The Community Business Model Helps Drive Successful Customer Engagement

Dan Bieler
Principal Analyst
November 9, 2017

In the age of the customer, companies need fast access to scalable expertise, transparent costs, and agility in order to quickly adjust customer experiences to changing requirements. Community-based business models are gaining momentum as companies aim to intensify their customer engagement activities with relevant and great customer experiences.

Originally, most online community-based models, such as Wikipedia, were charities or volunteer-driven organizations. But a growing number of businesses are now run almost entirely on a community-based business model. This type of community business model relies extensively on community support to acquire customers as well as to provide support services.

  • The community context opens up new possibilities for deeper customer involvement. Customers interacting with customers builds trust and the feeling of owning a stake in the business. In turn, this drives customer involvement beyond the sales relationship.
  • Working collaboratively with customers translates into better offerings. Ongoing interaction between customers and with customers generates insights about emerging demand patterns more quickly. In turn, this drives open innovation for products and services.
  • The community-driven business model offers a lower cost base. With customers acting as sales and marketing channels as well as service support agents, the cost base of a community-driven business is lower.

My case study of UK-based mobile virtual network operator (MVNO) GiffGaff highlights the business benefits that can be obtained from a community-based business model. GiffGaff’s customers are actively involved in running the business through co-innovation and active membership support. Importantly, GiffGaff has repeatedly been nominated as the telco in the UK with the best customer service.

Community-based business models certainly do not work for all organizations. But this case study offers interesting insights into how businesses can reap substantial business benefits by involving their customers more intensively as a source of expertise and making them part of open innovation and design thinking in addition to supporting internal sales, marketing, and service activities.

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