Internet Marketing and e-Commerce, Instructor`s Resource Manual

Internet Marketing and e-Commerce,
Part II, Chapter 10: Creating Commitment
Chapter Overview:
Fostering customer loyalty and commitment is a central challenge to many businesses,
but one that could be made easier if firms are able to successfully tap the value creating
features on online communities. Chapter 10 explores the basic structures and key
attributes of online communities, assessing both the rewards and challenges in building
successful virtual communities. It also raises potential concerns for firms accustomed to
being in full control of their company message.
The author in Chapter 10 explains how businesses can learn from online communities,
through web log analyses, database marketing methods and new research areas such as
netnography, which has moved the traditional ethnography studies into the digital world.
Chapter 10 also extends the features of online community to the broader challenge of
building customer commitment, through relationship marketing tools such as loyalty
programs, built-in switching costs and electronic consumer dialogue.
Learning Objectives:
At the end of the tenth chapter, students should:
Understand the value creating features of online communities.
Recognize the challenges to building and maintaining high-functioning online
Learn the importance – and associated problems – of member-generated content
in a successful online community.
Identify how marketers can learn from online communities by employing web
analysis and database marketing tools, as well as emerging online social research
Extend the lessons of online community building to consumer commitment efforts
such as loyalty programs, switching costs and dialogue marketing.
Chapter Outline:
Building a Sense of Community Online (Pages 324 to 331)
 An alumni association creates community, and maybe future donors
 Online communities foster loyalty and value, but can be difficult to build
 Struggles to gain attention and drive traffic
 Members lose focus as online communities change or grow
 Content creation, user retention breaks down if members disengage
 Firms accustomed to controlling the message become uneasy
 Understanding different types of online communities
 Portal-based: Marked by free hosting, multiple categorization tools
 Affinity-based: Depend on closed set of rules defining community
 Purpose-built: Structured around specific tasks, most common to B2B
 Health of online communities dependent on interplay of four key areas:
 Content attractiveness: Depth and relevance of available content
 Member profiles: Opportunity for outreach, added value
 Member loyalty: Satisfaction can help grow audience
 Transaction offerings: Selling interest-area items brings in more
II Content is King: Communication and Content Tools (Pages 331 to 341)
 Communication rings emphasize social and relational flow of information
 Email dominates as most important online community tool
 Instant messaging and SMS bring stronger ties, greater expectation of
immediate interaction
 Online gaming and simulation technologies as indicator of next wave
 Content trees bring organization and focus to community conversations
 Debate persists over whether online tools truly build connections, social
 The optimistic view says they have created new ways of relating, offer
smart companies new ways to create and retain loyal customers
 The pessimistic view says online tools have stifled true community
 Member produced content is crucial to a healthy online community
 Content generated by members is generally less expensive, current,
creative and credible
 Member-generated contributions often skewed to heaviest
contributors, but sites can also promote important or prominent content
 Member participation in online communities can expand and enhance
the nature of online discussions, often aided by anonymity of the
 Member-generated content is not without risk for site sponsors
Lack of control can result in off-topic, offensive messages,
repetition, spam and other problems
Authentication deters some problems with real-time postings
Legal issues still can persist, and for sponsors, partial control or
editing can create more legal exposure than no editing at all
III Community Insights into Loyal and Profitable Customers (Pages 341 to 345)
 Content attractiveness can be measured with standard web logs, tracking of
emailed articles or diversity of topic and member usage
 Member loyalty can be judged through log analysis, usage and duration
 Member profiles allow use of database marketing methods
 Transaction offerings measure success of many online commerce activities
 Interaction measures such as email campaigns offer direct measures of
community strength
 Netnography moves traditional social group study of ethnography online and
helps identify motives of online community members
 Self-interested helpers
 Multiple-motive consumers
 Consumer advocates
 True altruists
IV Customer Dialogue and Relationship Marketing (Pages 345 to 353)
 Using online community tools to analyze a firm’s consumer base
 Analyzing customer loyalty and customer profitability
 Building commitment through loyalty programs
 Extending customer loyalty through switching costs
 In dialogue marketing, using online systems to create relationship aware,
interactive and closed-loop customer relations
 Email outreach to customers at risk of defecting
 Following up with high value customers, knowing when to let go
 Recognizing trigger moments: the tipping point for better services or
trial and repeat behaviors