The failure rate of new online communities

by Martin Reed on 16 July 2008 in Articles

Failure rate of online communities

I just finished reading a really interesting article in the Wall Street Journal entitled ‘Why most online communities fail‘. The piece identified three main reasons for why online communities fail, all of which I have previously addressed on this blog.

Reason 1 – Being seduced by ‘bells and whistles’

When I launched Just Chat way back in early 2000, I paid little attention to having a fancy design or offering expensive features. Indeed, I thought paying a few pounds for the domain name was a major expense. I used free software for the first year or so, before investing in a chat solution solely for my site. Even then, I used off the shelf software – an ethos which I keep to this day.

Even now, when people take a critical look at Just Chat they frequently mention how ‘basic’ the site looks. Now, I will admit that the site is due for a redesign but even then the site will still appear simple, clean and basic. I am not interested in overwhelming visitors to my site – I will always choose function over frills. As for the software I use? phpBB (free), ParaChat (free and paid versions available), eMeeting (paid, off the shelf solution), Helpdesk pilot (free and paid versions available).

Even now, as the development of my new online community draws to a close and the launch draws ever closer, my earliest goal was to only use software that was already available and that could be easily customised to meet my specific needs. In the end, I chose ExpressionEngine and so far I haven’t regretted the decision one bit. I am not alone in having this opinion. Sure, some projects may need custom coding but you will be surprised how customisable off the shelf software can be if you use your imagination.

You don’t need to spend a fortune developing a new online community. As long as your site is functional, it has just as much chance of success as one with a $10,000 design and development budget.

Reason 2 – Not being committed to the success of the community

Successful communities don’t just spring up out of nothing. I think the reason why most corporations are finding their online communities failing is because money cannot buy human relationships. Corporations are used to financially investing in something in order to get results. Communities will not be more successful as more and more money is thrown at them. Online communities need nurturing. They need attention. They need time, and they need commitment.

As the Wall Street Journal identified:

30% of the businesses Deloitte studied have only one part-time worker in charge of their communities. Most other businesses put a single marketing pro in charge of their sites.

It is absolutely no wonder that these same businesses are experiencing high failure rates. If you want to develop a new online community, you need to work extremely hard on the project. Tending to a new community every now and then, or when convenient will not work. A new community should be thought of as a new born child. If it is to develop and be successful, it needs constant attention and nurturing.

Reason 3 – Not knowing how to measure success

In the article, businesses claim that they establish online communities in order to generate word-of-mouth marketing and to increase customer loyalty. Unfortunately these metrics are extremely difficult to quantify. Companies would find it far easier to measure success based on data that is far more measurable. An e-commerce site for example, could measure success based on its conversion or retention rate. Success could be measured by the number of active members in the community, or how many new links the site is picking up that point to the community.

The success of an online community varies according to the individual goals of the person or business developing that community. Regardless of what those goals are, they need to be measurable (and attainable).

A little comfort

Many readers of this blog are online community developers. Some are struggling to make their community a success. If this is you, be comforted by the fact that Deloitte found that 35% of the online communities they studied have less than 100 members and less than 25% have more than 1,000 members. All this despite the fact that close to 60% (corrected to 6% by report author) of the businesses studied had spent over $1 million on their community projects.

How much have you spent on your online community? I am guessing it is less than $1 million, right? In that case you are already more successful than many of the efforts of ‘big business’!

Your thoughts

Why do you think most online communities fail? Why do you think many businesses struggle to make their online community projects a success? Share your thoughts and opinions by leaving a comment below.

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Mr Woc July 17, 2008 at 11:30 am

Hi there

A very good article and all very true, communities need a lot your time and effort, I had no idea how hard it would be if i am honest, its been a steep learning curve and i have probably wasted an awful lot of money in the learning, but this has stood me in good stead for future projects and am considered an experiance campaigner now lol !

Most communities fail because people are not prepared to work for it, people assume that people will just turn up on their site magically and stay there.

This never happens, when i first started my chat room visitors were few and far between, and me and the other admins on our site, would often be sat in an empty chat room for hours on end and when someone came in we would have to work hard to keep them.

After years of hard work, we have finally got to a point where we get a decent amount of visitors and im glad that we dont have to sit in an empty chat room for hours on end anymore lol !

I agree with what u said about websites also, your website doesnt have to be flashy in anyway to be popular, my site is no where near that, its the same as just chat functional.


Nicole Price July 18, 2008 at 5:40 am

Good post there Martin, but my comment is actually about something else: I see something new in the comments section: how come you decided to put up the Keywords not permitted notice here? I’d love for you to do a post about why you decided to ban keywords. I mean did you find it was detrimental your site? I still allow keywords so i was just wondering.

Boris July 19, 2008 at 2:48 am

I am curious as well. What difference does it make if I use my name or not. Have you seen a drop off in the amount of comments? We both would like to here more about this change.

Smiley July 19, 2008 at 2:57 am

This time last month, at around 3 AM, we’d have 6-8 regular chatters.

Tonight? 22 chatters in, chatting away.

I was telling my newer regulars tonight who’ve only been regulars for a few weeks or so.. one of them said something like “wow it’s busy tonight”, I told them a couple months back, our peak time would be around 12 chatters, now our peak time is 30 chatters, every couple of months or so our chatter numbers seem to double.

It’s just that awful wait between the months before it does.

I’m making a steady 200ish per month via ads, which pays for all the hosting, bills etc.

I’d say I’m doing alright.

Smiley July 19, 2008 at 2:59 am

In Martin’s defence re: keywords not being permitted in the username – I’ve only ever used my alias.

People who use keywords in their username are people who usually post a quick sentence then bugger off just for the benefits it reaps.

Besides, this is a community building blog, designed to help developers of communities with hints, tips & advice – it’s not an advertising blog.

Your URL is allowed, and it’s link love enabled thingy majiggy, so no need to use spam tactics. Fair is fair.

Angela Connor July 21, 2008 at 5:05 am

You have to put in the work, period. It is important to work hard to engage users, encourage them and support their presence. Greet new members, make suggestions about how they can create even more interesting content. Be available and care about the community. If someone submits an awesome photo gallery, TELL them!
I know that working at home is taboo for many but I jump in and create in my community, whenever I can. If I have a few free minutes on a Saturday night, I’ll post a blog. It takes commitment.
If the person managing the site is not committed to its success, it will not pass go, let alone collect $200.

Gerard July 21, 2008 at 9:27 am

Good post Martin. Good to know that we’re not the only ones struggling to make a success of our forums! I think at Unreality, we’ve done a good job of bringing our forum on, and some of our key users are instrumental in helping spread the word and keep the conversations going.

I would say though, that even with a userbase of > 2500 members, only a small core are frequent posters.

On the topic of keyword stuffing for commenters, I’m glad you did that. When you subscribe to the comments, you see what volume of people only comment for the SEO benefit. You’re right to delete those comments – there’s rarely any value in the comments left by those people.

Eva White July 22, 2008 at 4:55 am

Personally I like the look of your site. Its uncluttered and not gimicky. It also has great content and that’s what keeps the site popular.

Niccolo Svengali July 23, 2008 at 1:28 pm

You do need to put some work in, but if you’ve been slogging for months, have a re-think. Things take off because people really want them. Polishing a t*rd is a waste of time.

Martin Reed - Blog Author July 23, 2008 at 3:49 pm

Mr Woc – I agree. Functionality is far more important than a flashy design and hi-tech features. Furthermore, people do often fail to realise just how hard it is to develop a successful online community – they see the successful ones out there but forget about the majority of failed ones. It’s great to be optimistic, but also a little naive!

NicoleChanging the commenting system was a personal decision based on my own goals and aims for this blog. I just wrote an article outlining my reasons in more detail.

Boris – No, if anything the number of comments is increasing over time. Please check out my article linked to above for further information.

Smiley – I would definitely agree that you are ‘doing alright’! How are you finding your revenue with the private EasyDate affiliate scheme? It must be making you more money than when you worked through PaidonResults.

Thanks for your support on my new commenting policy.

Angela – Yes! Creating a successful online community demands hard work and commitment. Whenever you have a spare moment (and even when you don’t) you need to be getting involved and creating content until your community can sustain itself. This can take weeks, months, or even years!

Gerard – I think developing a successful forum is a continuing struggle, so you are most definitely not alone! It is not unusual to find that only a small proportion of your actual member base are regular contributors. Have you checked out my article entitled ‘Why are active forum members like gold dust?‘. It may help.

Thanks for your support on my new anti-keyword commenting policy.

Eva – Thanks! That is what I was aiming for. It is easy to get carried away with your site’s design and end up with it distracting from your content. Aim for simplicity and functionality and you can’t go too far wrong!

Niccolo – Things take off because the community developer put the hard graft in and refused to accept defeat. I believe all new communities have the potential to succeed, you may just need to kick some life into a failing forum.

Paul July 23, 2008 at 3:51 pm

I am shocked to know the percentage of failure and success. Perhaps we should find something different. Twitter is an example. We were familiar with HI5, faceoff, and myspace, I think all of them have same style and theme. Twitter said,”what are you doing” and it rules. So we need something different.

Martin Reed - Blog Author July 23, 2008 at 4:16 pm

Paul – I have to admit that I thought with all the resources such large companies have at their disposal, they would be able to achieve a higher success rate when developing online communities. It just goes to show that money does not buy relationships.

Angela Connor July 23, 2008 at 4:22 pm

As I read more of the posts, it seems to me that a culture change is needed, and we all know that culture change in the business world is a hard pill to swallow. Just look at the newspaper industry. Culture changes a LONG time ago would have put the industry in a much better place today. So, what is this new metric? I think I need to blog about that. In my opinion, time spent is a tell-all.

Smiley July 23, 2008 at 5:36 pm

You’re welcome.

And yes, thanks a bunch for reminding me about EasyDate. I was already a member but never bothered using it ’til you reminded me about it.

I lost revenue at first, but then realized they’re more location-specific. Ie: only pay out if they’re from GB or USA on certain ads etc, so I played with the ads a bit, added “Britain” and “USA” to the BeNaughty ads so people could differentiate, now I’m making enough to cover my expenses with a bit left over.

Gerard July 23, 2008 at 8:13 pm

Hi Martin

Yeah, I read that post a while back. It prompted us into giving our members a more involved role in running the forum. They’ve really stepped it up, welcoming new members and seeding discussions. Great stuff.

Richard Millington July 24, 2008 at 2:53 pm

Good analysis. I suspect the biggest problem is exactly that identified in the article, too great a focus on the medium and not enough on the people. Building the tools and interface is the easy safe part which can be given a nice and convenient time scale.

Having people reaching out to tens, perhaps, hundreds of people every day on the internet is the tricky part. All these unique interactions on Facebook, on forums, on blogs, on podcasts – they bring people in. That takes time, and it’s the least sexy part of managing a community.

Phil Tanny July 24, 2008 at 11:57 pm

Just discovered this blog Martin, great work. Community
building is of great interest here, so I’ll be reading

In the early days of Internet business there was an email
discussion group called I-Sales Digest. Old timers here will
remember it I’m sure.

You submitted your post, and it was reviewed by the
moderator. If the post was useful enough, and/or
interesting enough, you’d get published, and your comments
would be read by many of the leading people in the field at
that time.

But, you wouldn’t always get published. If the conversation
had moved on past your points, or if your post just didn’t
quite contribute enough, was very long winded, not up to
your usual standard, etc, the post would be politely

The point of this example is that moderation and editing may
be key to establishing a community full of the kind of
posters we’d all like to have. That is, mature thoughtful
posters who really do want to add value, and are capable of
doing so.

These key folks will gravitate to venues where the quality
of the content is kept up to their level, and not diluted
with oceans of one line quips etc.

Would we buy and read a magazine that included any article
anybody submitted? Probably not.

I see Web 2.0 in general evolving past it’s first amateur
awakening, towards models that will include more moderation.

Editing and editors have been a core part of publishing for
decades, and I sense Net community builders are starting to
understand why.

Again, thanks for this place. I hope my first post makes
it in to the magazine! :-)

Adam Keynes July 25, 2008 at 9:21 am

The trouble with building new communities is convincing people that yours is more worthwhile than one of the bigger communities, and that there’s a reason to post at yours instead. Most people will say they only need one place to discuss subjects, so why should they choose yours after already find somewhere else.

As far as making money goes, your really have offer something different, and most new forums just don’t do that.

Smiley July 25, 2008 at 11:41 am

That’s where personality plays a key role, Adam. Most of the forum categories, and chat features etc are more than likely going to be the same… but one thing you can offer that’s different is the personality of the site.

A lot of people like smaller communities because they have a more intimate and familiar feeling, smaller communities are also great for people new to the internet or simply new to chat rooms & chatting on the net in general.

To make mine a gradually growing success I reached out to new users and female chatters – I played off the current media hype about perverts in chat rooms and such. “Come to Friendly Chat, where we operate a strict no-perv policy” when we were just starting off, I had my staff make an example out of perverts, really zero tolerance.. so we got a flood of female regulars who felt safe.

So again, you can offer something different from the big sites in the form of your rules and the way you run your community.

Being different and more worthwhile is not necessarily just about having a fancy feature that nobody else does — it’s about the personality of your site, what makes them want to stay there?

Richard Millington July 25, 2008 at 1:00 pm

Great point about the personality of the site. There are usually niches to fill within bigger communities.

I think another point relates more to the cause of the community. What does your community stand for? What does your community mean? Sure some people get together to talk about a social object, maybe television shows or politics. But others get together to change something, to contribute to and build something special. Photographers get together and share advice and ideas about being better photographers.

It might be easier to establish and evangelize a broader cause than build a unique personality.

Phil Tanny July 26, 2008 at 12:28 pm

Here’s a proposal that attempts to address what is perhaps
the number one reason sites, blogs and communities fail.

If the proposal makes sense, this is something we could
actually do, and this blog would seem to be an ideal place
to get the ball rolling.

PROBLEM: The number one reason sites fail may be that most
webmasters try to make it on their own, that is, we try to
compete against the entire world all by ourselves.

SOLUTION: A solution might be for smaller online communities
to band together to create a “community of communities”, a
network, so they can cross promote one another.

Such a union might be accomplished by each of the member
communities agreeing to display a javascript drop down menu
that links to all the communities in the network.

It seems that achieving critical mass is the number one
challenge of smaller communities, and that’s hard to
accomplish on modest traffic. If 20 smaller communities
pool the modest traffic each has, it could add up to an
sizeable audience that breathes new life in to all the
individual communities.

The benefit to users is that it becomes easier for them
to find conversations on a variety of topics, which means
they would chat more. If there was a link on this page
that took me to another blog or forum on one of my other
interests, I’d likely go there next, and comment there
as well.

The number one obstacle to reaping the benefits of
such alliances would seem to be the highly independent
nature of webmaster culture psychology.

I don’t have a solution for that, other than to point out
that most small communities will likely remain small, unless
they find a way to leverage the talents and traffic of
others, as we are all trying to do here.

In the early days of Net business, the small solo
entrepreneur had a great advantage, because we could move
much faster than the big guys. This advantage fades with
each passing day, and we little guys probably need to find a
way to become bigger guys, if we want to compete and survive.

A community of communities? Anybody interested?

Abhi July 28, 2008 at 1:28 pm

Very good post Martin! Most community owners fail to realise these very simple steps to help them stay afloat. If they cannot be involved in their own communities, tough to see how anyone else will! Keep writing!
PS: I have more to read on Community Spark, as I am catching up after a while.

Meghan July 29, 2008 at 7:17 pm

I think that the reason why online communities fail is because of the lack of commitment from the users. There are so many communities out there on the web and to find just one that keeps you interested and engaged is very difficult. I know that I have been a part of 2 online communities for awhile (even before they got really big) and now that they are big, I don’t find any reason to keep my profile on there. In today’s society, there are so many choices and so many things to do that time and commitment are disappearing.

Smiley July 30, 2008 at 2:46 am

“the reason why online communities fail is because of the lack of commitment from the users.”

I have to disagree with that.

Why would a user be committed if the owner/staff isn’t? Users imitate the owner/staff. They imitate the person they see as “in charge”

Which means if a user isn’t committed.. the owner/staff is going wrong somewhere ;) (obviously most likely with their own commitment).

So instead of you saying “the reason why online communities fail is because of the lack of commitment from the users.” — what you REALLY should be saying is “the reason why online communities fail is because of the lack of commitment from the owner.”

Phil Tanny July 30, 2008 at 12:36 pm

One way this “lack of commitment from the owner” can be
expressed is by community owners declining to fully leverage
the power of community.

Community owners typically think of the power of
community in regards to their own forum or blog.

“If a lot of people gather on my site, I’ll benefit from the
power of community.”

We all get this part.

But, most of us are still thinking of the power of community
in regards to our site. Our fundamental perspective
is still that of a single individual, working on our own.

The biggest problem most communities have is that they
haven’t reached sufficient critical mass to generate enough
conversation, and sufficiently diverse conversation, to keep
their readers fully engaged. So readers and posters wander
off, in search of a more exciting experience. Getting
past this crucial hurdle is indeed a challenge.

Yet, 9 out of 10 times or more the community owner is not
working to make alliances with other communities, instead
preferring to view other community owners as competitors.

Most of us are trying to create an island built around
ourselves. We’re trying to do it by ourselves, for ourselves,
and thus aren’t fully leveraging the power of community.

Martin Reed - Blog Author August 4, 2008 at 9:25 pm

Angela – How do you propose business culture needs to change with regards to developing successful online communities?

Smiley – Glad to hear it is working out for you. I definitely made more money using their direct affiliate program; especially with those quarterly bonuses they offer.

Gerard – Fantastic; the more active and welcoming your members are, the less work you have to put in which allows you to spend more time working on other areas.

Richard – Exactly; developing a successful community from scratch takes a lot of time, commitment, effort and dedication. Money needs to be invested right if it is to be well-spent.

Phil – Thanks for your very thought-provoking comment. I am not sure that such blanket moderation would work well on most communities, although that isn’t to say your idea is without merit. Sure, the better the content is the more people that community may attract. However, people want to develop relationships with other people – think of when you are out with friends… you don’t always chat about politics or current affairs, do you? Sometimes you just like to have a natter and enjoy the company of other people, and online communities are no different.

If you are aiming to develop a community that will be highly analytical and topcial, this approach may work but you will be creating a lot of additional work when it comes to moderation. Additionally, members may not like the fact they will be investing time creating a post that may not even get published. If your aim to to provide fantastic, in-depth content then a blog may be more appropriate than a forum or social network.

Adam – Exactly. Your online community needs to be different if you want it to be successful. Money can help differentiate a community – it can be used to develop a unique design and unique features, for example. However the design needs to be user-friendly, and the features need to be useful. What really makes a community unique is its members.

Smiley – I agree. The personality of a community is extremely difficult for a competitor to copy.

Richard – Yes, I think a lot of communities launch with the community developer not really knowing what their aims are, or what the purpose of the community is. If you don’t know this, how can you expect to attract members?

Phil – This has been tried before in the past by way of banner exchanges and ‘Web Rings’, but have pretty much died out now. Most people join a community because the subject matter interests them – they are probably not interested in visiting and/or joining a number of communities based around a variety of subjects – this is where such a ‘community of communities’ can fail. Additionally, communities may not be too eager to promote communities that are based around similar subjects.

Abhi – Good to have you back. Community developers definitely need to take an active interest and role in their communities. If they don’t want to get involved, how can they expect others to?

Meghan – That’s the challenge of developing a new online community. You need to keep members interested, engaged and active and you need to keep the community feeling and personality regardless of how large it becomes.

Smiley – Exactly. Members won’t be committed if the community developer isn’t committed.

Phil – Yes, you are going to find it difficult to attract and retain members if your community is void of members and conversation. In these cases, you need to step up to the plate and create the content for yourself – even if it means talking to yourself for the first few weeks/months!

Tracy September 27, 2008 at 7:41 am

Yes, dedication and concentration are the key factors required here. Just have the ambition to grow more and more.


Martin Reed - Blog Author October 6, 2008 at 8:00 pm

Tracy – Agreed. Do you find these stories to be inspirational, or demotivating?

Scott February 25, 2009 at 12:17 am

Good points there. Certainly, online business is not only to gain profit or a return of investment . You should also consider the community where you established your business. You should be aware of their needs, their comments and suggestions in order to succeed. That’s why some online business failed, because of their failure to reach the community.

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