Community building requires deep understanding of the customer and technical flexibility

We invited Joel Skoglund, co-founder of Noos Digital, one of the leading management agencies in the Nordics to write a guest post about a current trend. What he came up with is gold - and well worth a read. So let's dive right in!

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Hi,  

I'm one of the founders of NOOS Digital. A Management Agency specializing in strategy and analysis for digital businesses. We are super passionate about working together with our clients to create long-term sustainable businesses.

During the past year or so, we have seen a shift from customer acquisition to customer retention. We often refer to this as community building. An ambition to solidify the business’s position among its target audience by bringing them closer to the brand.

Building a strong community around your E-commerce business is a long-term investment that, when done correctly, can yield significant financial returns. These communities, built around shared interests or goals, can foster customer loyalty, increase retention rates, and consequently enhance your business’s bottom line.

A Loyal customer base tends to have a higher lifetime value than one-off purchasers, and they are more likely to drive word-of-mouth referrals. Community-focused businesses often see a higher average order value, pricing power, and the benefits of active participation on the part of customers, including lower customer acquisition costs.

The important but often forgotten aspects of community building

In order to reap the benefits of a strong brand community, we need to get a few things straight about the phrase community building itself. Often, we see it used in a quite loose manner, like a synonym for branding or awareness marketing.

To us at NOOS, brand community entails continuous and often spontaneous engagement from several actors rather than just having a sizable following on social media. Businesses successful in this domain regularly communicate with their customers in a mutual fashion, with customers actively engaging. Often, customers communicate with each other or external brand ambassadors about the brand, either in forums owned by the brand, such as a social media page or site, or in external forums.

Besides modes of communication, a community generally shares several cultural characteristics, such as beliefs, values, norms, and practices that characterize the group. They reflect how people perceive the world and influence their attitudes and behaviors. These characteristics act as facilitators of in-group connection and communication, which increases the willingness to engage and endorse.

At NOOS, we believe that the ability to incorporate psychographic attributes in audience analysis and definition is key to community building. These deeper values are what facilitate peer-to-peer and peer-to-business communication as well as relationship building in the context of the brand. This also demands a tech stack that is dynamic and manageable in differentiating messages and targets based on markets and local trends.

Businesses that manage to understand and leverage these attributes will have the best chance of winning their customers long-term. However, many still rely solely on traditional demographic variables such as age, gender, and income to define their target audiences.

Beliefs and values are sometimes perceived as something all too abstract to discuss in a business context where hard facts dominate. With that being said, if you want lower customer acquisition costs, higher lifetime value, higher customer retention and customer satisfaction, a deep understanding of your audience's psychographics is a must.

Community building requires precision in targeting and message - and an ability to synthesize data

A truly data-driven approach to community entails utilizing both quantitative and qualitative data in order to create a feasible community strategy. To truly resonate with a target audience, however, businesses first need to spend time on research aimed at understanding our audience at a sub-cultural level. What values do our target customers hold, and what gets them talking? What do they wear? Understanding these attributes is the foundation of any community strategy.

To succeed, you need precision and the ability to localize your content and how you talk with your customers.  A message that is too broad or vague equals a suboptimal chance of tying the desired audience to the brand. We encourage marketing departments to conduct thorough enough research to truly rely on the findings for further development of the community strategy. This might seem risky, but in order to win your audience, you need to be bold.

Community is not only related to brand and marketing activities but to the business as a whole

Developing a community strategy is demanding work,  we’ll admit. But so far we’ve only scratched the surface. As mentioned, it is often associated with marketing and branding efforts. However, creating a successful, sustainable community goes beyond these areas and requires a holistic approach, incorporating assortment, pricing, timing, and tech. The fit between these variables and the target audience will significantly impact the effectiveness of community-building efforts.

Assortment that aligns with core values

The assortment is often viewed as a fairly rigid part of the business and is, therefore, rarely discussed in relation to the brand community. By offering an assortment that aligns with the community's interests and values, businesses can position themselves as not just providers of products but curators of experience. This helps in reinforcing the community's identity and fostering a sense of belonging among its members.

A challenging aspect is that preferences within subcultures can change quickly, which creates a financial risk from both a sales and purchasing perspective. There are creative ways of working with an assortment to test suitability within the target audience. This includes exclusive assortments, limited editions, customer involvement in design, and so on. These can facilitate data gathering and, thereby, decision-making, transforming the business as a whole.

Timing is a key aspect

Timing, while often overlooked, is pivotal in community building. It includes both the timing of interactions with the community (content scheduling, promotional campaigns, etc.) and the larger timing in terms of market trends, cultural moments, or even societal changes. Effective timing can make a brand seem relevant, responsive, and in tune with its community's needs and interests.

For example, creating content or offering products in alignment with cultural events or moments that are significant to the community can boost engagement. Similarly, timely responses to queries or feedback can make community members feel valued and heard.

The combination of hitting the shopping window with a relevant offer and message is a crucial point to consider. Bad timing extended promotions risks leaving a brand looking greedy or non-authentic.

What role does my technical platform play in this?

Not every business is built on fast decisions, trends, and the need to stay competitive by being the coolest brand out there (which is a great thing in many aspects). Therefore, not every business needs an advanced technical platform to sell online. But If you aim to build a strong community over time together with an international presence, there is high value in technical flexibility and de-risking getting stuck in major technical investments to do so.

Being able to localize factors like content, payment preferences, and logistic solutions and jump on local trends in a cost-effective way is absolutely fundamental to building long-term loyalty and relationships. These are pretty straightforward examples but important ones to create trust and belonging to the local user base. While this is a common discussion and factor in businesses entering new markets, these factors should also be looked at in your home markets from a long-term perspective. The market and trends are fast-paced, and even in the markets that you know the best, there is no guarantee to stay relevant over time.

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