Do You Need An Online Community For Your Customers?

L E A D E R NETWORKS

Copyright © 2011 Leader Networks, LLC Proprietary & Confidential 1

Customer Intimacy On Steroids:

The Value of B2B Online Communities

A Discussion with Vanessa DiMauro

CEO, Leader Networks


Copyright © 2011 Leader Networks, LLC Proprietary & Confidential

Agenda

1. Define online customer communities: What they are, how they work, what value they can generate

2. Examine five successful communities: LexisNexis, Palladium, SAP, Taleo, and Sage, and the value they generate

3. Offer ways to help you determine whether you (and your customers) need an online community

4. Discuss lessons from the pioneers on how to build thriving communities

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THE QUEST FOR CUSTOMER INTIMACY: A BRIEF HISTORY OF B2B CUSTOMER ENGAGEMENT TECHNIQUES

From the Industrial Age to the Internet Era

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Over the Last Century, B2B Companies Have Created Distinct Ways of Interacting With Their Customers

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But in the Last 10 Years, the World Has Profoundly Changed

• Competition is truly global

• Customers’ problems are far more complex

• Innovative products have become table stakes

• B2B company missteps become known quickly via social media

• Competing solely on price against offshore firms is a losing game

• Customers need much more help to solve their mandates

• Companies need to understand customers’ changing needs much faster and better

• Lack of sophistication in social media is starting to hurt

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Over the Last Century, B2B Companies Have Created Distinct Ways of Interacting With Their Customers

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THE EMERGENCE OF B2B ONLINE CUSTOMER COMMUNITIES

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Online Communities Can Mean Many Different Things

• Depending on your industry, profession and even your age, the term “online community” can evoke multiple and often competing perceptions

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Defining the Phenomenon

• What we mean by online customer community – An interactive, often gated website that a company sets up for

customers to collaboration on topics of mutual interest

• Examples of what we are talking about – Business information provider LexisNexis Martindale Hubbell’s

Connected community for attorneys – Software giant SAP’s Community Network (SCN) – Consultancy Palladium Group’s community for strategy

practitioners of the Execution Premium Methodology and Balanced Scorecard approach

– Online ad placement and tracking firm Clickable’s community for online advertisers and their agencies

• What we’re not talking about

– Customer service websites – E-commerce sites where goods and services are bought and sold – Online publications that let readers comment on articles – Blogs, twitter and general use of social media broadcast tools – Online customer panels that focus on customer research

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They’re Starting to Take Off

49% of businesses reporting having a customer community.

[Business.com Business Social Media Benchmarking study, 2009]

34% said they planned to create a customer community in 2011-12.

[Leader Networks New Symbiosis of Professional Networks study, 2010]

24% plan to use an online community to support senior-level client

relationships in 2011-12.

[Leader Networks New Symbiosis of Professional Networks study, 2010]

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From Research and Experience, We See Six Reasons Why B2B Firms Launch Online Customer Communities

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Product Groups

Product Development Sales

Customer Service

Marketing

To help customers get more value from their products and

services

To improve the way they enhance

products and services

To develop better new products and

services

Customer-Facing

Business Functions

To market and sell more

effectively

To reduce the cost of post-sale service

Online Customer

Community

To get control of the social media

conversations about their firm



Online Customer Communities: 3 Models

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Shop Talk

• Goal: Helping customers troubleshoot transactional problems with your products/services • Methods: Organized discussion forums that allow viewers to share knowledge • Typical community hosts: IT companies whose customers help other customers solve technical problems

Information Dissemination

• Goal: Keeping customers informed on your products/services and how to use them • Methods: Company-written blogs with comments; using Twitter and other social media tools to broadcast information • Typical community hosts: Regulated industries, topics where engagement is unlikely to be high

Professional Collaboration

• Goal: Helping customers solve longer-term issues that involve your products/services • Methods: Participation in studies; providing white papers and other articles; holding webinars; etc. • Typical community hosts: Firms whose customers are professionals who need to share information to stay current in their fields



How an Online Community Can Create Significant Customer Value

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1. Member has an idea

2. Member seeks advice

3. Member evaluates options

4. Member builds plan & budget

5. Member makes purchase

Goes to discussions or content Accesses advisory service Joins buying pack or transacts online Surfaces buying needs Support opportunity emerges

create value get benefit

© 2010 Leader Networks



EXAMPLES OF SUCCESSFUL ONLINE COMMUNITIES AND WHY THEY WERE BUILT

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Helping Customers Get More Value from Your Products and Services The Case of LexisNexis Martindale-Hubbell’s Connected Community

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Community Fast Facts

Sponsoring Company: LexisNexis

Martindale-Hubbell

Audience: Global legal professionals

Size: More than 40K registered members

Launch date: June 2009

Product Groups

Product

Development Sales

Customer Service

Marketing

Online Customer

Community



About the Connected Community

• Martindale-Hubbell a 140-year-old international business unit of LexisNexis ($3B+ firm)

• $190M revenue and 27,000 clients in legal market (law firms, corporate counsel) • Especially known for Martindale-Hubbell Legal directory and Peer Review

Ratings • Launch and grow legal industry’s premier online community • Make Martindale.com more interactive for its 1 million lawyers and law firm

customers • Retain existing clients and gain new ones

• A global online community for corporate counsel, law firm attorneys and other

legal professionals, beta launch in June 2008 • Lets them network and collaborate in a trusted environment • More than 270,000 pieces of counsel-created research, online events and other

content contributed by members • Members can tap LexisNexis information and other legal data: statistics,

research, news, law firm profiles, marketing trends, ratings, polls and client reviews

• Integrated 37M LinkedIn users from the legal profession

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Company Background

Case for Community

What They Built



About the Connected Community (cont’d.)

• Has grown to >40,000 members (10X growth in 1 year)

• Members from over 120 countries

• 700 active groups, 110,000 blog posts by members and 2,500 members have participated in community webinars

• Improved value to Martindale customers: Martindale is sending more qualified visitors to law firm websites than Google search results (average 4% bounce rate vs. 83% bounce rate from Google)

• Winner of numerous awards and focus of many articles

“I regularly use Martindale to learn more about attorneys that will be

involved in my cases and to advice clients….It is the most trusted way to locate attorneys (especially out of town).” -- Neil Rose, Partner, Willcox & Savage

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Results to Date

Executive Comments



Improving the Way You Enhance Your Products/Services The Case of Palladium Group’s Execution Premium Community

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Sponsoring Company: Palladium Group

(founders of the Balanced Scorecard

approach to corporate measurement)

Audience: Senior strategy professionals

from organizations worldwide

Size: More than 2,700 companies

Launch date: April 2010

Product Groups

Product

Development Sales

Customer Service

Marketing

Online Customer

Community



About Palladium Group’s XPC

• Palladium Group is a consulting and conference firm whose founders invented the Balanced Scorecard measurement system (Robert Kaplan and David Norton)

• Positions itself as the global leader in helping organizations execute their strategies.

• Services include consulting, technology, conferences, communities, and certification.

• Designed Execution Premium Community (XPC) to help practitioners of the

Balanced Scorecard share knowledge and experience • Increase customer intimacy and raise awareness of products and services • Tap into leading trends in strategy execution • Create a new revenue-generating service line for Palladium Group

• Launched XPC in September 2009 as a private, gated online community for worldwide strategy professionals from around the globe to access resources, participate in research, share in discussions and work with Palladium group strategy consultants.

• Before launch, conducted beta testing with ~700 Palladium clients worldwide to determine content and social interaction model

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Company Background

Case for Community

What They Built



The Case of Palladium Group XPC (cont’d.)

• Global online community with more than 50% of the membership from non-US countries, deepening Palladium’s market reach

• Membership from over 2,600 organizations worldwide • Drives conference attendance, consulting projects and publishing arm of

Palladium • Revenue-generating in first 6 months • Over 15% of new members come from peer referrals

• "Collectively, we will advance the science of strategy management and help organizations achieve execution premiums with XPC."

-- Dr. David Norton, Palladium Group Founder and Director • “Palladium’s Execution Premium Community (XPC) provides those of us

dedicated to improving the strategic performance of our companies the ability to exchange best practices with peers and access the expertise of the pioneers of performance management.”

-- Takehiko Nagumo, SVP & Strategic Performance Manager, Union Bank

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Results to Date

Executive Comments



Boosting Product Development The Case of SAP’s Community Network

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Sponsoring Company: SAP

Audience: SAP customers, partners,

employees and experts.

Size: 2.3 million members

Launch date: 2004

Product Groups

Product

Development Sales

Customer Service

Marketing

Online Customer

Community

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About the SAP Community Network

• $17 billion enterprise software company (based in Walldorf, Germany)

• World's largest business software company (more than 52,921 employees)

• Offices in more than 50 countries worldwide

• In 2003, SAP was introducing a crucial upgrade of its software (to be delivered via the Web) called NetWeaver. Convincing customers and business partners to upgrade to it was not easy

• SAP executive board member Shai Agassi’s idea: Let SAP customers, integrators and ISVs teach each others about their experiences with NetWeaver through an online community

• Goals were to use the SAP Community Network to:

– Increase awareness of NetWeaver and other SAP products and services

– Generate more leads for the firm’s offerings

– Accelerate adoption of NetWeaver

– Help channel partners (ISVs, etc.) sell their services • Launched the SAP Community Network (SCN) in 2003 – Today, SAP has five online communities for different audiences (developers, business

process experts, EcoHub, universities, and Business Objects customers)

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Company Background

Case for Community

What They Built



http://blogs-images.forbes.com/sap/files/2011/01/SCN_logo5.gif



About the SAP Community Network (cont.’d)

• >2 million members from 200 countries (30,000 new members/month) • 6,000 forum posts every day, and the median time before the first reply is 17

minutes • More than 20 million total visits and 400,000 bi-weekly newsletter subscriber • Net Promoter score in the 60% range. A good score would be in 30-35% range • Generate partner program leads to > 2M members globally • Value to SAP: Faster uptake of new products and enhancements

– Faster product/service adoption and market ramp-up – Higher customer satisfaction and loyalty – Up-sell and cross-sell – Better products and customer experiences from external feedback

• Value to SAP’s customers and partners: – Helps individuals and companies accomplish their jobs faster and with higher quality

through feedback from surveys, comments to blogs, discussion forum replies – Lower cost of operations

“Being engaged in community and social media has brought SAP tremendous benefits, including product adoption, market penetration, and so on — and also richness of relationship which can translate into customer satisfaction and success – and I would guess that would translate into customer loyalty. I know that these communities have brought SAP tremendous financial and non-financial benefits.” --Mark Yolton, SVP of SAP Community Network

“It has allowed us to save a lot of time and resources and … to get to a deliverable solution

much faster than we would have otherwise without the community.” -- David Hull, IT Infrastructure Architect, Walt Disney Company

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Results to Date

Executive Comments

http://www.youtube.com/watch?v=EkQg8OL8dKw

http://blogs-images.forbes.com/sap/files/2011/01/SCN_logo5.gif



Marketing and Selling Your Offerings More Effectively The Case of Taleo’s Talent Grid Communities

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Sponsoring Company: Taleo

Audience: customers, partners and job

seekers

Size: 200,000,000 candidates and 5,100

customers

Launch date: September 2009

Product Groups

Product

Development Sales

Customer Service

Marketing

Online Customer

Community



About Taleo’s Talent Grid Communities

• Founded in 1999, Taleo (NASDAQ: TLEO) is a $200M provider of software that helps companies automate the process of reviewing resumes and job applications, as well as monitoring and improving employee performance over time (so-called “talent management solutions”)

• More than 5,000 organizations use Taleo’s products (including nearly half the Fortune 100) in 200 countries and territories

• > 3,600 small and medium-sized companies also use its products

• By pairing social networking with talent management, Taleo's Talent Grid is bringing together thousands, and potentially millions, to share knowledge, offer insights and solve problems

• In September 2009, Taleo launched three online communities: The Knowledge Exchange (an online customer community); the Solution Exchange (a partner ecosystem); and the Talent Exchange (for recruits).

• Collectively called the Talent Grid

• Customers share best and "next" practices, discover innovative solutions and interact to match up the world's top jobs with the best talent

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Company Background

Case for Community

What They Built



About Taleo’s Talent Grid Communities (cont.’d)

• 200 million job candidates; 500,000 new job postings per quarter; 5,100 global customers of all sizes (including 48 of the Fortune 100); 19,000,000 users

• Taleo has a 95% customer renewal rate due, in part, to communities with 18% of customers choosing Taleo because of the communities (Taleo Value and Customer Satisfaction Study by CedarCrestone, 2010)

• Over 2 million jobs have been posted in the past year

• Recently launched a new business unit to support online communities

• "We are delighted at the early, powerful response by the world's largest talent management ecosystem -- Taleo's customers, partners and candidates -- to collaborate, strategize and streamline their talent decisions through the Talent Grid since its launch in September.”

-- Michael Gregoire, Chairman and Chief Executive Officer, Taleo

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Results to Date

Executive Comments



Getting Control of the Social Media Conversation About Your Firm The case of Sage Group ACT! Community

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Sponsoring Company: Sage Group

Audience: Customers and developers

Size: 24,000

Launch date: March 2008

Product Groups

Product

Development Sales

Customer Service

Marketing

Online Customer

Community



About the Sage Group ACT! Community

• Sage Group PLC is a $2 billion software company with 13,000+ employees and >6 million customers

• Focuses on financial, CRM and other applications for small and mid-sized businesses

• Company has millions of customers (small businesses), which makes getting and acting on customer feedback difficult (vs. a software company with many fewer but larger customers)

• The company’s North American business unit created the ACT! Online Community to increase interact with its contact management software customers

• The community is an open forum for customers to share positive and negative experiences with Sage products, and interact with other customers and ACT! developers in a variety of communication forums to support each other and improve future versions of the product.

• Community lets Sage better listen to the needs of its small and mid-size business customers and better serve them, so they in turn can better serve their customers

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Company Background

Case for Community

What They Built

http://www.sage.com/



About the Sage Group ACT! Community (cont.’d)

• In first 12 months of operation, community has had >8.9 million page views and >266,000 searches

• As a result of the community, ACT! has seen a 20-point increase in its customer loyalty score (as measured by the Satmetrix Net Promoter score)

• Experienced 300% increase in participation in its product beta program, and received customer feedback that has resulted in highly impactful product, organization and process changes.

• Additionally, the ACT! community has become one of ACT!’s top marketing assets.

• “We have seen a significant decrease in negative online reviews as ACT! users continue to embrace the online community, using it to give feedback that Sage actively utilizes to build a better product. In fact, the release of our newest ACT! 2009 (11.0) product was aided by the participation of ACT! users within the community. We conducted a beta customer participation program, in which ACT! users tested the product and Sage developers used feedback to make immediate enhancements to the product build, often in less than 48 hours.” -- David van Toor, ACT! General Manager

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Results to Date

Executive Comments

http://www.sage.com/



Online Customer Communities Change Business As Usual… For The Better

Deepen client relationships to

increase retention

Build greater brand equity

Provide better customer care

Shorten product innovation cycle

Deliver improved financial returns

Extend accelerate product &

services delivery

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Social Capital In-person + online

Enhancing the brand because the online community can’t be

quickly duplicated by competitors – it takes time to build a vibrant

community

Lowering the cost of customer service by

having customers solve each other’s problems

Identifying nascent customer needs before competitors recognize

them – and before customers have well-

articulated them

Providing a large and ongoing

customer research panel

Enabling customers to easily share detailed

information on how they’re using their offerings with

one another, which increases their value



And online customer communities provide one more major benefit …

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Shifting from Social Media Chaos To Focus

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Many Companies are Responding Chaotically to all the Social Chatter

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Wiki

B2B

B2C

Twitter

Facebook

LinkedIn

Blog

Web 2.0

YouTube

RSS

On-line Community

Thought Leadership

Customer Retention

Unstructured Information



Online Communities Enable B2Bs Firm to Monitor, Coordinate, Respond to and Influence What Customers Say About Them

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Distribution

Product Groups

Product Development

Sales

Customer Service

Marketing

Internal

Social

Media

Activities

External

Social Media

Activities

Social Networking

Sites Comments

Retailers’ Online

Customer Forums

Online Media

Discussion Groups

Consumer Advocacy

Online Communities

Twitter Chatter

A Firm’s B2B Online

Customer Community

Investor Online

Communities



SO DO YOU NEED AN ONLINE CUSTOMER COMMUNITY?

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Which Companies Need Online Customer Communities the Most? Common Characteristics of the Early Community Builders

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Customers

• Willing to share information with other customers because they largely don’t compete or fast moving industry

• Have purchased a platform product and need to communicate with each other about how to capitalize on it

• Willing to participate in off-line user groups or in person customer summits

Customer problems

(which their products or services addresses)

• Critical, ongoing and ever-changing

• Knowledge for solving problems becomes obsolete quickly

• Customers gain major value by learning from the experiences of other customers

• Urgent need to share experiences

Products/services

• Customers use B2B firm’s offering as a platform to solve bigger problems

• Customers need the supplier to make continual enhancements to product

• Key revenue source for B2B firm is product/ service upgrades



IF YOU NEED A COMMUNITY , HOW SHOULD YOU BUILD IT?

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Online community:

It’s all about connecting

data + people

© 2010 Leader Networks



Building a Vibrant Community: 9 Key Success Factors

What?

1. Unanimity that community must provide big value to members (not just to your firm)

2. Agreement on what member problems it will solve (and they must be big ones)

3. Having key assets and conditions in place before launch

4. Creating a steady stream of content that stimulates members and addresses their key problems

5. Value and respect all members

6. Building the community in an evolutionary way

7. Actively keep your finger on the pulse

8. Attracting members to the community

9. Making it feel like THEIR community, not YOURS

How?

Create a strategy that defines the target member, key problems, and how the community will address them

Conduct interviews with target members to surface key unfilled needs that an online community could address

Deciding whether customers have strong connection to your firm; whether you help them solve key issues, etc.

Create thought leadership content on site, in part thru collecting, dissecting and aggregating their experiences

Creating Golden Rules for integrity and transparency

Erecting Sherpa tents instead of Mausoleums

Monitoring and measuring to know and grow; and thread key information through-out the organization

Not using old marketing tactics to drive members

Getting members to take ownership of community discussions and enforcing the culture



Who We Are

Leader Networks

• Leader Networks is a strategic research and consulting firm that partners with its clients in developing social media strategies and creating on-line B2B communities of interest.

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Copyright © 2011 Leader Networks, LLC Proprietary & Confidential 41

We Have Helped Numerous Organizations Create Vibrant Online Communities

Do You Need An Online Community For Your Customers?

Business

d e r networkscopyright

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customer intimacy

customer research9

termonline community

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b2b companies