Consumers are becoming less receptive to traditional methods of customer acquisition. Partly, this is due to the growing evidence that customers want something stronger than transactional relationships with brands. In 2020, community plays an increasingly critical role in the successful CMO's strategy.
Certainly, marketers who have left their approach static over the last few years are feeling the pinch. Internet trend expert Mary Meeker's reports show that cost-per-acquisition has increased by 50% over the last three years and is on track to outpace the lifetime value of a customer for many brands. The economics of this approach are no longer feasible.
Because of this, CMOs have started to look at alternatives to traditional methods. Significantly, the words "soul", "purpose," and "community" dominate CMO responses about their view of marketing. One study found that these concepts were 70% more common among CMOs than other C-suite level executives, and 100% more common than a non-CMO marketer. These early indicators indicate that the 2020s will be focused on creating a purpose-led brand - a brand that grows through their passionate community and group of advocates.
We've already seen impressive case studies showcasing the power of community-focused brands. For example, Lululemon, the athletic apparel retailer that boasts over 20% year-on-year revenue growth, has built their brand entirely on community principles. This includes the nurturing of groups of local leaders and fitness ambassadors as a primary technique for growth, as well as more deep-seated focus on community.
Jaclyn Crocker, Brand Community Consultant at Duel and a veteran community builder at Lululemon, puts it this way, "The most successful brands use their own communities to propel growth. By building a powerful community around your brand, what you are really doing is equipping a group of people in a particular market - and most likely in multiple markets - with your story."
Equipping a highly engaged community with a powerful story creates the perfect environment for word-of-mouth based growth and high repurchase rates. Indeed, it may be the only way that brands can compete in a period marked by increased customer acquisition costs. For brands looking to create strong communities, Jaclyn highlights three key principles.
Stand for Something Greater
Today's consumers are tuned in to the impact large organizations have on the world. According to research firm Forrester, Boomers, Millennials, and Gen Z all expect strong missions and company values from brands they engage with--many companies now build the core of their brand on purpose.
For example, clothing retailer Everlane has taken a strong stance on ethical manufacturing and transparent communication. They've declared their brand as "radically transparent" and lived up to the ideal by publishing how much each item costs to produce, where it is produced, and what their profit margin goes towards.
They've coupled this transparency with a commitment to only work with suppliers who provide safe and ethical work environments. This approach has led to a cult-like brand following for what has been described as one of fashion's most innovative new brands.
Everlane is not the only success story, according to Kantar Consulting, purpose-driven brands saw their brand valuation increase by 175% over the past 12 years versus a median growth rate of 86%. Many brands are succeeding by committing to an unwavering purpose and transparently communicating their impact to their customers.
As Crocker puts it, "You are building an emotional connection between the customer and the product that increases their loyalty to the brand - so much so that they will organically talk about you and what you are creating."
Stay True to Brand Values
Once you have committed to a mission, your brand has certain values it is expected to live up to, and failing to do so comes with heavy costs. Communities expect their brands to consistently prove themselves and be truthful about their mission."Be authentic" may seem like an obvious guideline when it comes to marketing--but it is easier said than done.
Pepsi for example, immediately faced heavy backlash from customers after releasing their controversial protest ad featuring Kendall Jenner in an attempt to take a political stance. Pepsi's lack of audience empathy only alienated their target community.
Strong communities are passionate by nature and deeply invested into the stories told by a brand. They have the potential to spread ideals and stories throughout their networks, but it must be a cohesive and authentic message.
Brands like Patagonia, Tesla, and Glossier understand this and have experienced long-lasting success thanks to their ability to express their values, communicate authentically, and take action that proves their impact on the mission. When it works, it is a powerful strategy. "Ultimately, your powerful brand communities create decentralized storytellers on the ground that are authentic and passionate," says Crocker.
Integrate Community Building into the Overall Business Strategy
Community building seems to be one of the most talked-about marketing trends of the last five years with no sign of slowing down, however, the term and the intention behind it has become much more diluted. Many brands fail to build communities because they narrowly focus on hosting one-off, large scale events and developing social channels.
The not-so-secret secret of community building? It must be integrated into the long-term business strategy and into every team in the company. Committing to building a brand community is far more than just a single line on the marketing teams to-do list--it is a shift that the entire organization needs to be aligned with. Crocker notes that "every employee and new hire within a business represents a champion for community principles--this buy-in is the key to making a strong community a reality and not simply a desire."
Although organizations have established processes and traditions, transitioning to a community-driven company is possible. It begins with buy-in from senior stakeholders and leaders, but, once again, must ultimately flow into every department of a business from finance to operations and human resources.
The needs and habits of consumers have drastically changed over the past decade. More than ever, a customer's choice of brands is a reflection of their personal identity and the community they belong to. Many CMOs have seen this shift and are responding by developing powerful communities of brand advocates that not only serve the brand's bottom line, but the planet and its people as well.