How Should a Small Business Build a Brand in the Digital Era?

In 2024, many small businesses still do not understand how to build a brand. The traditional marketing playbook, heavily reliant on mass media and broad targeting, has been disrupted by the rise of digital and social channels.

This shift requires a new approach to brand building—one that is more nuanced, community-focused, and agile. Drawing on insights from McKinsey & Company's article, "A better way to build a brand: The community flywheel," we explore how small businesses can leverage the community flywheel model to build their brands effectively.

The Evolution of Brand Building

Previously, companies relied heavily on mass media to create brand awareness and reach a broad audience. However, with the advancement of technology and data analytics, businesses have shifted their focus toward targeting consumers based on their demographics and needs. While this approach proved successful initially, it raised concerns about privacy and cost-effectiveness. Companies are prioritizing engagement with consumers within their digital communities to build emotional connections and loyalty. The community flywheel model encapsulates this approach, emphasizing agile testing, learning, and minimal upfront investment in marketing technology.

The Community Flywheel Explained

The community flywheel model is predicated on five key elements:

Know Your Communities: Identify and understand the communities your brand appeals to, focusing on shared interests and values rather than demographics.
Hero Products: Concentrate on a few distinctive products that encapsulate your brand's value, making it easier for consumers to recognize and engage with your brand online.
Talkable Brand Story: Craft and communicate a compelling brand narrative that resonates with your target community, encouraging them to share and advocate for your brand.
Fuel the Conversation: Engage your community with continuous, exciting content and recognize the contributions of brand advocates to keep the conversation going.
Effortless Transactions: Ensure a seamless purchasing experience, both online and offline, to reduce friction and encourage sales.

Implementing the Community Flywheel

In order to create a successful community that generates user content, mentions the brand, and shares brand-related posts, companies need to prioritize community building at the heart of their strategy. Simply creating a social media presence is not enough. By implementing the community flywheel, businesses can achieve higher engagement levels, increased conversion rates, and viral brand-related content.

Test-and-Learn using Marketing Technologies

To drive the community flywheel, agile methodologies and effective utilization of marketing technology are absolutely essential. Agile teams enable brands to test and learn quickly, allowing for effective connection with their communities without making significant upfront investments. A robust marketing technology stack supports scaling efforts over time, paving the way for efficient marketing and engagement with targeted communities.

Measuring Success and Building on It

Tracking progress across the five elements of the community flywheel and adjusting profit-and-loss expectations are critical to measuring success. Brands must reduce their marketing spend and increase demand for their products to see significant increases in gross profit and EBITDA margins. It is imperative to focus on key performance indicators related to customer engagement and user-generated content, as they will play a crucial role in determining the brand's success.

Conclusion

The emergence of digital and social channels has revolutionized the way brands are built. Small businesses that embrace the community flywheel model can attain an unparalleled presence, develop powerful emotional connections with their communities, and establish the unwavering loyalty necessary to thrive in the digital era.

By prioritizing community engagement, offering hero products, crafting compelling brand stories, and delivering seamless transactions, small businesses can harness the immense power of their communities to drive growth and success.