Ahh, LEGO, the ubiquitous little plastic brick. The stuff that childhood memories are made of, and increasingly, also the everyday experiences of a growing segment of adult fans. It’s also an incredible exemple of the power of communities to change the trajectory of a business for the better.
The LEGO Group is worth US$13 billion today, but did you know that at one point in the early 2000s, it was on the verge of bankruptcy? In 2003, sales were down 30% year-on-year and the company was $US800 million in debt.
One of the reasons for LEGO’s downturn was over-diversification. LEGO had lost sight of what was core to its brand. It had started churning out poorly performing ancillary lines in the 1990s, including girls’ jewellery, clothes, theme parks and even its own video game company. LEGO also faced stiff competition from other toys in that era, from Tamagotchis to Nintendo Gameboys.
So how did LEGO reverse its fortunes? There were two key strategic decisions by then-incoming CEO (now LEGO Group executive Chairman) Jørgen Vig Knudstorp:
Get back to basics. Meaning, get rid of unnecessary product lines, sell off the theme parks, and sreamline production processes by reducing the number of unique LEGO bricks produced.
Leveraging cross-media fandoms: LEGO started to partner with well-known brands, with Star Wars as its first licenced property in 1999. This proved to be a smart move, as it bridged fandoms, introducing new consumers to LEGO and broadening its brand appeal beyond children to adult hobbyist and collector communities.
Harnessing communities to innovate. The company started a more intentional engagement strategy with its community.
Once a more niche grouping, Adult fans of LEGO (AFOL) had always existed, but became an increasingly prominent segment that LEGO started paying more attention to. LEGO started releasing more complex, intricate sets targeted at grownups and listed at a premium price point.
LEGO Ideas is LEGO’s product crowdsourcing initiative, where the public can submit ideas for new lego sets. If an idea reaches the threshold for the number of supporters within a certain timeframe, it goes to the review board to be considered as an official LEGO product.
Going back to its roots, becoming more customer-focused and engaging more deeply with its communities was how LEGO enacted what is often called “the greatest corporate turnaround in history”.
What is a brand community?
The LEGO case study shows how community can be a really powerful thing for brands.
But what is a brand community?
It’s a group of people who come together because they have a shared interest in a particular brand. They differ from ‘regular’ communities that might be formed around shared hobbies or lifestyles. And they also differ from communities that emerge from people interacting in close geographical boundaries (such as a local community centre or neighbourhood walking group).
Unlike trainspotting communities, amateur cryptozoologists or cruciferous vegetable enthusiasts, the focus of a brand community is fundamentally commercial in nature.
In my view, brand communities have two defining traits:
More than just money: Despite being formed around a commercial entity, brand communities support a connection that goes beyond a purely transactional exchange. Going back to the LEGO example, you’ll hardly find a LEGO fan that sees themselves as a mere consumer of plastic modular toys to pass the time. LEGO fans see themselves as part of a community of creators and innovators.
A many-to-many model: Brand communities must have an interaction model beyond a one-to-one model, or even a one-to-many model. In other words, members of a brand community have a relationship with each other, and not just directly with the brand.
The second distinction is one that I feel is particularly important.
If a brand has strong one-to-one interactions with its customers, that’s fantastic customer support and experience. If a brand has excellent one-to-many interactions, for example, through sharing great content on its website and social media channels, then it has a highly engaged audience. But it’s not until there is space for the members to interact and engage with each other do we have the beginnings of a community.
Why do brand communities form?
The term ‘brand community’ was first presented in 1995 by Albert Muniz Jr and Thomas O’Guinn at a conference in Minneapolis in the United States. They then went on to write a seminal paper called ‘Brand Community’ in 2001. (As a side note, reading through the paper is a quaint exercise, full of terms such as “computer-mediated communications”. Most hilariously, Macintosh was seen as a niche, underdog challenger brand going after the ‘big bad’ Bill Gates.)
Community as a business and marketing tactic has evolved significantly in the decades since, but many of the principles remain the same.
According to Minuz and O’Guinn, early brand communities were spontaneously formed by users of the products or services, not engineered by the brands themselves. Members typically came together to get support from other users, to help with troubleshooting problems, and to learn how to use the product or service better.
For many, being a consumer of the brand becomes a part of their identity in some way. The brand’s mission, culture, values or ethos resonates with them, and they want to be part of a bigger group of like-minded people. A strong brand community helps nurture loyalty and retention by supporting these needs in ways that feel genuine and fulfilling.
It’s not until later, though, that we see brands themselves more intentionally using community building as an intentional marketing (or more accurately, a business-wide) strategy to increase customer loyalty and acquisition.
What types of brand communities are there?
Similar to the model of earned, owned and paid media, I think this classification is quite useful when we think about brand communities.
Owned communities: Communities hosted and administered by the brand. The most common examples would be website portals and message boards on the brand’s own official platforms. I would also include the communities hosted on third-party sites such as Reddit, Facebook Groups, LinkedIn Groups, Slack and Discord if they are moderated or controlled by the brand.
Brands benefit from these third-party sites by not having to build their own community features, though of course, brands face the added complication of limited control over platform policies, IP ownership and portability, making it harder for the brand to fully ‘own’ the community experience or migrate it elsewhere. (Perhaps we should classify these as ‘sub-owned communities’.)
Earned communities: These are communities that aren’t instigated by the brand themselves, but rise up organically around the brand, often again on third-party social media and community sites such as Facebook Groups, Reddit and so on.
They’re truly earned in the sense that they form independently out of genuine interest and enthusiasm from its members without the brand’s direct involvement. A lot of unofficial brand communities form around brands like Apple, Peloton, Tesla and Disney, for example. And entertainment, tech, media and gaming brands tend to be ripe areas for earned communities to emerge.
Sponsored communities: These are communities that don’t originate from the brand directly but are supported financially or logistically by it. An example could be a brand sponsoring a tech user conference or providing support and training to a marketplace of independent resellers, vendors or service providers who are selling the brand’s products or services.
What are the benefits of brand communities?
At its heart, brand communities are about building loyalty and increasing retention of a product or service. It’s about creating a reason for staying. That, in turn, leads to a whole lot of benefits, such as:
Increasing brand awareness and advocacy:
When people love a brand, they talk about it with their friends and network. This sort of advocacy is so valuable as an acquisition strategy because it’s a shortcut to one of the most powerful human psychological drivers - social proof.
People may hold what an ad says with a grain of salt, but People are genuinely influenced by what others say and do, particularly if they perceive them to share certain values, circumstances or challenges. Even more so if the endorsement feels authentic and without hidden motives. That’s when a genuinely strong brand community can help drive customer acquisition through the network effect.
Improving customer support
You know how in conferences or seminars, speakers often encourage you to ask a question out loud? Because there could be another twenty people with the same question, and having that question asked in a public setting is the equivalent of sticky-ing a common user question to the top of a message board. If the solution to common issues is publicly resolved and displayed, it can increase efficiency by reducing duplication of effort, saving customer support/success staff from having to respond to multiple tickets from customers with the same questions.
Product improvement and innovations
As the LEGO example shows, community can be a great source of innovation. Whether it’s crowd-sourcing, getting more frequent and direct product feedback or just having a ready-to-go collective of people who love your products and are eager to give their opinions. Many brands recruit focus groups and user testers from their most loyal and engaged customers.
Conclusion
In my next article, I’m going to poke at the question “does every brand need a community?’ (my controversial answer, is no! Or at least, not without some caveats). I’ll talk about what types of businesses and brands are particularly suited to community-building as a strategy, and how brands can incorporate the benefits of community into their growth, whether as a core or minor part of their overall business strategy.