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Salma Lalji

BUSA 3455
Fall 2010

Research Paper
Table of Contents

Executive Summary................................................3
The Reason for an Online Community To Exist.......5
What Makes A Community Application Successful? 7
How Success Is Measured.....................................12
What Makes Online Communities Fail – How To
Avoid It?................................................................17
Appendix A ...........................................................20
Like, OMG! Wal-Mart Is Totally Standard!..........20

Appendix B............................................................24
How Target Got it Right on Facebook, and How
Wal-Mart Failed..................................................24
A Successful Online Community Can Add Value to Your Business

A Successful Online Community Can Add Value to
Your Business

Executive Summary
Online communities include everything from
discussion boards to massive multi-player online
role-playing virtual reality games []. Only some
online communities succeed, but the vast majority
fail. This paper looks at the purpose of online
communities, why they are successful, and how to
measure their success, which adds value to the
businesses they serve. In conclusion, a successful
online community is the one that serves the best
interests of its members, not its business goal –


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Communities are defined as a group of interactive

people sharing an environment. Traditionally the
environment was a geographically circumscribed
entity, such as neighborhoods, villages, etc.
However, the explosive diffusion of the Internet has
changed our way of communicating. Today in our
modern world, communities are no longer bounded
geographically. The Internet enables instant
information exchange and the constructions of
online communities, where people from all over the
world can provide support, share information, and
build friendships. These are communities of like-
minded users. The core of the Web today is its
members clustered to communicate together.
Historically, bulletin board systems preceded the
Web by several years but what were they really
except a type of community? Real-time Internet
text, chat, is yet just another form of community.
Today, the fact that communities appear as a new
concept is really just a result of the evolution of the

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tools used to create them. These tools have made

communities more interactive, easier to use and
administer. However, expecting to relax, sit back
and watch the membership grow simply by adding
a forum application to a website is false. So, this
paper is going to provide valuable insights into …
• The reason for an online community to exist
• What makes a community successful?
• How success is measured

The Reason for an Online Community To Exist

There are numerous reasons to support the
existence of online communities; some are as
follows: to answer questions and give advice,
training and learning opportunities, upgrading of
knowledge, and providing innovative ideas or
improvements. [][] For example is a Star
Trek Advisory Council designed to answer Trekky
(TV series and movie Star Track fans) questions. teaches

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instructors how to use smart boards, which are

interactive blackboards used at educational
institutions. is used by Adobe
Software Inc. to teach users how to use their
software. But most online communities are large
portals used to accomplish multiple purposes. Let
us take a look at the Arthritis Society at which has an
interactive advice section, teaches fitness and
wellness, provides symptoms and treatment
information, and even has a section on “your great
ideas” allowing readers to think critically and

Historically, it has been rare to allow customer-to-

company relationship or customer-to-customer
relationship []. Today, online communities help
accomplish just that - enabling customers to
interact with one another or with the company
itself. This behavior helps foster the buyer

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relationship by customizing products and services

to meet the consumers’ interests and needs.

What Makes A Community Application

Since the beginning of the Internet and the World
Wide Web, many thriving and established online
communities and social networking sites have
materialized. There has been extensive research
done to identify factors that ensures favorable
applications. A few strategies have emerged for
building a successful online community, starting
with: purpose of the community and emphasizing
encouragement, motivation, and privacy of the
participants. []

The following summarizes the major steps on how

to build a successful online community. []

Define the purpose of the community and type of

audience. Focus on the needs of your target

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audience, rather than your own agenda, for

example, profit. A well-defined and specific
purpose will help characterize the site, establish a
unique identity, and create a mission statement for
the contributors to follow.
After defining the purpose, decide on what
resources or tools are right for the application. It is
best to do some research to compare alternatives
before deciding on which technology to use. You
have to understand what a specific tool can do for
you, whether it is scalable, what technical
expertise are required, how long will it take to
install it and the time and money involved in
learning the new tool.

Good planning will help populate the site with great

content tailored for your audience. Quality and
significant content is the essence of the site that
draws the potential members to join. However, in
order to attract the attention of your potential

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audience, the first impression is critical. Brand the

site to match the appeal of the target audience.
For example, for a younger audience, the website
has to look fun or cool with videos, flash, or games.
In contrast, for a corporate or government site, it
should be conservative, informative, and easy to

Usability is a key factor to encourage members to

become participants. Web usability is an approach
to make web sites easy for end-users, without
undergoing any specialized training. Participation
makes an engaging experience for the member,
allowing them to identify their peers and network
with those who share common interests. Here is
where the organization or the owner of the
community can capture data that could grow the
community into a fruitful entity for everyone.
Member interaction helps enrich quality content
and deliver relevant, current information. As a

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result, the business enjoys the advantages of

advertising dollars.

Implementation of the site and community alone

will not be enough to drive the potential member
to the site. You have to promote it or market it as
you would with off line products. To raise the
awareness of the online community, you can reach
out to online and offline media, like bloggers and
radio stations, through incorporating incentives, for
example, contests, promotions, and classifieds.

After building the online community, good

maintenance makes it sustainable. A great
manager is needed for maintenance. The manager
makes sure the online community stays within the
mission statement. He or she is responsible for
setting the tone for the community. For a large
community it means a full time job, but as the
community flourishes, participants emerge as

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managers and mediators. You can take advantage

of these contributors’ skills and let them be a part
of the team. One big part of the community
manager or mediator is to keep trouble makers
away. Talk to the person causing trouble as soon
as possible but be polite. Tell them what they did
wrong and why it was offensive, while keeping your
tone courteous and professional. Remember - it
pays to be friendly. Setting up community
guidelines in plain language that can be easily
referenced, helps to keep the notorious members

The last step is the most important one. Listen to

your members and what they are saying, both
directly and indirectly. The highest rated and most
viewed content, trends, feedback, and forum, help
reveal what your members want. Encourage the
same type of content to give your member what
they would like to see. Monitoring the site’s traffic

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and statistics from the beginning will allow you to

evaluate the progress of the site.

How Success Is Measured

There are a number of ways to measure the
success of an online community. Success can be
defined as the return on investment, or ROI, of the
application for a business. The simplest way is to
establish criteria for the application and to
measure the performance according to those
criteria. It can be simple or complex, depending on
how you judge the criteria you set.
The most common criteria for evaluating the
success of an online community include: []
unique visitors - how many different people
page views - number of pages viewed by single
session time - amount of time spent on the site

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community click-through - how many visitors come

to home page and click into the community section
registered members - some people do not register,
just view the site. Therefore the ratio of visitors
and actual registered users is usually different.
postings per day/week/month - number of posting
per member to or for another member.
read-to-post ratio - how many “lurkers” become
active participants.
page additions - how many threads per content in
member-generated content programs
page revisions - how many pages viewed again in
member-generated content programs
peak number of concurrent users - how many live
users in live events
total number of users - in live events
audience penetration - only if the total size of the
target population is known
repeat visits -

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frequent visitors add definitions for both to be

consistent with above.

Quantitative data can be collected to measure ROI

in metrics, such as number of users who log on
verses the number of contributions, average
number of time spent on the community, unique
number of visitors, new member registrations,
feedback, and other numerical or quantitative
data. Numerical data can easily be compared to
other community numbers, which can quickly
highlight an overview of how the community is
doing, giving a picture of users’ behavior. For
example, the number of transition of lurkers, those
members who do not contribute to the site, into
active community members, those who post
content or reply to posts. If this number increases,
the community site could be said to be engaging,
and successful. []

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Qualitative data, on the other hand, allows the

view of quality of site content and conversations.
The qualitative data will show the interaction
between the user and the site. That is, users’
responses to the product or service. For example,
have the number of posts about a conversation
increased? Are the comments positive or negative?
Are the ideas of quality? The subjectivity of
qualitative data makes it hard to measure.
However, once the baseline has been established,
qualitative data can shed light just as quickly as
quantitative data. The quality of the content and its
usefulness to the community at large will be better
understood. []

How does online community add value to your

business? First, if the online community is helping
to increase profits by making the customers buy
more, or if through the online community the
business is able to meet the desires and needs of

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its best customers, then the company will also

want the community. [] Once the baseline has
been established, the business can use the
community to improve other areas or aspects of
the business. That is, the manager can influence
the community to focus on another topic that can
benefit from collaboration. []

The analysis sheds light into areas that were not so

apparent. For example, users who are not active
participants such as “lurkers” are indirectly
engaged in value creating activities. It is important
not to underestimate the value the majority of
members add to the business. In general, only 10
percent of any online community members are
active. [] The rest are all “lurkers”, inactive
members. After analysis, the best users are those
that return. Those who visit the community and
never return are unlikely to have benefited the
business in anyway, including its bottom line. The

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online community helps the business build its

reputation in the industry. []

What Makes Online Communities Fail – How

To Avoid It?
The best example and the easiest to follow is Wal-
Mmart. Appendix A and B contain web postings on
Wal-Mart’s version of “My Space” and comments
on its demise. What can we learn from Wal-mart? It
is a classic case, missing the first step, which as
mentioned is, defining who the target audience is,
and what the purpose of the online community is.
Also, Wal-Mart did not identify the best technology
to use. They already had a community in My Space
which is free and has a large global presence. The
unnecessary expense of building their own version
was their mistake. The quality of content was also
amiss, pretended to have real content by
populating the site. In addition, they tried to create
an atmosphere rather than let the active

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participants create one. They did not listen to what

their customers wanted, and most of all, their goal
was the company’s bottom line.

On the other hand Target was able to launch a

successful campaign. They launched their
community with a popular social network
application that focuses on their type of customers.
Facebook is the best platform for school goers who
are Target’s audience. The focus was to let the
users have fun, providing them with the ability to
interact with one another and have cool games to
play. The theme of the online community emerged
from the users, and was not enforced by the
company. The company then fed the users what
they wanted - how to survive in the dorms during
freshman year. The Target Community was well
planned and executed, and the company is still
reaping its benefits.

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The future of online communities is still going to be
challenging even though they have been around
since the beginning of the Internet revolution.
Effective management and maintance of these
communities depends largely on the new kinds of
measurements and reporting. However, principals
of successful engagement can now be outlined.
1. First and foremost, define the purpose of your
community and its audience.
2. Define the business objectives and how its
success will be measured.
3. Make the measurement, reporting, and analysis
part of the daily business management.
4. Use the community measures not only as
statistics to calculate where you stand, but also
allow it to help in making factual decisions to
improve the community and therefore the business
over time. []

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Appendix A

Like, OMG! Wal-Mart Is Totally Standard!

Wal-Mart’s new back-to-school campaign

tries to appeal to teens by aping the popular MySpace social site.
From Advertising Age:

Desperate to appeal to teens with something other

than pencils and backpacks during the crucial
back-to-school season, Wal-Mart is launching a
highly sanitized, controlled and rather unhip site at Teens are invited to

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create their own page, “show it to the world and

win some fab prizes,” including a chance to have
their videos appear in a Wal-Mart TV commercial.
Wal-Mart’s agency is GSD&M, Austin, Texas.
The opening page shows video of four teens-a
bubbly fashionista, a Texas football player, a quirky
skateboarder and an aspiring R&B singer from New
York-who are clearly actors reading a script,
although the videos are positioned to appear
authentic. Within, there are pages such as “Beth’s
Backyard Club,” where you find a picture of her in
a strapless prom dress above the approved quote:
“I’ll school my way by looking hot in my Wal-Mart
clothes to school to catch a cute boy’s eye. ...”
But like America isn’t buying Wal-Mart’s lines on minimum wage and health care, teens aren’t
giving the company much “street cred”.

But if Wal-Mart thought it could win over Amy

Kandel, 14, of Columbus, Ohio, it was wrong.
“Some of the kids looked like they were trying to
be supercool, but they weren’t at all, and they

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were just being kind of weird,” she said. “Are these

real kids?”
Nor did it impress Pete Hughes, 18. “It just seemed
kind of corny to me,” he said.
“Wal-Mart really needs this to work,” said Irma
Zandl of youth-marketing firm Zandl Group. “Over
the last year, we have been getting increasingly
bad feedback from teen girls about Wal-Mart in
contrast to Target-especially Wal-Mart’s apparent
lack of cleanliness, messy layout and lack of stylish
attire. This attempt at ‘we media’ is terrific. We’ll
have to wait and see if it’s enough to overcome in-
store issues.”
But it won’t change the shopping habits of Molly
Morgan, 14, who goes to Wal-Mart only when her
mom does to buy groceries and spends her
monthly $150 clothing budget at Abercrombie &
Fitch, Hollister and Nordstrom.

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The Columbus teen doubts she’ll submit a video or

enter the contests because “it, like, takes a lot of
time, and it’s not very likely you’ll win.”
We think “corny” is the perfect word to describe it.
Posted by Laura Jack on Monday, July 17, 2006

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Appendix B

How Target Got it Right on Facebook, and How Wal-Mart Failed

Tags: advertisingbrandingcampaign strategymarketingpublic relationssocial

networksstrategytarget audience
October 11, 2007 by jimtobin

Back in August, we wrote a post about how Wal-mart's latest social media marketing campaign
was inherently flawed. We predicted that it would, once again, blow up in the retail giant's face.
(Note to the folks in Bentonville: Let Edelman focus on the traditional PR. Give us a call on the
social media marketing stuff, k?)

Here's what we said then, in a nutshell: This

campaign won't workbecause Wal-mart is talking
“style” when they are known for“practical.” The
campaign should focus on the utility of trying to
moveto a dorm. Alas, it was too late for them to
But Target, on the other hand, did listen. (Note: Check with legal, Do they owe us royalties?)
As it happens, while Wal-mart was prattling on about something they don't understand, Target
was listening! (See Listening is Social Media Step Oneon how important that is.) They began to
understand the flow of theconversation among incoming freshman. They began to understand
theFacebook platform and how conversations occur there. They wisely noted:

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“We aren't there so much to tella story, but to put

on a party, giving the students a platform forsocial
interaction.” Any content provided by a marketer in
such asetting “needs to work as social currency. …
Whatever story there is,it's mostly told by the
users, not by the brand.”
Their Facebookpage was about dorm room survival. They had practical tips, they hadphotos,
they (gasp) let users upload their own photos in place of theonce they carefully designed first.

They made the marketing very subtle and were

rewarded by posts frompeople saying how much
they love Target (See that: brand evangelistsdoing
the marketing work for you, if you (a) deserve it
and (b) givethem the platform on which to do it.)
Wal-mart, on the other hand, had vicious wall posts
slamming their corporate practices, for example.
“Wal-Mart is toxic to communities and livelihoods.”
There's so much right with what Target did and so
much wrong withwhat Wal-mart did, I could go on
for days (maybe I have already), buthere's 5 points
to take away from this (different than our earlier 5
Steps to Rolling Out a Social Media Campaign):

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Listen first. Social media marketing is cocktail

party dialogue. When you enter a new group, you
listen politely first.
Talk on your prospects' terms. Back to
thecocktail party analogy. Incoming freshman were
talking about their fearof being properly prepared
for dorm life. Wal-mart said, “Let's talkstyle!”
Target said, “Let's talk survival.”
Understand the value you bring. There are a lot
ofpeople who hate Wal-mart. This doesn't preclude
Wal-mart fromparticipating in social media, but
they ignore this truth repeatedlyand get slammed
for it. They don't understand the value they
bring.Target, on the other hand, doesn't have that
baggage, and played their“we're the place you can
get cool, functional stuff pretty cheap”
Social media campaigns can cost a fair
amount.Target budgeted $500,000 for their
campaign. Facebook's media kit talksabout

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minimum investments of $50,000 per month.

People think of socialmedia as “free” and it can be.
But you've still got to budget for time,at a
minimum, and if you want to buy you're way onto a
media platformlike Facebook or MySpace, you still
need a budget of some kind.
ROI measurements are different, and not
very evolved.Target had 7,176 members of their
group by September 31. That's great,right. If you
calculate a CPM (cost per thousand) relative to
members,the CPM is over $69,000. Of course, CPM
is more traditionally appliedto “impressions” which
were no doubt hire. But the point is, the valueof
over 7,000 people engaging with your brand in a
positive way is much, much hire than 7,000 people
being exposed to an ad. The ROI calculations,
however, are still being fleshed out.
Kudos to Target for getting it. That will pay
dividends now and in the future.

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Oh, and their campaign started July. I guess they

don't owe us royalties… Dang…

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1. Trent J. Spaulding, How can virtual communities create value for

business? Electronic Commerce Research and Applications Jan 2010

2. Evan Cook, Adding Value with Online Community: Listen to Webcast

On-Demand, Social Media Today, December 21, 2009

3. Communities For Innovation - Presentation @ Unisys

4. Eric L. Lesser, Michael A. Fontaine, Jason A. Slusher, Knowledge And

Communities, Business & Economics, chapter 6 p Pages 85-95, 13 Sep

5. KickApps Team, 9 Steps to A Successful Online Community, : KickApps 2008

6. Alicia Iriberri, Gondy Leroy, A Life-Cycle Perspective on Online

Community Success, ACM Computing Surveys, Vol. 41, No. 2, Article
11, February 2009.

7. Joseph P. Cothrel, Joe Cothrel , Measuring the success of an online

community, Strategy & Leadership, V 28, 2000

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8. Matt Rhodes, Future Lab, So How Do You Measure ROI of Online

Communities?, August 2008,

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