Part Two: Chapter Ten Creating Commitment

1. Internet Marketing & e-CommerceWard HansonKirthi KalyanamRequests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENTTHOMSON BUSINESS and ECONOMICS5109 Natorp BoulevardMason, OH 45040Phone: (800) 423-0563

2. Part Two: Chapter TenCreating Commitment “No company should ever take for granted the idea that managing customers for loyalty is the same as managing them for profits.” Reinartz and Kumar, The Mismanagement of Customer Loyalty

3. Online Community and Loyalty • Focused social gathering places • Multi-directional communication • Community value > individual value

4. Online Community and Loyalty • Focused social gathering places • Multi-directional communication • Community value > individual value Results?

5. Online Community and Loyalty • Focused social gathering places • Multi-directional communication • Community value > individual value Results? • Online community activities can build good will and lead to word-of-mouth support, donations or purchases

6. Online Community and Loyalty At the Stanford Alumni Association, alumni who receive e-newsletter @Stanford lead annual giving.

7. Online Community: Types and Functions

8. Challenges to Creating Community • Gaining attention and building traffic • Losing member focus as community grows or changes • If members disengage, content creation lags and retention drops • Firms accustomed to controlling the message reluctant to let go

9. Signs of a Healthy Online Community • Content Attractiveness: More content = more value = more members

10. Signs of a Healthy Online Community • Content Attractiveness: More content = more value = more members • Member Profiles: Opportunity for individual outreach by sponsors

11. Signs of a Healthy Online Community • Content Attractiveness: More content = more value = more members • Member Profiles: Opportunity for individual outreach by sponsors • Member Loyalty: Commitment fosters participation, creates audience

12. Signs of a Healthy Online Community • Content Attractiveness: More content = more value = more members • Member Profiles: Opportunity for individual outreach by sponsors • Member Loyalty: Commitment fosters participation, creates audience • Transaction Offerings: Selling linked to interest area attracts other vendors

13. Community Tools • Communication Rings • Email most important community tool • Instant Messaging and SMS • Growth of simulations, online gaming tools

14. Community Tools • Communication Rings • Email most important community tool • Instant Messaging and SMS • Growth of simulations, online gaming tools • Content Trees • Discussion groups, web sites bring organization and focus to handle flow of information

15. True Community? • Optimistic view – Online communities offer new ways of relating, and give companies new ways to build and retain loyal customers • Pessimistic view – Online tools have stifled true community building and depleted face-to-face interaction

16. True Community? Online time, minutes per day from six-hour time slice SOURCE: Niie, Simpser, Stepanikova and Zheng, ‘Ten Yearks After the Birth of the Internet,’ December 2004

17. Member Produced Content • Less expensive member content results in extensive content areas, often attractive to advertisers • Member content reflects current interests and issue • Quality varies, but often very creative • Access-controlled communities lend credibility to online recommendations

18. Member Produced Content • Other distinguishing features : • Contributions are skewed toward frequent contributors, which can be promoted • Broad participation can expand and enhance nature of online discussions

19. Member Produced Content • Other distinguishing features : • Contributions are skewed toward frequent contributors, which can be promoted • Broad participation can expand and enhance nature of online discussions • Potential problems: • Lack of control can result in off-color, offensive messages • Partial control can create legal exposure

20. Community and Customer Insight • Content attractiveness • Access frequency, content diversity, contributor edits, emailed articles • Member Loyalty • Access frequency, access duration, referrals, church or opt-out rates • Member Profiles • Database completeness, user update frequency, email bounces • Transaction Offerings • Sales revenue, active vendors, customer LTV

21. Community and Customer Insight • Interaction Measures such as email campaigns offer direct measures of community strength

22. Community and Customer Insight • Interaction Measures such as email campaigns offer direct measures of community strength • Netnographymoves traditional social group study of ethnography online • Self-interested helpers • Multiple-motive consumers • Consumer advocates • True altruists

23. Community and Customer Insight Using email and homepages to identify communities of interest SOURCE: Culotta, Bekkerman, McCallum, ‘Extracting Social Networks and Contact Information from Email and the Web,’ American Association of Artificial Intelligence, 2004, p.2

24. Creating Consumer Dialogue • Understanding the customer base • Analyzing customer loyalty, profitability • Loyalty programs build commitment • Extending loyalty with switching costs

25. Creating Consumer Dialogue • Understanding the customer base • Analyzing customer loyalty, profitability • Loyalty programs build commitment • Extending loyalty with switching costs • Building customer dialogue • Email outreach to possible defectors • Follow up with high value customers • Tipping points and trigger moments

26. Creating Consumer Dialogue Categories of Switching Costs SOURCE: Adapted from Burnham, Freis and Mahajan, “Consumer Switching Costs: A Typology, Antecedents, and Consequences,’ Journal of the Academy of Marketing Sciences 31, no. 2 (2003): 109-126

27. Creating Consumer Dialogue Customer state and appropriate contact questions