Companies 'Friend' New Focus Groups

Companies are keeping in touch with customers as 'friends' and using them as focus groups.
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BOSTON (

TheStreet

) -- Time suckers like Facebook and Twitter have given rise to the trend of businesses using social networking to catch customers' attention. They're building fan pages and asking the public to "friend" them, they're Tweeting sweater sales, and, more and more, they're encouraging two-way conversations, creating exclusive online communities in which customers serve as virtual focus groups.

With a private online community or panel, a company will invite a targeted group of customers -- a few hundred or so, via e-mail invitations -- to take part in online discussion groups, surveys and a variety of other opinionated interactions that let companies know what the customers want. (The e-mail addresses generally come from list brokers or existing customer databases.) The communities are carefully facilitated by moderators who represent the company, which is how they differ from, say, the comments section on an old blog post. Customers rarely receive monetary compensation for their time, but they participate anyway for the simple reason that it's nice when someone listens to you, especially a big company.

"Listening is a really underrated marketing strategy," says Diane Hessan, chief executive of Communispace, a Watertown, Mass., company that specializes in online customer communities for clients such as

Kellogg

(K) - Get Report

,

Kraft Foods

(KFT)

,

Hewlett-Packard

(HPQ) - Get Report

and

Godiva

. (Godiva has used online communities to realize a variety of information about its target audience, including the fact that for many women, fancy chocolate is an impulse purchase.)

"People are used to people talking at them or pretending to listen," Hessan says. "The idea that you actually have the chance to effect major change is very cool to people."

According to

Gartner Inc.

, 60% of Fortune 1000 will be using online communities for some measure of market research by 2010. On the flip side, Gartner also reports that half of those companies won't do a very good job of managing them, which is why it may make sense to outsource to a company that specializes in managing online relationships.

People in the online-community biz say the lousy online communities are the ones that aren't engaging their customers with stimulating questions, video and consistent feedback.

"It's kind of like putting together a good dinner party," says Ellie Sykes, vice president of community panels at

Vision Critical

, an online market research firm in Vancouver whose clients have included

Macy's

(M) - Get Report

Bloomingdales,

Kodak

(EK)

and

Major League Baseball

. "If you throw a party and there's no food or drinks, or there are no attractive people, nobody's going to stick around."

The cost of setting up a private online community varies greatly depending on whether a company wants to outsource the management. Vision Critical charges $60,000 to $80,000 annually for clients who license a company's software but manage the community themselves, and $230,000 to $250,000 for customers who want Vision Critical to configure, host and manage the whole thing. Communispace charges about $25,000 a month for software, setup and hosting services; according to Hessan, clients generally want to outsource the whole shebang to her company. "It sounds expensive, but you can get really fast ROI on this," Hessan says. "Companies can move much faster when they have the pulse of the consumer right at their fingertips."

Furthermore, the

labor

is basically free, and an online community can offset any of the costs associated with in-person focus groups, which generally cost thousands of dollars per session, not to mention the cost of traveling somewhere to conduct them.

"A big side bonus is the environmental impact of doing things online," Sykes says. "I used to be a focus-group moderator and was flying everywhere, and now I don't have to travel anymore except for a couple of client meetings a year."

Smaller businesses that can't afford to foot the bill for a managed online community have more cost-effective options such as the online survey tools from

SurveyMonkey.com

, which provides tools for small businesses and individuals to create online surveys, with prices ranging from free -- for a maximum of 10 questions and 100 responses, to $200 a year for unlimited questions, responses and design options.

"Survey monkey really is a great tool and they've done a wonderful job," says Robin Chase, co-founder of car-sharing company

Zipcar

and CEO of transportation consultancy

Meadow Networks

, who used the tool to gauge interest in carpooling before launching ride-sharing business

GoLoco

in 2007. "But I would take care to not confuse it with focus groups. And unless you are very careful and clever, you will get a lot of bias using

online surveys. People who aren't online won't be responding, and that is still a lot of relevant people, depending on whom you are hoping to hear from."

-- Reported by Carmen Nobel in Boston.