When Community Becomes Your Competitive Advantage

If a company can transition from simply delivering a product to building a community, they can unlock extraordinary competitive advantages and create a superior business model. In fact, strong communities help support the ideal business model. Specifically:
• Enthusiastic members help acquire new members, resulting in lower customer acquisition costs and a tight viral loop.
• Members of a community are loath to abandon it, resulting in increased member retention and therefore improved lifetime value.
• Members of a community support other members in that community, resulting in high gross margins due to a lower cost of service.

The result of this are very real network effects: as engagement grows, the community gets smarter, faster to respond, more globally available, and generates more value.