do not really know whether they are successes or failures.

It is true that many communities fail, and will continue to do so. When they do, however, they do so for very similar reasons – so you’d think it should be fairly easy to avoid the pitfalls.

The first reason is that many companies who embark on community initiatives are putting their company or product at the center of the effort. As many pointed out, that is obviously WRONG – you need to put the community member at the center and make sure that there is some passion around the initiative.

Do companies spend too much on Technology?

The second main reason for community failures, and one that got misinterpreted by many, is that companies are starting community initiatives by focusing on the technology first. It’s not that they are spending too much on technology, it’s that the technology platform is not what is going to result in the dynamics of increasing return that characterize successful communities.

Should all companies have community initiatives?

If you can create a place for your customers and prospects to come and share their passion, and that place does not yet exist, then you should absolutely try to have a community initiative. But don’t be blinded by “the not invented here” syndrome – maybe the best way for your company to leverage communities is to go on Facebook, MySpace or some other community that is user controlled, like the Tivo community used to be.

As some pointed out, there is another big reason why companies should always think about affiliating with other communities – and that is that people will only participate in a limited number of communities. I won’t participate in a Bank of America small business community and a Microsoft small business community and maybe a few others – I only have so much bandwidth.

When is $1M too much to spend on a community?

Many jumped on the bandwagon that it is unbelievable for companies to spend $1M on customer communities…[update 07/21 @7:45pm ET - only 6% of the companies who participated in the study spent more than $1M on their communities]

Maybe yes, maybe no…

If you are small startup, then $1M is definitely way too much. If you are a bigger company and spend $1M on designing a slick community with worthless technology bells and whistles, then that is too much to. But as I wrote by using the example of Bank Of America, in some cases companies are not spending enough to make a difference with their online community. If you are a Fortune 50 company with billions of dollars in revenues, and routinely spend multiple millions of dollars on advertising media, then only spending a few hundred thousand dollars or even a million dollars on your community will just not move the needle. And if the goal of everything you do is to create new customers in a way that will make a difference for your company, then you need to invest appropriately.

Now if you are going to spend $1M – you have to make sure that the investments need to be made in content creation, moderation and awareness development (no, I did not say advertising or direct mail ) to support large numbers of users.

Do CMOs get it?

Talk about a loaded question…but since many were quick to dismiss the capabilities of marketers it is one that I thought should be addressed.

And the answer again is – some do, some don’t, and many are trying to figure things out.

Some are indeed looking at communities as another channel through which to interrupt their customers and prospects with product messages – and most of them fail fast and miserably.

Some don’t quite get what they inherited and keep it small and contained so that it does not make it on their radar screen.

And some know that it is transforming their role and giving them a renewed chance to be the key market strategist at the executive table and the representative of the voice of the customer within their company – and those are the ones who are reaping all the gains.

So, again – do most communities fail?

Our study did not show that. But yes, many community initiatives do fail – either because nobody comes (or they come once and then never come again), or because they fail to move the needle for companies and do therefore not receive the executive attention that they deserve. As I said before, the reasons why they fail are very similar from one case to the next and should therefore be avoidable. But there are many case studies where companies delivered game changing results to their company’s bottom line – and the reason why they succeeded are very similar as well.

For the second time in six months I got to listen to the Fiskateer case study at last week’s ANA Conference on Marketing Accountability. This time it was co-presented between Jay Gillespie, the VP of Marketing at Fiskars and Spike Jones, the Firestarter at Brains on Fire.

The folks at Fiskars did a lot of things right in order to build this community – they found an area of passion, scrapbooking, and they put the users at the center of their community, not their company nor their products.

In a nutshell, the Fiskateer community is a community of passionate scrapbookers who are helping one another in every aspect of the hobby – from providing social interaction guidelines for the community to finding the right tools for the job. A handful of community leaders are paid by Fiskars, all others are volunteers.

What started as a modest PR project, with a goal of recruiting 250 community members within 6 months, ended up with a movement of 5,000 passionate fiskateers in 18 months. In fact they achieved their original goal of 250 members in less than 48 hours. Another goal was for them to increase chatter by 10%, which they instead grew by 600%. They also blew past their original goal of increasing store sales by 10% and instead increased store sales by 300%.

What’s even better is that the program, which was originally funded by Fiskars at the tune of $1M, is now fully paid for by the box stores.

And just like we found with our own study on how companies leverage communities, they had some unexpected benefits from their community, including:

• The participation of the community in the R&D process
• Having the community members create better advertising than they used to
• Having community members take over much of the customer support function
• Having the community rally around the company when they had a PR crisis on their hands.

The key to success, said Fiskars’ Jay Gillespie, is to keep yourself accountable to the fans – not the company.

When companies deploy successful communities, the benefits are not level-setting; they are truly game-changing.

Over on the Marketing 2.0 blog, I wrote about the importance of thinking big about your corporate community efforts if you want to have a real impact on your business and if you want to make it onto the CMO’s agenda. I would love your feedback.

Thinking about the issues of scale that large companies need to be able to achieve in order to make a difference also made me think about the importance to affiliate with others in order to provide a valuable service to a community. If a company needs hundreds of thousands or millions of small business community members to make a difference, they will never succeed if 10 other companies are vying for those same members by creating their own separate communities. If, however, they could find a set of partners who deliver complementary products and services, then together they could attract a critical mass of members and achieve their goals…

More on this thought later – I would also appreciate your feedback.

One interesting observation from the ongoing “2008 Tribalization of Business Study” is that while the state of communities has progressed by leaps and bounds since the last community 2.0 conference, the market is still very young with many people confused about what to do and what to expect.

One way of gauging this is by looking at what people found to be unexpected as part of their community efforts:

• Reach of Word of Mouth for free
• Knowledge about customers
• That our market really will tell us what they want — if we just ask
• Greater visibility
• Lots of active users
• Ideas generated by communities
• How happy customers are with the outreach

It is sort of funny that most people will setup communities to get to know more about their users, get ideas from the outside inside the company faster and increase word of mouth, just to name a few, and then get surprised when this actually happens.

Another unexpected consequence, this one potentially dangerous is “Advertising Revenue.” If the purpose of your community was not advertising, and so far no companies in the study have indicated that as a goal, then discovering advertising revenue as a by-product may potentially lead to spamming your community and eventual failure.

In partnership with Deloitte and the Society for New Communications Research, Beeline Labs, our new company is conducting a research project on how companies measure progress and success within their business communities.

The survey will have a qualitative component as well as a quantitative component. You can participate in the quantitative part of the project by taking a few minutes to fill out our online survey (https://new.qualtrics.com/SE?SID=SV_8HXjnrxuO2uwywc&SVID=Prod).

If you would like to participate in the qualitative portion of the research project, you can leave a comment here or email me at francois [at] emergencemarketing [dot] com.

The results of the research project will be published later this spring.