Building Community-Driven Growth Strategies in 2023

Introduction

According to McKinsey (2022) The “big idea” in 2020s marketing was community—reaching consumers in the communities they are a part of and helping them express community membership by participating in your brand.

With the evolution of the internet and the mass availability of new online marketing tools we have seen a parallel evolution in how brands have attracted and retained customers.

Traditionally, brands used mass media advertising to achieve broad reach and awareness. More recently in the Web2 era, new social media platforms, and  consumer data scraping enabled brands to create more targeted advertising campaigns focussing on personalisation. Today, we are entering a new era focussing on the importance of community to generate stronger brand equity, affiliation and advocacy.

This focus on community was particularly powerful among the Web3 brands of 2021, and Web3 architecture can be a useful tool for brands to leverage in developing a strong brand community.  New tools and methodologies including tokenisation offer exciting new ways to boost engagement, consolidate fragmented communities and scale partnerships with abundant potential.

But perhaps more importantly, regulatory changes are forcing brands to look for new and sustainable sources of customer data (BCG, 2023). With impending limitations to third-party cookies, rising costs of gatekeeper social media platforms, and ever-growing awareness and controls over consumer privacy, brands are under increasing pressure to build, host and manage their own data collection ecosystems.

What to Think About

There are various different models for building and retaining an active community, but critically, a successful community goes beyond having presence on social media platforms, and extends to hosting and nurturing an actively engaged community that contributes to the brand via social proof, data contribution and UGC.

In order to build a successful community brands should consider the following recommendations:

• Focus on hosting a centrally-controlled community in a single space. Rather than paying gatekeeper social media platforms for consumer data insights, use them to channel consumers into your own centrally-controlled and hosted community that you can nurture and manage according to your own preferences and objectives. Not only does this approach give brands more granular, more affordable consumer data via a fairer more transparent relationship, but it also enables them to unite fragmented audiences into a single space.
• Focus on utilitarian community personalisation - Rather than trying to personalise bespoke ads for every individual user, focus on binding missions or interests that resonate with the largest customers segments, and ensure that brand story-telling focusses on these largest segments to adopt their language and interests. In doing so you will build traction with the longtail of your consumer base.
• Focus on brand mission and values. Customers are increasingly  ikely to be attracted to mission-oriented brands. This is being driven by Gen-Z influence. Willingness to pay higher-prices for impact orientated brands has risen from 58% to 90% in 2 years. This trend likely translates into customer lifetime value. According to Accenture, 62% consumers feel more favourably towards impact-oriented companies.
• Recognise your authentic ambassadors. Brands should use social commerce tools to give opportunities to contributors in their communities, not just the 1% of paid influencers. To do this, brands should build a community-centred feedback loop that focusses on rewarding their authentic active community of consumers. This includes testing ideas, products and designs with organic brand ambassadors, who in turn feel valued by the brand. By setting an equitable relationship that shares value between brands and the customers who make contributions, brands will better incentivise interest in the longtail of low-activity users, shifting the 1-90-90 rule to distribute engagement more evenly.

• Grow the Pie with collaborations - By creating interoperable communities of brand advocates united by common or complimentary missions or interests, brands can access broader, more diverse customer bases and offer them more engagement touchpoints.
• Remove the friction in purchasing and optimise for social commerce - Consumer patience is at an all-time low, and streamlining the design of purchasing journeys on desktop and mobile will reduce abandoned baskets rates. The frictionless experience is being taken to the next level by emerging online shopping channels, like social commerce. According to McKinsey’s research on the State of Fashion, 37% of fashion executives believe that social commerce will have a significant impact on their business in 2022, making it one of the top three themes. In China, social commerce has generated around $360 billion in sales, accounting for approximately 13 percent of all e-commerce sales. Building social commerce opportunities for your brand will not only increase purchase channels and boost consumer engagement among younger audiences, but will also help you deepen relationships with the next generation of influencers and brand ambassadors that are sharing in your sales function.
• Gamification - Reimagining product browsing and purchasing journeys with gamification, turns the ordinary, mundane, and burdensome task for most consumers into a more engaging and captivating experience. Based on Digital Marketing Forum, 60% of consumers say that they would be more inclined to purchase from a brand that offers an attractive game. Gamification-based activities enhance the online store and brand strategy because, like video games, they entice customers to remain involved over time, attempt new "levels," and earn a psychological reward that also yields tangible benefits. By building gamified social commerce experiences, brands not only remove friction but optimise engagement.