featured image for post 3 reasons why brands are shifting budget to build niche communities
April 16, 2020
3 reasons why brands are shifting budget to build niche communities

With millennial and Gen Z consumers spending at least 2 hours a day on social media, it’s clear why brands are increasing their investment year over year. According to a study by Sprout Social, marketers will increase social media ad spend by 8.7% in 2020, likely reaching over $100 billion.

Despite this upward trend, 85% of marketers feel that the rising costs to advertise are a huge concern, especially on Facebook. They’re also looking for ways to drive constant engagement and avoid creative fatigue in a time where nearly half of Gen Z are blocking ads.

As a result, brands are shifting towards a community driven model - a world where they have close proximity to their most loyal customers.

The community model works like this: brands identify their most loyal fans, invite them to dedicated communities, and reward them with exclusive experiences that drive engagement, insights, and sales.

Below are three reasons why a dedicated community is ideal for both brands and consumers:

  1. It’s cheaper to retain a customer than it is to acquire a new one.

The Harvard Business review notes that acquiring a new customer is anywhere from 5-25x more expensive than retaining one.

Recognizing an existing customer and inviting them to a private community, an experience that they cannot sign up for independently, drives an immense sense of loyalty.

Within Zyper’s app, which powers communities for brands like Dior and Farfetch, fans access exclusive product rewards, creative content challenges, and a group chat where they can connect with each other.

The result of this experience is tremendous. In a recent fan survey we conducted, we found that 80% of “brand fans” say they feel more loyal and spend 3x more after being recognized by a brand and invited to their community.

A fan in Banana Republic’s community expressed, "Every time I go to shop, I see other stuff I want, and then I buy more stuff. I spend way more than my voucher each month."

  1. Super fans spread the word.

The official “brand fan” status lends itself naturally to peer-to-peer marketing.

Through personal links generated by the app, fans also act as an army of advocates, driving up referrals and help brands acquire like-minded, quality customers.

Customers referred by super fans are spending 3x more in the first 90 days than customers acquired by Facebook.

  1. Community generated content is 5-10x more engaging than influencer and brand produced assets

In the battle for consumer attention, brand teams are burning out from the demand to produce extremely creative assets at a rapid pace. In turning to super fans to create content as a community, they have a constant stream of on-brand content (as many as 500 assets per week) at their finger tips.

The content generates crazy high engagement - 10x more than influencers - when posted by fans directly since these are everyday people posting to their closest friend groups:

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Plus, brands have the rights to repurpose the assets - a move that drives massive engagement on their owned channels while recognizing fans with an even larger gesture.

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When fans actively log into a community completely dedicated to a common love for a brand, that brand is top of mind daily. This adds up over time and allows the brand-consumer relationship to go beyond transactional.

For more insight on how to build community and loyalty with your fans, access our whitepaper here.

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