E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Community features can boost customer loyalty and sales. Here’s what it takes to build those features, and keep them fresh.
It may take a village to raise a child but more e-retailers are discovering that an online village or community can rear a stronger business.
However, building a successful e-retail community is not a quick task. In fact, it’s a lot like building a house, retailers and experts say. Merchants need a clear blueprint, cash to get it going and dedicated staff. And, just as a house requires ongoing maintenance to repair that leaky faucet or fix the roof, an online community requires upkeep as well-staff must constantly conjure up new ways to captivate visitors and keep them coming back.
Make it happen
“You can’t just launch a community and expect content to appear,” says Faramarz Farhoodi, chief information officer of retailer MotoSport Inc., which launched its e-commerce site four years ago. The retailer, which markets 100,000 SKUs of power sports apparel, parts and accessories, says it offers incentives to its customer service team to encourage them to participate in its community.
For example, if the retailer is sponsoring a contest with a prize, such as a gift certificate, for its community members, MotoSport will offer the same prize to employees who contribute the most to the community. At any given time Farhoodi says about 10 to 20 employees from his contact center staff of 50 are actively participating, most often by answering questions, moderating, and posting articles and videos. A technical administrator and a content administrator also play significant roles, Farhoodi says.
Online communities can run the gamut from simple forums and blogs to entire sections within a site to microsites where users can chat, share content and participate in contests. And, if done right, any of these versions can reap many rewards, says Dayna Bateman senior strategic analyst for e-commerce consultancy Fry Inc. The bottom line, she says, is consumer interaction, which can boost trust and loyalty.
One of the big benefits of communities, which consist mostly of user-generated content, is that they drive sales. U.S. consumers find user-generated content three times more influential when making a purchase decision than conventional marketing methods such as TV advertising, according to a recent study by Chicago-based Leo J. Shapiro & Associates LLC. The poll of 450 households found 34% of Internet users deem such content as influential when making a purchase decision, while just 11% find TV advertising as effective. Moreover, in the past year, nearly half of Americans have consulted user-generated content while shopping, and 37% have consulted it in the past three months.
E-retailers investigating whether online community is right for them may want to test the community waters with less expensive-read: virtually free-tools to gauge interest. This could include setting up a Facebook page and having staff add fun announcements to keep it fresh, or trying out Flickr, a photo-based social networking site, or Twitter, another social site that enables users to send and read other users’ brief, in-the-moment updates.
But communities aren’t for everyone. A retailer like MotoSport, which has an engaged and competitive audience, will likely fare much better with community than, say, an office supply retailer. Indeed, Farhoodi says one of the first things he noticed at MotoSport was its passionate customer base. “There was such an enthusiasm and strong sense of camaraderie among all the riders,” he says.
But finding a home for that passionate community took some thought.
MotoSport’s online community is different from many retailers’ in that it lies completely outside its e-commerce site-a deliberate decision, Farhoodi says.
While the 700,000 unique monthly shoppers on e-commerce site MotoSport.com will find a few Web 2.0 features such as ratings and reviews and an ask-and-answer feature in which a customer can pose a question to staff or other customers who can respond online, Farhoodi says he limits the retail site to features that aid the buying process. “I don’t want to distract visitors from purchasing,” he says.
And so, when the retailer decided to launch an extensive community, it went off site-literally-to MotoSpace.com. The retailer drives traffic to the community via e-mail, with messages during checkout on its e-commerce site and through its direct-to-consumer catalog.
Visitors to MotoSpace aren’t hit with a hard sell to go to MotoSport and make a purchase-that’s not the point, Farhoodi says. Instead, the retailer seeks to build credibility and brand awareness. For example, MotoSport employees typically identify themselves in forums, and the homepage presents the site as “MotoSpace.com-MotoSport Rider Community.” Additionally, small text at the bottom of the site explains that it is “A motorcycle and ATV rider community, brought to you by the crew at MotoSport.com.” And there are links to the e-commerce site.
Keep it fresh
MotoSpace.com was created in-house over six months and cost the retailer $20,000 to launch-that included the price of a software program called Dolphin from vendor BoonEx. At four months old, it has attracted 5,000 users, and is adding 20 to 50 a week. Farhoodi says he’s pleased with the response, and is hoping for 10,000 by mid-2009.
Beyond the standard videos, chat features and industry news, the site features a track finder integrated with Google maps so racing buffs can plan rides together, a racing events calendar and contact information for racing groups. Members can also participate in polls about ways to improve the community or on racing topics in general, such as favorite manufacturers. And MotoSpace plans to launch a fantasy racing league soon.
Farhoodi says he’s seen increased sales and conversions since the community launched. And, he says user participation is a clear sign that members are coming back to the site, and viewing MotoSpace as a destination for racing information.
The key to building a thriving community, Farhoodi says, is to keep content fresh and offer something that appeals to his demographic that users can’t find on mass social networking sites like Facebook and MySpace.
Craig Gillan, director of e-commerce at young women’s clothing and accessories retailer Charlotte Russe, agrees that innovation is key to a thriving community. In fact, it’s so important that it’s the theme of a weekly staff meeting at the retailer. Each Friday at 4 p.m., employees gather for The Latest and Coolest, a meeting where staffers share new and interesting web sites or technologies they’ve dug up. The routine practice spurs creative thinking, Gillan says.