Why Crafting a Community-Building Business Model Strategy is Your Service Business' Competitive Advantage
How does a community-building business model strategy attract new clients to your service business? According to Salesforce, 84% of customers respond when treated like a person, not a number. That explains the rapid change of consumer expectations when interacting with brands. In a world full of your prospective clients, there’s more to brand building and business model innovation than quality services. People — who may be your future clients — are longing for an authentic human connection with both your brand and others like them who may be using the same tools and technology, struggling with the same business challenges or at the same phase in the process of business-building.
The logic is simple:
- humans are social beings who love joining tribes that align with their values.
- Consumer buying decisions are a reflection of their personal identities and those of their communities.
What does this mean for your service business?
It means that your client relationships are your community relations — and are no longer window-dressing. They're a strategic aspect of your service business. (A food for your business's soul, if you will.)
But the reality is: building a business community goes beyond gathering people in a space or accumulating a hundred app users. It requires the "right" community-building business model strategy.
So what's a community business model? And do you use it to your advantage in your service business? In this article, we’ll explore why a community business model is your competitive advantage. And, we’ll dive into the details of exactly how to create a community-building strategy to harness the potential of a well-crafted branded community in your service business.
You in? Let’s do this then!
What's a Branded Community?
Let’s start with the basics of what makes a branded community.
A branded community is a shared environment for people with similar interests and values. It fosters a sense of belonging and has the following characteristics.
- Rituals and traditions: specific behaviors and acts that solidify shared meaning and culture in the community
- The consciousness of kind: a shared understanding that individuals within the community are different from outsiders
- Sense of moral obligation to members: there's a drive for community members to serve each other
While relatively new concepts, branded communities help clients create deep connections with brands and fellow brand supporters. They also help brands to connect with their ideal clients.
So, What is a Community Business Model Strategy?
A community-based business model strategy is one focused on connecting your professional service business brand to a specific community. The connection is often via an online platform. Members use the platform to communicate, create mutual meanings and exchange values.
You can use established forums, create your own group(s), create a custom build or choose solutions that are fully integrated into your service operations and workflow.
Regardless of your approach, your job will be to create opportunities for connection, spark conversations and create meaningful traditions around shared values and beliefs.
With a community strategy, your branded community can also become:
- a growth strategy for your professional service business
- another client and customer acquisition channel for your business
- a self-contained client retention (support) channel
Building a branded community is a long-term strategy that requires care and consistency. At its heart are meaningful relationships, which take time and trust to flourish. It also requires you to relinquish control to your clients, who won't always agree with your personal or even business point of view.
Why are Brand Communities Powerful?
Branded communities are powerful because they tap into people's emotional and social needs. They create a tight connection between individuals and their brands of choice.
One Cogent Business & Management study concluded that members of brand communities are motivated by validation, passion and emotions. They use their communities to express personal concerns and pains.
A community’s deeper-than-surface power lies in their nature as organic, self-supporting ecosystems. In a healthy community, its members engage in and organically maintain active interactions without the need for brand interjection(s).
Another sign of a healthy community is its ability to organically produce user-generated content. You may find community members — inspired by your brand mission, values, service or product — posting online in social media groups or in their virtual networks about your brand. This rich source of brand-building content and social proof can do wonders for your business.
To many service-based businesses, communities are an affordable source of clients and an avenue for providing more targeted, helpful customer support.
Strong Community Relations Have a Business Payback
In a recent survey, approximately 80% of startup founders noted that building a branded community was essential to their business. Twenty-eight percent of the respondents considered it a differentiator and a competitive edge.
It's no wonder the top brands — Apple, Google, Facebook, Amazon, Microsoft, and more — have invested substantially in in-person and digital community engagement.
A survey by the Center for Corporate Community Relations (at Boston College) of 200 community relations experts found increasing business leader support for branded communities. Thirty-six percent of the respondents reported an increased community relation budget, while 23% noted an increased community relations staffing. At the same time, 87% of respondents said that their organizations encourage onsite management to interact with the local community. And 31% of organizations provide bonuses to site managers for local community involvement.
So, what's with the communal trend?
Research by the Walker Group — a management consulting company in Indianapolis — notes that companies will achieve a more competitive edge through social responsibility. In other words, branded communities are a safe harbor for businesses looking to escape the pressures associated with the surging parity in pricing models.
Strategic social investment is essential as businesses strive to establish a consistent market presence across the world. If a company can extend its core activities to include a community-building business model strategy, it can unlock a substantial competitive advantage.
Why the Community Business Model is Your Competitive Advantage
Branded communities have real network effects. As the community grows, its engagement grows. The community gets smarter and responds faster — all of which translates to more value. Overall, a community business model boosts your competitive advantage through:
Only 4% of people trust social media influencers when making purchases. At the same time, individuals are more likely to trust a recommendation from a friend or people they know. So as options for engaging consumers decline, the need for a branded community is undeniable.
What's better? With a strong community, you get a sea of brand advocates ready to spread the word about your business. A recent Salesforce survey found that 72% of customers are willing to share good brand experiences with peers. Therefore, a strong community-building business model strategy can result in organic growth via word of mouth.
For example, Ameritech Ohio's community relationships derived $80 million in cost avoidance and new business opportunities. Jacqueline Woods, the then-president and CEO noted:
"We target companies, organizations, and individuals with whom we work to develop an ongoing relationship. "There's a bottom-line payoff. We believe it is less expensive to retain customers than to acquire new ones."
(And she was right about the customer churn.)
Besides growth, strong brand communities are a valuable source of feedback for service businesses. Surveys, focus groups, and other traditional marketing research cannot compare.
Research shows that people participating in "traditional" studies may suffer from Hawthorne Effect. That is, people tend to change their behavior when under observation. Think of responses in terms of "what ought to be" instead of "what is."
Connecting enthusiastic brand advocates with your business's production cycle provides a wealth of insights into consumer behavior. You can leverage the feedback to have a deeper understanding of your clients’ desires and needs. Then use the information to better your services and enhance your clients’ experience.
A well-known example is IdeaStorm — Dell's brainstorming and community discussion website. The site is an avenue for the company to gauge ideas most relevant to customers.
Glossier, a beauty and skincare products brand, is excellent at this too. The company leverages its loyal community on Instagram, Slack, and in-person events to solicit advice on what its audience want.
Evernote, the note-taking app, is another excellent example of a company with a community-building business model strategy. Its lively communities encourage members to post their wish-list for future updates and features.
Strong branded communities are invaluable for service businesses as they:
- Support members
- Make strategic connections
- Act as a source of actionable insights
- Provide a sense of belonging and camaraderie
(As you can see in the image example above, the value of building a branded community enables this Consultancy — using Profi’s integrated community feature — to establish and grow a community of consultants within their service operating system.)
They provide effective learning strategies for all involved, which results in more success. After all, the best learning strategy is to connect learners with their peers and industry professionals through in-person events or online communities.
Codecademy knows the trick only too well. It links learners who then collaborate to better their skills and contribute to their catalog. Codecademy Pro users have access to a Slack group. They can meet, mingle, and share insights. They also gain access to in-person events with peers and industry professionals. (Here, experts mentor novice programmers, and the rich learning environment produces a network effect to their business model.)
Brand and Client Humanization
Lively branded communities create more authentic content around your services than you alone (or your marketing team) will ever do. Think of comments, reviews and user-generated content (UGC). The reason being, consumers are more likely to believe fellow consumers than marketers or influencers. It's no wonder 97% of online buyers read reviews to inform their purchase.
By investing in a community-building business model strategy, you put the power to create authentic content in the hands of your clients. Community members will post UGC, share honest opinions about your services, and create unique relationships that you cannot replicate. (The result? A more authentic, human experience for your fans.)
As noted in the Salesforce State of the Connected Customer report, 84% of consumers prefer being treated like the person they are, not a number. And Salesforce understands that all too well, thanks to its community of over 2 million members who:
- Organize events
- Create content
- Support each other
- Support Salesforce global operations
(We mean, the Salesforce annual Dreamforce conference attracts around 200,000 followers to San Francisco annually. Talk about excelling at building relationships and advancing a business agenda!)
According to Accenture, two-thirds of customers spend more on companies to which they're loyal. (Glossier, for instance, estimates 90% of its revenue to be from repeat customers.) The reason? The more effort and time a person invests in your services, the more value they'll attribute to it. Harvard Business School researchers call it the IKEA Effect.
Branded communities create connections and bonds over shared values and interests. That, in turn, creates a personal investment that boosts brand loyalty – and makes it unlikely for members to "try" your competitors.
Engaged communities lead to learning, innovation, improved products and business growth. With community members as co-creators and an essential part of the evolution,
- They are hesitant to leave the community, increasing retention and lifetime value.
- They are also more inclined to buy from you or spread the word about your services, programs, courses and products.
(Note, maintaining symbiotic relationships is essential for brand loyalty, especially given that 71% of consumers crave more varied and relevant loyalty-incentive programs.)
Reduced Service Operation Costs
In strong branded communities:
- Enthusiastic members act as ambassadors to help gain new clients. That, in turn, reduces your client acquisition costs while creating a tight viral loop
- Members support each other, lowering your cost of service
- Engaged members can create a buzz around your professional services, saving you time, money, and effort as well as organically creating user-generated content (UGC) — which becomes an exceptional source of social proof, authoritative credibility and trust-building with other potential clients
The resulting loop generates compounding value as the branded community grows and thrives.
Creating a Community-Building Business Model Strategy
So communities are an authentic source of your service business’s brand advocacy, but how do you create them?
The truth is, crafting a community-building business model strategy is a cultural and technological challenge. Besides creating the platform, you must inspire the behavior you desire, recognize and reward participation, and expose the generated value.
Strong branded communities share seven essential elements:
- Shared values and purpose. The "why" behind the coming together.
- Simple and accessible value consumption. Members should see what they're getting. Is it support, documentation, or service exclusives?
- Simple and navigable value creation. Community members can create value for others with ease.
- Clearly-defined rewards. There should be a strategy to acknowledge and applaud community-centric behavior (like mentorship) and quality contributions (like content and support).
- Accountability. Clearly defined peer reviews help increase collaboration, produce different results, and boost skills development.
- Good leadership and diverse participation. Good leadership inspires healthy and different contributions to increase value and reduce toxicity.
- Objective governance and evolution. Members reshape the structure and operational dynamics of the group together.
Here's your blueprint for creating a community-building business model strategy that achieves those elements.
Define your brand messaging and audience
That means clearly defining your:
- Core values
- Tone of voice and personality
- Ideal client(s)
The goal here is to understand who you are, showcase it, and attract the right people.
Define your community objectives and metrics
Any objectives worth their weight start with a real question you want to answer for your unique service business. Get to understand:
- What are the purpose and values behind the community?
- What values will you encourage and why?
- How will you keep members engaged?
- How will you align the community goals with your business goals?
With your objectives and metrics (we like to use key performance indicators or KPIs) in mind, it's time to select a platform.
Choose a platform for your branded community
There’s no lack of options when creating your branded community home base. In fact, as a service provider, it can feel pretty overwhelming to choose where to host your branded community. A few of the first considerations that may come to mind include:
- Establishing forums like this community of HR Professionals
- Creating a Branded hashtag
- Launching a social media group (on Facebook, LinkedIn)
- Building rewards programs
- Using Slack channels
- Or opting for a virtual community technology provider like PeerBoard or Mighty Networks to name just a couple.
Tech-based communication platforms are highly accessible. You only need to leverage them. But, it's best to start by understanding where your target audience mostly hangs out now — and leverage those platforms.
To own or not to own the channel you build community in
As your community grows and you take a longer-term view of your strategy, you’ll likely end up holding the question: should I be building my community on a channel I own or not?
And that’s the million-dollar question most service businesses and brands are asking themselves. So, you’re on the right track.
Platforms like PeerBoard that integrate with your existing channels are a flexible, white-label option for building a community that lives within your owned website domain, right inside your product or behind your paywall (in Wordpress or Shopify).
But what if integrating is just not enough to support and simplify community management for your particular service model? “That’s when you need to take a hard look at your service business model overall and see where you can innovate a bit,” shares Alina Trigubenko, founder and CEO of Profi.
This is where all-in-one operating platforms purpose-built for professional service modeled businesses (by professional service providers) come in strong for the win. “Imagine seamlessly integrating your entire professional services operating platform (and service workflow) with your community,” Alina poses.
Technology that allows you to grow your community in harmony with your existing service workflow has major implications. You can start wherever you're at now with the flexibility to scale your service offerings — and revenue streams — as you go. (From 1:1 sessions to group sessions, program and course development to building your own community!) This consultancy, UXL, Ltd. is doing just that within their grey-label, Profi-powered expert marketplace of consultants using a community to scale and create more business value and health in their service business.
First, establish trust
Foundational to building reciprocal and regenerative relationships is trust. To build trust with your community:
- Demonstrate sensitivity to members' concerns and issues in your language and response times
- Listen to them (no, really listen to them!), and make sure they feel heard and understood
- Act on that understanding with your behavior. Create resources, tools, programs or courses that empower your community or support their expressed needs.
You don't have to build the perfect branded community on your first try. Err on the side of implementing, testing and tweaking as you learn more about what your community needs. Practice evolving with, rather than against, the natural flow of your community.
Engage the community regularly
Inspire curiosity and participation by creating discussion posts, answering questions and applauding engagement that’s aligned with the group’s shared values.
And be careful not to turn the community into a one-to-many advertising channel. The community is there for people to share and connect organically, not your personal listserv.
Create ambassador programs and outreach
Brand advocates help drive conversations, welcome newcomers, inspire events and so much more. They help lighten your load while ensuring the community is serving its purpose. For best results, frequently connect with the ambassadors and motivate or incentivize them to contribute to your community.
Host community events
Hosting regular community events gives people a chance to meet you (the person behind the brand.) A positive outcome of building your business in a post-pandemic world is that those pricier, logistics-heavy in-person events have given way to much more flexible, affordable or often free virtual community events where you can offer your community a lot of value in exchange for just their attention (instead of their money).
Support social causes
People form strong bonds when supporting social causes they're passionate about together. And, modern consumers (and the communities they engage in) want to know where a brand stands on social causes they care about. Fortunately, you can achieve that through:
- In-kind donations woven into your offers
- Philanthropy woven into your vision, mission or values
- Partnerships with social causes and the organizations that support them, and
Measuring The Success of Your Community Strategy
To make the necessary adjustment, it pays to have a set of metrics (KPIs), which you'll then evaluate regularly to inform the evolution of your community. Consider tracking:
- Community traffic
- Individual contributions
- Your community-building business model strategy
- Evolution of community expertise and skills in your company. Think of:
- Conflict resolution
- Reading and analyzing data
- Creating and delivering incentives
- Gained/enhanced business and sales
- Revenue and cost savings
With metrics in mind, follow this simple formula to measure your community-building efforts using the OKR method. Or grab your own OKR template.
Objective (the What) → Key Result (the How) → Metric (the measurement) → Tactic → Cost → Results → What worked
Here's an example.
Objective: Increase my coaching client engagement this summer (to address natural seasonal summer client drop-off rates) as measured by three key results:
- Clients on my social channels would engage more with posts
- Clients in my community would engage more with posts and one another
- Clients engaging would see the value in booking sessions instead of taking the summer off
- Social post engagement rate % increase over benchmark + previous summer ER
- Community post engagement rate % increase over previous summer ER
- Increased client bookings from those also engaging on social + community
Tactic: Create post series for social about the benefits of coaching even when things are “going well”; Create series of summer tips, Q&As and promotions for community members; Make sure promotional packages/sessions are set up and booking links are easily accessible
Cost: 20 hours time investment to create social posts, tips, Q&As and set up promotions
Results: 7 existing clients didn’t drop off; Acquired 2 new clients
What worked: Utilizing existing community channel-focused content + promos
(Use the resulting insights to tweak your community as needed.)
Harness the Potential of Well-Crafted, Productive Communities
Done well, and when purposefully woven into the fabric of your service business, communities can drive brand awareness and result in a tangible and sustainable competitive advantage. They can also result in gratifying client experience.
And with the realities of life on the other side of a global pandemic, people are craving community engagements more than ever before, why not take that leap today? Why wait to harness the latent potential waiting to emerge from a well-crafted, productive community-building business model strategy?
If you're a solo service provider wanting to be an early adopter of the community business model to differentiate your service practice, try Profi yourself (free for 30 days).
For teams and corporations of professional service providers, book a demo with us. Tell us the community-building business model strategy you're crafting. We'll help you solve the world's problems better together with the community.
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