Ben Worthen writes an interesting article for the WSJ called, "Why Most Online Communities Fail." It’s basically a retelling of the results of a Deloitte study by consultant Ed Moran. Moran studied more than 100 businesses with online communities. 35% of the communities studied had less than 100 members. Fewer than 25% had more than 1,000 members. At the same time, 60% of these businesses had spent over $1 million on their community projects. Moran calls it a disturbingly high failure rate, and I agree.

Moran lists 3 reasons the sites fail: too much focus on technology, too little focus on the people (30% of online communities are run by part-time employees or just a single PR person), and measurement of the wrong metrics for success. On the measurement front, sites are chasing eyeballs instead of building interaction and creating a level of comfort that incents your most loyal users to evangelize products for you.

ReadWriteWeb’s Marshall Kirkpatrick picks up the thread with, "Corporate Social Networks are a Waste of Money." They reference the original study, done in conjunction with Beeline Labs, and some of the results don’t look so bad. For example, communities can increase revenue per customer by 50%, they can increase the likelihood of a successful product introduction, and they can reduce costs for a lot of other activities.

Looking at all this, the answer seems pretty obvious: many of the companies in the study did not provide a compelling incentive for customers to get involved with their communities. Many of these communities are set up with the idea that people want to come hang out in a community just to chat about a brand. As RWWeb puts it:

Let's face it, though. Social networks where a brand name product is what everyone rallies around are a dumb idea. They are stupid. No one should submit themselves to the indignity of creating a user profile and friend connections based on cola or cat litter. We have written before about the never ending market for niche social networks and we're down with that. Hell, we like to read about countless niche social networks on the Ning Blog just for fun. If brand-centered social networks are failing, though, it's probably because they are brand heavy and stupid.

It’s a bit hard hitting, but essentially true.

The problem here is not unlike the one retailers face when siting their storefronts. Are you a "destination" retailer, or do you rely on other destination retailers to bring traffic past your store? As it turns out, a lot of the value and benefits around community for marketing are not "destinations." It isn’t that people don’t want to talk to you about your brand, it’s just that they don’t get out of bed to do that, especially if they don’t have any kind of relationship with your company to start.

So how do you jump start the demand? How do you get your customers to attend the party? Much like a shopping mall involves anchor tenants to drive destination traffic that a lot of other interests can benefit from; the same analog exists for communities.

The destination need for corporate communities is not marketing or sales, it’s customer service. Build your community around customer services. That’s the reason for customers to get signed up and start interacting. Show them a great service experience and that gets them coming back to the community. Once you’ve got a destination community, you have the opportunity to expand the experience. Marketing and Sales can then begin to add value and receive benefits.

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Seth Godin writes a great piece about how the Internet doesn’t care what businesses want to use it for.  If business wants to use the Internet, it has to provide a value that customers want to receive.  That’s exactly my point in using Customer Service as the destination for your community.  It’s a value customers want to receive.

R. Todd Stephens over at the Collaborage writes:

Online communities seem to struggle when there is no real business reason to get involved. Focusing on the business environment, people need a reason to come to the community. This reason may include customer support, tips, techniques, best practices, news, or simple sharing of information. Communities that try the open end or "anything goes" approach will struggle to stay afloat.