Most corporate community organizers are thinking too small when they set goals for their online community efforts. The result is that most community efforts fail to make it to the top of the CMOs priority list - both because of the low relative investments for the community efforts as compared to other marketing programs, and because of the low relative returns to the business’ bottom line.

Look at one of the flagship case studies in Groundswell, the recent blockbuster book on social technologies authored by two well known Forrester analysts. In it Lego is being touted as a smashing success story for communities. They were able to increase sales by $500K with an investment of $200K.

Who cares? Lego is a $1.8B company, so increasing revenue by $500K is not moving the needle - it represents a whopping increase of 0.027% of sales.

And that is one of the better case studies. Let’s take a look at Bank Of America’s community efforts for small businesses. It looks like they have a little over 15,000 members, and I am sure that there are many people within BoA who are patting themselves on the back with the success of this effort. But with millions of small businesses as clients and with millions of transactions every day from those clients, how many millions of people do you think you need in your community to move the needle? I am not sure about the exact number, but I do know that it is a heck of a lot more than 15K members.

And you can keep going on and on with examples. When a commerce site takes in 40,000 orders per day, how many members do they need to make a difference? When you have millions of tax customers, how many people do you need in your community to affect the bottom line?

Until marketers think differently about the scaling issues of their communities and the associated investments, communities will have a hard time going mainstream. And yet, when done properly, they could deliver game-changing results - eBay customers who participate in their customer support communities bring in 50% in increased revenue to the company.

Let’s go back to the Bank of America example. Apparently someone calculated that the value of a new small business customer is $100 - if you refer a small business you get $50 and so does the small business. Let’s assume that BoA has 10M small business customers (they had 59M consumers and small business customers combined in 2007). If a marketing program is to increase the number of small business customer by 0.5% that would mean an increase in 500,000 new customers worth $50M. I am sure that this is not out of the realm of possibilities for them to spend this kind of money on TV advertising, even though $50M in TV ads would probably not deliver 500K new customers. But do you think they spent anywhere near that on their community? And if they would, do you think they could deliver a resource to the small business community that would attract much more than 15K members and that could result in much higher reference sales?

You can argue the numbers, but you cannot argue the scale issue…

In brainstorming with some friends and colleagues (including my partner Lois) on the future of marketing, and indirectly during conversations and presentations at the Conference Board meeting on Marketing Effectiveness (with other posts on the conference here and here), the question came up of what the role of a corporate marketer should be in a large multi-brand company.

What do you do when you are not directly connected with the product, the brand or the revenue? Think GE and NBC, Disney and ESPN, Pepsi and Gatorade, or Eli Lilly and Cialis. As long as the business units are doing well, there may be very little perceived value in what corporate marketing has to offer to the business units. In some cases you may wonder what brand people are actually buying – are they buying an NBC product, or are they buying a specific show? It is clear that the GE brand does not affect buying behavior – but does the NBC brand actually influence a show’s buying behavior?

Regardless of whether NBC or the NBC shows are the main brands, how does the corporate marketing group at GE proves its value to the subsidiaries in such a way that it can be impactful? (And note that I am using GE as a fictitious example – I have no idea whether there are frictions or any such problems as described here between corporate marketing and the subsidiaries.) One way could be by accepting that the only role they can play is an advisory role – and then strengthen that position. They could surround themselves with a center of excellence in marketing and then share the acquired knowledge with marketers in the subs, who probably do not have enough time for thought leadership and education. Another could be for them to become a friend/ally with the local marketing departments to make sure that they do not get marginalized into a tactical position, but that they instead get a key strategic seat at the executive table which marketers should occupy at any company. Remember Peter Drucker’s saying - “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

In some companies the marketing role of the parent company is important. In the case of Eli Lilly for example, which presented at the Conference Board meeting yesterday, the two key brand-attributes for doctors, their “primary buyers” as prescribers at this point, are – do they trust the product/drug and do they trust the company it is coming from. So if corporate marketing does not deliver, and doctors lose their trust in the company, then the brands could have to spend up to 4 times as much as competitors to gain the same number of market share points. In this case the role of corporate marketing is self-evident. Now when the inevitable shift toward consumer-driven drug selection comes, that whole picture may very well change. Individual consumers may base their decisions on the trust they have in the product and the trust they have in the community which recommended it to them – so in effect diminishing the role of the trust they have in the company, and thus that of corporate marketing.

So is bigger better?