How User Communities Can Boost Your Business

chillibreeze writer — Aaditya Talwai

User communities, per se, are not a new phenomenon. They have existed in the real world for years, but in more passive forms. Wherever there are products, there are users, and inevitably, these users will get together to discuss their experiences with the product. Housewives deriding the local grocer, students comparing the attributes of their pens and even office-goers arguing over the durability of a particular brand of briefcase— these are all user communities in their most basic forms.

Even in these crude forms, user communities were able to create some impact on the product and the manufacturers of the product. Businessmen might be convinced to switch to a sturdier, more popular brand of briefcase. The local grocer’s business may suffer because of the slightly exaggerated housewives’ tale of ants in his lettuce. This impact however was on a rather small-scale.

With the Internet revolution, virtual communities sprang up and users were able to make their presence felt in a much bigger way. And today, with the advent of Web 2.0-led collaboration, virtual user communities are stronger than ever. Never before, have users wielded so much power. Businesses have duly taken notice of this and have learnt how to leverage the power of these virtual communities for their own benefit.

One of the first companies to effectively utilize this power to their own advantage was Propellerhead.

Propellerhead Software is a developer of computer-controlled musical instruments, including tools for sound production, processing and recording. In 1999, Propellerhead launched ReBirth, a software for sound processing and recording. The product code was initially made unavailable to users.

An impromptu user community was formed on the Internet for users of the product to share tips and queries. But very soon, this community became the hub for something else. A group of computer-savvy members began to collaborate to try and hack into the product’s source code. This process took 6-8 months with numerous users contributing to the effort. Finally, when the product had been successfully hacked, users began to create their own personalized version of the product with custom graphic designs and sound samples.

The management of Propellerhead, on hearing of these developments, were surprised but took a positive outlook. They realized that they would be able to benefit from such product innovation with more variety being added by responsible users. They decided to open up parts of their product code to users interested in modifying the product and even encouraged users to send in their customized versions to the company for review. Soon, co-created updates of ReBirth were released onto the market and these sold fast.

This example further highlights the power of user communities and the necessity for a business to recognize opportunities for furthering core objectives. It may be argued that Propellerhead took a gamble in encouraging the ‘hackers’ instead of taking acting against them, but they were able to distinguish the opportunity from the threat and this eventually paid off.

This paper will investigate the ways in which businesses can utilize such communities to their advantage, like Propellerhead did, along with some other prime examples.

USER COMMUNITIES FOR BRAND BUILDING

The Internet as a medium is designed for accessibility and comprehensiveness. Virtual communities further exemplify these qualities and hence, many businesses regard firm-hosted user communities as ideal media for improving reputation and brand image. An easily accessible firm-hosted user community providing a wide range of post-sales support options for its product can go a long way in projecting the company as user-friendly and improving its reputation.

User feedback (positive or negative) on internet communities affects the perception of the brand. It can help companies recognize the pros and cons of its product and where it stands with respect to its competition. If implemented tactfully, a firm-hosted community can provide that feeling of community involvement which adds to a customer’s satisfaction in using a product. The main incentive for someone to join a fan club is a similar sense of involvement. This is the kind of feeling that firms hope to recreate through virtual communities.

One firm that has been able to do this very effectively is Sunsilk, through their firm-hosted social networking site ‘Gang of Girls’. Sunsilk encourages all its users to get together on the site and discuss product use, hair care, beauty tips etc. The site has been marketed as a network for ‘girl bonding’ and has been successful in improving Sunsilk’s brand image amongst its target market of female youth. The community has also been effective in improving market penetration and boosting sales.

Another innovative branding strategy focused around user involvement is that of MTV India. MTV India has taken advantage of the considerable Indian presence on social networking sites such as Orkut (India is the second most listed nationality after Brazil) and Facebook. An MTV Webmaster creates and moderates topical communities on Orkut and Facebook for MTV’s reality shows such as “Roadies”. User feedback, comments and suggestions are actively encouraged on these communities.

The company is able to keep track of the popularity of its shows and can manage its reputation. Viewers have a greater feeling of involvement. The majority of Indians on Orkut and Facebook are between the ages 15-25, and this conveniently corresponds with the age of MTV’s target audience.

USER COMMUNITIES TO FURTHER CORE BUSINESS OBJECTIVES

Training and Recruiting

Real-life interviews and training seminars can be simulated on virtual platforms such as Second Life. WIPRO claims to be the first Indian company to have a presence on Second Life in the form of its Offshore Development Centre known as Innovation Isle.

The virtual campus has numerous facilities: a client engagement centre, a learning centre, a 3 floor ODC setup with cubicles, a security desk at the campus entrance gate, an amphitheatre, a press announcement hall, basketball and volleyball courts etc.

WIPRO has the option to tie up with various educational organizations on Second Life to streamline its training and recruiting processes. Various Indian companies will soon be following Wipro’s example. This could prove to be significantly time-saving, reducing firm costs and allowing businesses to reach out to employees and customers all over the world.

Customer Servicing

Customer queries put forth on firm-hosted user communities can be responded to in a matter of seconds. Even in independent user-communities (those not regulated by the firm), we see more experienced users helping less experienced ones by answering their queries. In fact, this form of user-to-user servicing takes a significant burden off the post-sales support systems of a company, reducing its workload to a significant extent. HP is a company with significantly large independent user-communities such as Encompass (now amalgamated into Connect). Such communities are global in nature and significantly reduce the workload of HP service centres.

Marketing

Social networking communities have become the fulcrum for the Web 2.0 based marketing strategies of many companies. Consumer goods companies use platforms such as YouTube to distribute viral ads to create buzz around their products. To promote "legal purchase" of music among college students at its iTunes store, Apple partnered with Facebook in 2006. As a “back-to-school special”, Apple gave away 250 million music samplers to Facebook college users. Hence we see that marketing through social networking sites can provide a more targeted reach and is a cost-effective way for a company to boost product sales.

Distribution

User communities can be utilized to streamline distribution as well, especially when the user community is the distribution network. This works effectively when service activation or delivery is completed on-line.

mGinger is an opt-in permission based SMS service through which users become part of a target community by providing details about their interests. The user receives SMS advertisements corresponding to these interests; mGinger has a tie up with numerous advertisers who supply these ads to prospective customers.

The AdGinger product allows advertisers and distributors to track the demand for a particular product in a market segment and market their product accordingly. For example, a distributor can request details about the demand for ads on sports goods among males in Mumbai and can receive relevant data.

Portals like mGinger are beneficial to both producers and consumers as consumers are provided information on products specific to their interests and producers can save significant marketing costs by advertising only to those who are truly interested, giving them a more targeted reach.

Product modification and improvement:

Through the example of Propellerhead, we have already seen the benefits that firms can derive from user modification or ‘modding’. User innovation has scaled new heights in recent years especially in the computer games industry.

Computer games released in the late 1990’s were extensively modified by communities of users/hackers to suit their own needs. Possibly the most notable case of this is that of Half-life, a First Person Shooter computer game released in 1998.

Valve, the creators of Half-life, decided to make their product code open to the public so that they could modify certain elements of the gameplay. What they expected was a few minor modifications to graphic design and maybe slight alterations to maps, but within weeks a team of UBC students had completely overhauled the game and created a new, vastly different version. They called it ‘Counter-strike’.

The game became hugely popular throughout the campus and even outside it. Valve eventually heard of this drastically modified, hugely popular version of its game and bought it from the university students. ‘Counter-Strike’ was eventually released as a product of Valve and sales went through the roof.

THREATS TO SECURITY AND PRIVACY:

No great opportunity comes without its threats or potential pitfalls. As exemplified by the Propellerhead case, user communities may become hubs for hacking and other threatening activity. Although, Propellerhead’s was a case in which this proved beneficial, there is also a threat of malicious ‘modding’ which hurts products and users alike.

Providing detailed company information on networking sites can compromise on a company’s privacy in addition to being a security risk. In the case of firm-hosted communities, unsanctioned use of Web 2.0 technologies by employees is a very relevant threat. These and many other potential security risks must be kept in mind by companies when they are mapping out their Web 2.0 strategies.

RELEVANCE TO INDIAN IT INDUSTRY

Using the power of user communities is particularly important to the Indian IT industry. Adaptability and innovation is key for a company to survive in this market. Hence with the Web 2.0 revolution, many companies are implementing blogs, wikis etc. as part of a full-fledged Web 2.0 strategy. User communities are an integral part of such strategies.

Keeping in mind the large number of players in Indian IT, competition is fierce. Globalization is key to facilitating growth and customer service has become a marked differentiating factor. There is also a need for greater market penetration. User communities have the capacity to contribute on all these fronts. Coupled with the receptive mindset of Indians towards community involvement (exemplified by the large Indian presence on social networking sites), companies can forge a symbiotic relationship with their users which is essential for India to capitalize on its position as a global IT power.

Chillibreeze's disclaimer: The views and opinions expressed in this article are those of the author(s) and do not reflect the views of Chillibreeze as a company. Chillibreeze has a strict anti-plagiarism policy. Please contact us to report any copyright issues related to this article.

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