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The Connected Web

Phil Wainewright

Customer Communities that Drive Business Results

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Listen to my interview with Sanjay Dholakia, chief marketing officer of Lithium Technologies, which provides its community platform as a service that helps retailers, technology companies and other brand owners interact with their customers.

In this podcast, hear about the best practice that contributes to a thriving community and learn how Lithium provides community expertise alongside its software to help customers achieve successful outcomes.

Listen to or download the 8:25 minute podcast below:

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PW: Sanjay, I'm particularly pleased to have you on from Lithium because what your company does is very much around an aspect of Enterprise 2.0 — using social networking to support things like customer support, sales and marketing, innovation and ideas. And that's very much in the area that we're interested in talking about here in the Leveraging the Connected Web community. So perhaps you can tell us a little bit more about how Lithium works with customers in those areas.

SD: You bet. At its summary levels, Lithium builds, powers and manages the largest, most successful, most visible communities in the world — for companies like Best Buy, Barnes and Noble, AT&T and other large brands. But, of course, yeah, this isn't just technology for technology's sake. One of the things that we think is unique in our vantage point is that we're trying to solve a business problem.

And ultimately, that is to help organizations engage their customers in a much more productive way to accelerate their businesses. So that means, how do you use the community to listen to customers? — Such that you might be gleaning new product ideas, which, of course, turn into new revenue streams. [Or it means] listening to the community and using the community to accelerate a product launch, which of course, drives top line.

It can also be used to drive actual improvement in your marketing and sales arenas. Many of our customers are experiencing dramatically higher e-commerce conversion rates, as an example, through the community. And then, of course, engaging communities to help each other — customers to help each other — tremendously aids organizations in the support area by deflecting calls, reducing the cost that they have to bear from a call center perspective. And also, obviously, drives up customer retention rates, which again drives revenue.

So all with an eye towards what is the business problem that we're trying to solve and how can we use the community and the underlying Enterprise 2.0 technologies to really effect a real return on investment and a real result.

Yes, and of course, this is a very attractive thing for companies to look at. The notion that there's all this "free resource" out there on the web of people who may be enthusiastic advocates for the product or who may be willing to make a time commitment to help other users — and, of course, it seems like a fantastic opportunity to harness that resource. I think many companies perhaps under-estimate the amount of work — and indeed expertise — that's necessary to actually do that successfully, don't they?

I absolutely agree. In fact, one of my favorite quotes that I heard not too long ago was, 'Communities don't just happen'. To your point, they take a lot of work. There was a Wall Street Journal article, I think in the summertime, that published and commented on a report I think that was done by a consulting company that — based on the study, 75 percent of communities out there fail to reach scale and work. And I think that highlights the challenge and the opportunity here.

Lithium, on the other hand, about 90 percent of our communities reach scale and become quite successful. And part of that is because, again, of our unique view that software alone is only part of the solution. You can think of it as, software to us — if there are two-by-fours [timber planks], but ultimately, what customers need and want are a desk, or a shelf, or a door that you might fashion with these things — so you have to think about it from a complete solution perspective.

And so, as a result, Lithium has invested quite a bit — the company has about a decade of experience and so has invested quite a bit — in what we call the extended support infrastructure for these communities, everything from:

  • We have on staff a group called our "Customer Success Managers". So these are the folks that live with our customers in helping to drive their communities on a day-to-day basis.

  • We offer moderation services. Again, these are folks that help drive the growth and success of a community by enforcing the rules and facilitating behavior, etcetera, almost as a host or hostess would facilitate a good party.

  • And then finally, community management services that really help our customers fashion strategy and direction. And this role is quite critical as it is the bridge between the organization, the business and the community itself — and its most active users, who we call advocates.

And that role is critical, right. Those advocates that help drive these communities to success, typically, constitute less than a percent of the population — but they drive over 50 percent of the content.

So, in short, if you don't have these supporting services and infrastructure around the software, you are almost more likely to fail than succeed, getting right out of the gate.

Yeah, and I think that's one of the very interesting things about software-as-a-service - it's that we're talking about not really delivering a software toolkit that the customer then has to work on before it actually starts delivering the result. But you're a vendor that is delivering something which is going to be useful to the customer — you're investing in making it useful to the customer — to the extent of actually providing professional skilled resources alongside of the actual application, to make sure the customer is getting the best out of it. That's very characteristic of SaaS.

But I think this combination of professional services that are integrated with the on-demand software product, is quite a new thing that we're seeing a fair bit of in the SaaS marketplace.

Absolutely. I mean I might even call it 'SaaS squared' because I think you're right. The SaaS offerings in general certainly deliver the software-as-a-service, but if they stop just there, in this context — while they are providing an IT infrastructure — they're still not providing the full benefit. And so, the squared effect here is wrapping around the SaaS deployment model a full-service solution offering that really has the goal in mind.

Again, coming back to those business objectives. One of the things that I like to say to, again, perhaps use another contrived analogy: software is like the shovel. And none of us really go to the store to buy a shovel. What we really need is a hole in the ground. And that is what is our customers are looking for. Our customers are looking for the ability to drive a sales and marketing improvement, or an innovation improvement, or a support result, and we need to provide — we find it, frankly, interesting that we're so unique in the industry that we provide all these things, just because we think that it's so necessary. How could you not provide all of these services to drive the ultimate success?

And certainly, the figures you quoted earlier suggest that it is working for your customers. So I think that sounds to me like it's a very effective customer service. So we'll wrap there but I'd like to say thanks very much.

Phil Wainewright blogs about how businesses are using the Web to get better plugged into today's fast-moving, digital economy.

Phil Wainewright

Phil Wainewright specializes in on-demand services View more

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