Fostering Customer Community: A Tale of Two Experiences

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customers-talkingWhat happens when you’ve positioned your business as a trusted, community member, but your customer community goes elsewhere when it’s time to make a purchase?

This is the question plaguing two businesses in my area. Both are retailers who organize events around hobbies. Both face competitive pressure locally and online. They fall on two sides of the same basic question: cash or community?

1. The Scenario

A business organizes an event focused on bringing their customer community together. The goal of the event is to participate in the hobby, thus promoting products and interests. Retail sales are essentially a byproduct – not the main focus. These events are open to the public with a small cost to attend and participate.

During the events, customers happily chat about all kinds of things, including recent purchases in the category of sales of the organizers. Some attendees show items that they bought from the organizers’ shop. Others discuss websites where they were able to find items they were looking for – possibly at a substantial discount as compared to what the organizer charges. Some even talk about purchasing from competing brick and mortar stores in the area.

After the events, the businesses look at the sales for the event days and find that they did not make much money off of all these people present in their stores. Some products sold, but it does not seem to be a hugely profitable day. Over the next few months, the business owners track how many of the attendees come in to the store and make a purchase. One or two might come back and make substantial purchases. A few more get some odds and ends. Many do not come to buy anything.

Both businesses ask themselves the same question: Is it worth supporting the customer community if they don’t support me financially?

2. The Cash Argument

It costs money, time, and sanity to put together events. The attendance fee is there to try to cover the basics – promotional items, labor costs, room rental (if needed), etc. The assumption is that the upside will occur over time as attendees come back and spend in the store. If that behavior is not seen, it is not worthwhile to offer the events.

Furthermore, attendees should be sufficiently grateful for the organizer’s hosting the event that they would refrain from promoting other vendors during it. Discussing online retailers offering cut-rate prices makes other customers less likely to purchase from the organizer and therefore less likely that the organizer will continue to be financially viable in the future.

3. The Community Argument

The point of running the event was to bring the customer community together. The attendance fee is there to cover the costs for the day. Anything else is gravy. As long as the hobby is supported and there is continued interest, the day was a win. If, at some point later, competitors fail to live up to the demands of the customers, they will fondly remember attending the event and will hopefully return to the organizer’s business.

Attendees are likely to come from a significant distance to be at the event. So it is unlikely that all of them think of the organizers as their “home store.” Given plenty of time to socialize, the attendees talk about the places they know best for the hobby which will naturally include competitors or online merchants.

4. The Aftermath

The organizer in the Cash Argument scenario was quite vocal to their customers, and even to some attendees at the events, about their feelings regarding the customer community support. They continued to negatively discuss how various attendees had talked about competitors during the event even to customers who had not been there. Some people stopped attending events hosted by the organizer and spread negative word of mouth about the business. They felt pressured by the business owner, both during and after the event, to only ever shop with them. They resented that the business would disparage other members of the customer community.

On the other side, the organizer in the Community Argument scenario did not mention their concerns to the customers. Despite feeling as though the customer community had not supported them based on the event, they continued to host and people continued to attend. Attendees wrote reviews of the store on social media and other public forums where other members of the customer community could find them. These reviews were generally positive and likely contributed to some amount of new customers coming in.

5. The Reality

Every business has its own Pareto principle of customer value. Some customers are big spenders, driving large swathes of revenue. Most spend a little here and there. Some will look for a deal regardless of whether it hurts their preferred store. Others will shop locally even if it means paying a little bit more.

Wherever a given customer lands, it’s pretty good odds that they like having a choice in when, how, and where they spend. By supporting a community, the organizer has to acknowledge that choice. To do otherwise invites negativity, something businesses cannot afford.

So stay positive. Look more broadly at the impact of customer community support. And think carefully before disparaging other businesses or individuals. The repercussions of that sort of behavior are rarely worth the venting.

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