Customer interaction and engagement is a crucial aspect of any business. You need to interact with your customers to understand their needs, worries, habits, and fears. With this information, it will be easy to develop products and services that will serve them satisfactorily. The engagement also allows you to establish a relationship and build loyal customers.
In the long run, your loyal customers become brand ambassadors. Their endorsement and recommendations bring sales to your venture. With this concept taking shape, a new business model is gaining tact.
The community business model is the new buzz in the online sphere. But what is the special aspect does this model bring?
In this article, we cover what the community business model is including how it works as well as its pros and cons. Therefore, please keep reading to learn more about it.
What is Community Business Model?
As the word suggests, the community business model is an approach that relies on the community. The model involves the use of online communities to drive sales and offer support services to customers. It works for business-to-business (B2B) and business-to-customer (B2C) ventures.
However, with an increased online platform where customers can interact, the community business model is moving to a customer-to-customer approach. Through online communities, customers can share their feelings and experience on a given product or service. They do this by providing reviews and comments as well as recommendations.
So, instead of a company advertising their products to individuals, they rely on sales from these online communities.
How Does Community Busines Model Work?
The community model works to bring like-minded people under one roof to discuss and offer solutions to certain issues. The founders of these communities encourage people to join and participate actively in them.
Most of these communities interact through electronic tools such as chatrooms, forums, and message boards or emails. Here they share information about a product, services, guidelines, and solutions to issues affecting them.
The customer-oriented communities share reviews and experiences using particular products. Customers discuss various brands and their shortcomings. Also, they recommend their favorite products and why they consider them the best. To reduce trollers, some people charge members who want to participate in these forums.
As an entrepreneur, you can start a community that you will utilize to drive sales. Alternatively, you can become an active participant in these forums. Here, you can share information that will solve the participants’ problems as recommend your products. However, you must avoid being sales as it can lead to banning you from participating in the communities.
In other words, this model helps you drive sales by mentioning and recommendations by customers in their virtual communities. You do not advertise or promote your products in those forums. Rather, what customers say and share about your business is the determiner of your sales levels.
As a business, you can create an online forum for offering support to your customers. When customers reach you for support, you can encourage them to join the forum to enjoy seamless interaction with experts and other customers.
Example of Community Business Model
While businesses use other models, almost every venture applies the community model. Many businesses have social media pages where they share and interact with their customers. Also, you will see online stores with a review page and a comment section where customers can air their complaints and compliments with their fellows and business experts.
Through these forums and chat groups, businesses win recommendations and referrals from their current customers. Some of the examples of the community business model include social media platforms such as Facebook and Twitter.
These platforms allow people to form communities around their professionals, hobby, and interest. The members share information about various aspects. The platform benefits from a wide audience, traffic, and data which they monetize through ad display and targeted marketing.
Another example of a platform using the community business model is Open Source. This website is an online community for programmers. They use the forum to share codes free and openly. The platform then generates revenues from product support, system integration, tutorials, and the sale of related services.
Pros and cons of Community Business Model
A community business model is a superb approach for people seeking to try a leg in the online business world. However, it has some merits and demerits. Here they are:
Pros
Low marketing
As noted, customers play a central role in promoting your products in this business model. The customers share and talk about their experiences and feeling with what you offer to them. If they enjoy your products and services, they recommend the products to their colleagues on the online forums.
So, you do not spend money on advertising your business to customers rather they help you market it.
Enhance customer service provision
The online communities and forums do not act as sales promotion points only. Rather they work as a customer support center. Through the forums, customers can ask and get answers from experts and fellow customers. This aspect improves your customer services while also lowing your operation costs.
A place for capturing customer data
Through the online communities, the customer shares their emotions and feelings about your products. You can take this advantage to track and monitor customer behavior, habits, interests, and needs. With this information, it will be easy for you to modify your products and services to align with their current needs. This way, you will boost your sales and retain customer loyalty.
Cons
Chances of information overload
With active participation, the online forum receives massive comments and contributions. Each of these messages may have useful information for your brands and customers. However, the overloading makes such information go unnoticed.
Possibility of trollers
In the online space, there people focusing on bringing down a brand. Your business is not immune to this aspect. The online forum opens an opportunity for trollers to realize their objectives. These people can create fake accounts and use them to create a bad impression of your products and services.
Therefore, in order to avoid such issues, you need to establish strong moderation and monitoring of your online communities which can be a hard task.
Conclusion
In a word, the community business model involves selling your products through virtual and physical communities. This model helps you drive sakes with ease and earn referrals from current customers. Also, you lower your marketing costs as the customers become your brand ambassadors. However, you need to be more careful to weed out trollers that can hurt your brand even without being current or former customers.
