Latest / Community Marketing with Fexingo: Discord, Slack Groups, and Brand Communities / The 100th Episode on Why Brand Communities Should Pay Dividends Not Loyalty Points
Transcript
- Lucas: So it's episode 100 of this show, and I wanted to do something a little different. Not another 'community replaced X' story, but a question: what if we've been thinking about community incentives all wrong? Luna: Meaning what — that giving people points and badges isn't enough? Lucas: Exactly. Most brand communities run on what I'd call 'engagement scrip' — points, tiers, virtual currency that only has value inside the system. And sure, that works for a while. But there's a company that tried something radically different: paying actual cash dividends to community members. Luna: Wait — dividends? Like stock dividends? Lucas: Like stock dividends. The brand is Gramicci — they're a climbing and outdoor gear company. Not huge, maybe thirty million in annual revenue. But in 2024, they launched a community program where active product testers get a share of the revenue from the products they helped validate. Luna: So instead of 'earn 500 points for a ten percent discount,' it's 'help us design this climbing pant, and if it sells, you get a cut.' That's a fundamentally different incentive. Lucas: Completely different. And it's not a gimmick. Gramicci structured it as a formal co-op dividend. They set aside five percent of the annual revenue from any product line that had community input, and that pool gets distributed to members based on their contribution level — test reports submitted, design feedback given, survey responses. Luna: What counts as 'community input'? Could someone just fill out one survey and expect a check? Lucas: They tiered it. To be eligible for any dividend, you need at least 20 'contribution points' in a year — that's roughly five detailed product tests or about ten shorter feedback forms. The average active member got about $47 last year. But the top contributors — people who tested five or more products — earned between $200 and $400. Luna: That's not nothing. For a hobbyist climber, that probably covers a harness or a pair of shoes. And it's cash, not store credit. Lucas: The cash versus credit distinction is the whole point. Behavioral economics research — there's a great paper by Prelec and Loewenstein from the '90s — shows that people treat store credit as 'funny money.' It doesn't feel like real compensation. Cash does. So Gramicci members treat their testing role like a part-time job, not a gamified hobby. Luna: But doesn't that change the culture? You go from 'we're a community of climbers who love the brand' to 'we're paid contractors.' Isn't there something lost? Lucas: That's the fear, and Gramicci's community manager told me it was the most debated internal question before launch. But what they found is that the dividend actually strengthened the identity. Members started referring to themselves as 'co-owners' in forum posts. There's a thread where someone says 'I'm not just a customer — I'm a shareholder in the pants I helped design.' Luna: That's powerful. But I'm wondering about scale. If you're a brand with a hundred million in revenue, can you afford to give away five percent of product-line revenue to a community? That math gets expensive fast. Lucas: You're right — it's not for every brand. Gramicci works because they have a passionate, niche audience and high gross margins. Outdoor gear margins are typically fifty to sixty percent. So giving away five percent of revenue still leaves plenty of room. For a low-margin business, it's much harder. But I think the principle translates: the dividend doesn't have to be cash. It could be profit-sharing in the form of equity, or even first access to limited runs that can be resold. Luna: That's interesting — first-access rights that have real market value. Like, if you're a top contributor, you get to buy the limited-edition climbing pant a month before the public, and you can resell it on eBay at a premium. That's a dividend too, just not cash. Lucas: Exactly. The key is that the reward has external value. Points only have value inside the walled garden. A dividend — whether cash or a scarce good — has value in the real economy. And that changes how seriously people take their role in the community. Luna: Before we go deeper, I want to mention something. Lucas and I do this show independently — no network funding, no ad revenue. It stays ad-free because a small number of listeners support us directly. If these community conversations have sparked something you've actually applied, or if you just enjoy the deep dives, you can help keep the show going at buy me a coffee dot com slash fexingo. That's buy me a coffee dot com slash fexingo. No pressure ever — just a way for people who find value here to chip in. Lucas: And we really mean no pressure. We're not changing the show either way. But it's nice to know that some listeners find it worth supporting. Anyway — back to the dividend model. I want to talk about the minimum viable community size for this to work. Luna: Yeah, because Gramicci's community is only about 1,200 active members, right? Lucas: 1,200 who qualified for a dividend last year, out of a total community of around 4,000. And that's plenty. The overhead is minimal — they use a simple spreadsheet and a custom form on their website. No expensive platform. Luna: So you don't need millions of members. You need a few hundred truly engaged people who are willing to contribute real work. Lucas: Right. And the dividend model self-selects for those people. Because if you're only giving cash to contributors, you naturally attract people who want to contribute. The lurkers don't cost you anything — they just enjoy the community without dividends. But the people doing the valuable work are compensated. Luna: That solves the classic community problem: how do you reward the 1% who do all the work without alienating the 99% who just watch? You don't reward the watchers, but you don't punish them either. Lucas: Exactly. Most loyalty programs try to make everyone feel special, which means the high-value contributors get the same badge as someone who bought one pair of socks. The dividend model is brutally meritocratic. And Gramicci found that the lurkers actually respected it — they saw the top contributors as aspirational, not entitled. Luna: There's a flip side though. What about legal complexity? Paying cash to community members — that's not a gift card program. That's compensation. Taxes, contracts, potential employment classification issues. Lucas: It's the biggest barrier. Gramicci worked with an employment lawyer to structure it as a 'prize and contest' model — members receive a 1099-MISC if they earn over $600 in a year. Below that, it's considered a casual prize. They cap individual payouts at $500 to stay clear of employee classification. It's not trivial, but it's doable. Luna: So for a small brand, the legal costs might be a few thousand dollars upfront. But for a larger brand with more exposure, the risk is higher. I could see a big company being scared off. Lucas: That's probably true. But there's another path: instead of cash, offer equity. A few startups have experimented with giving community members actual stock options. The messaging app Telegram did something similar — they offered a portion of their pre ipo allocation to power users. That's a dividend, just in a different form. Luna: But equity is even more complex legally. And it only works if the company has a path to liquidity. Lucas: Right. So maybe the most practical version for most brands is the 'scarce access' model I mentioned earlier. Give your top contributors the right to buy limited products early, which they can resell. That creates a real-world dividend without cash changing hands. Luna: I like that. It's a clever way to create external value without legal headaches. And it aligns incentives — the most engaged members get access to products they presumably want anyway. Lucas: To wrap up, I think the lesson from Gramicci and from episode 100 is this: the best incentive for a community isn't a badge or a discount. It's a stake in the outcome. When members feel like co-owners, they act like co-owners. And that's the difference between a community that's a cost center and one that's a profit driver. Luna: So maybe the question every brand should ask isn't 'how do we get more engagement?' but 'how do we make engagement worth something in the real world?' Lucas: Exactly. That's the reframe. Thanks for a hundred episodes, Luna. Luna: Cheers to that. Here's to a hundred more.