Online communities news groups, chats or threaded message boards in which like-minded people congregate to share ideas, solve problems or work on projects were once thought to be the Web's killer app. The Web, its visionaries believed, could bring an unlimited number of people together no matter how geographically far-flung. And once all those people were gathered around the cyberhearth, their collective influence and buying power would dwarf anything the unmediated physical world could offer.
Well, yes and no.
At first, yes. Sort of. The fact that people could write their own reviews, post them and then discuss them with other book lovers certainly gave Amazon.com Inc. a first-mover advantage that translated, at least initially, into a cultlike popularity. Observers watched the online bookseller's popularity skyrocket due to the frenzy of activity and sales generated by this unique feature. And so, hoping an online community would have the same effect on their company as it seemed to be having on Amazon.com, companies building websites, including brick-and-mortar establishments, made adding online forums a top priority. Community, after all, was an obvious way to leverage the Web's essence: interactivity.
The question of whether encouraging site visitors to interact with one another actually had anything to do with the business was rarely asked. Everyone knew that hosting an online forum would make your site stickier. Sticky meant more eyeballs. More eyeballs meant profits from sales or advertising revenues beyond the dreams of avarice.
But somehow, for some reason, eyeballs didn't always turn into money. The most successful online communities weren't for profit, such as The Well, which, with a VAX computer and a rack of modems in an office in Northern California began in 1985 as a text- only discussion group for Web enthusiasts, activists and techies (and is now owned by the struggling Salon. com). GeoCities, which launched in 1994 with the goal of connecting millions through personal webpages, hasn't fulfilled its mission; instead of a bustling virtual community, it has become a simple provider of disk space. Even Amazon.com's initial advantage diminished over time, and the bookseller has yet to declare a profit. The online communities other companies established during those heady days of Internet experimentation often languished, becoming ghostly haunts visited by the occasional crank. Instead of generating value in the form of increased revenues or even customer loyalty, they just sucked up the resources of employees who could be deployed on other Web projects and used money that could be spent on other applications. The investment in community became increasingly difficult to justify because sites couldn't articulate, let alone measure, the value it added.
Web Business 50 winner REI.com doesn't see any correlation between its sales performance and the threaded bulletin boards on its site. The message boards are "not hurting anything, not helping anything," says Joan Broughton, vice president of online and direct sales for REI. "If I had to put more money into it, I wouldn't," she says bluntly. "But I don't have to."
Companies that have had little tangible business success with their online communities generally rushed to put them on their sites without evaluating whether they were really appropriate for their company, establishing a business goal or objective for them, or realising that it actually takes effort to get visitors to participate.
Some companies, however, did community right and reaped the rewards, such as:
-- Insight into customers' preferences, habits and attitudes.
- Ideas for new products and service.
- Increased customer loyalty.
- Fewer calls to service departments.
- Increased sales.
A few of the websites being honored as this year's Web Business 50 tech book publisher O'Reilly & Associates (www.oreilly.com); ski, skate, bike and snowboard manufacturer K2 (www.k2skis. com) and the American Cancer Society (www.cancer.org) cater to distinct communities and have gone to varying lengths to reach them. Each Web Business 50 winner possesses insights and best practices to share.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.