On-line Brand Building through Interactive Communities - CiteSeerX

Journal of E-Business, Vol. 1, Issue 2, December 2001

INCREASING BRAND EQUITY WITH INTERACTIVE ON-LINE COMMUNITIES Marc Resnick Florida International University ABSTRACT

Creating value in e-commerce has evolved beyond price competition. The long-term value that consumers receive from on-line communities can overcome the risk that they will be seduced by low priced offers from the competition. Community can lead to enhanced brand image, customer loyalty, and provides an unobtrusive touch point for learning more about key customers. But for communities to be successful, they must be designed well. Processes such as site navigation, registration, customer representation, support tools, and many others need to be designed according to usability principles. Sociability policies regarding privacy, free speech, copyright ownership, membership, and moderation must be considered very carefully. When implemented effectively, on-line communities can provide significant competitive advantage and engender long term customer loyalty. INTRODUCTION

Most successful on-line brands have used a combination of Internet and traditional channels to build brand equity and customer loyalty. Brand equity refers to the intrinsic value of the brand outside of its physical assets. It is created through a combination of strategic awareness, consumer perception, image distinction, and image consistency (Gschwandtner, 2001). Strategic awareness refers to the ability of the company to identify the real needs of the customer and to develop a brand image that addresses these needs. Consumer perception is the degree to which the consumer perceives and accepts the image. The mapping between these two is not direct. It is possible for an appropriate image to be misperceived by consumers. Image distinction refers to the parts of the message that stand out to the consumer. This is related both to the consumer perception and the images presented by other organizations in the industry. An industry cluttered by multiple organizations presenting the same image can obscure the brand. And consistency is critical. If an organization presents different messages to consumers, the brand becomes diluted and confused. When an organization wants to create multiple images for different product lines, maintaining distinct brands is essential. Once brand image has attracted the customer, maintaining his or her loyalty is critical. Customer loyalty is a simple concept to express but a hard reality to achieve. However, the common myth about e-commerce that the competition is only one click away is not true when a valued relationship has been developed with the customer. In this case, the intrinsic value of the brand expands the relationship beyond price and functionality. Unless the competition can duplicate this relationship, customers are less likely to try other brands. But relationships take time to develop. It is therefore competitively advantageous for an organization to maximize the time customers spend interacting with it and thus reduce the chance that a customer will interact with competing organizations and begin to develop other relationships. Investment in non-revenue producing services that increase interaction can lead to greater customer loyalty and thus reach a positive return on the investment over time.

Copyrights: Journal of E-Business (International Academy of E-Business). All rights reserved.

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Journal of E-Business, Vol. 1, Issue 2, December 2001

WHAT IS A COMMUNITY

One powerful strategy to develop both brand equity and customer loyalty is to build a community centered around the customers, and led by them, but subtly branded nevertheless. This can be done in both the off-line and on-line channels and in fact the most effective strategies combine aspects of both. A community is essentially an opportunity for customers to interact with each other to achieve their needs. Communities are traditionally operated in public spaces, but companies have begun to realize the value of sponsoring communities internally and are increasingly doing so. This is particularly true for Internet focused companies that have few other opportunities to observe customers outside of the transaction process. For brands that are primarily focused on the on-line channel, there are several strategies that can be used to build an effective on-line community. On-line communities can consist of bulletin boards, chat rooms, interactive gaming facilities, work areas in which customers can achieve real goals beyond the purchase process, contests, and/or personal web services. The important decision when creating a community is to match its focus with the needs of its customer base. There are two major company objectives for the community, to build brand image and to maximize contact with customers. Building brand image requires that the community enable customers to satisfy real needs such as information gathering, communication, and entertainment. Though these are not directly revenue generating, they bring customers to the site. The community must also be designed as an environment in which brand image is enhanced as a result of customers’ participation. When customers experience the benefits of these services, they attribute the value they receive to the brand associated with the community site. On-line communities can help companies associate their brand with images of expertise, enjoyment, empathy, and other strong emotions depending on the types of community services provided and the usability and sociability designed into the community. Customers are more likely to feel personally associated with the company, rely on the company for valuable information or services beyond the purchase process, and value their interactions with the company. The development of brand image consistency is supported when the customers use the community on a frequent and ongoing basis. Maximizing customer contact is advantageous because it allows the company to learn more about the customers’ needs and to predict industry-specific cultural shifts that may suggest needed changes to product design. Communities also provide non-intrusive touch points through which information about customer demographics, preferences, and lifestyles can be directly observed. Branding the community keeps the brand in the mind of the customer and reduces the time that he or she could be interacting with competitors. This is particularly important for companies that otherwise do not have frequent customer interactions. A retail realtor, who may only sell a property to a particular customer once in a very long while, can develop customer loyalty by creating value-added services through a customer community. Such a community can provide realty-related services such as assistance in setting up utility accounts, reminder services for periodic maintenance, and other recurring needs. Even when these services are offered for free, the value gained in mind share can be worth the investment and ongoing maintenance expense.

Copyrights: Journal of E-Business (International Academy of E-Business). All rights reserved.

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Journal of E-Business, Vol. 1, Issue 2, December 2001

CUSTOMER NEEDS

There are many customer needs that can be satisfied through community sites, including information, communication, entertainment, productivity, and feedback. INFORMATION

Information can be provided through functionality such as product-centered bulletin boards and chat rooms. Independent decision support systems, expert reviews and other impartial information can also be provided. Customers are given the space and the freedom to share information about their experiences with the company’s products and services. This can help them decide which products to purchase, how to use the products they currently own, how to service products, and so forth. Consumers value this information greatly and appreciate the opportunities provided. Regardless of product and service quality, there will be some negative opinions shared within the community. However, this can be an advantage for several reasons. When customers see a small amount of negative information, they know they can trust the community because it is apparently not controlled and filtered by the company. Also, this can be a rich source of information for areas in which the company needs to improve. COMMUNICATION

A second service that can be provided is communication. Support groups, fan clubs, and similar communication can be highly valued by customers in areas such as gaming, medicine and health, media, sports, and many others. This connection among customers is particularly valued in these areas and will be supported somewhere on the Internet. Maintaining this community in-house allows it to be branded. Jakala and Mikkola (2001) report that community sites are very effective at supporting the communication needs of customers. They also provide content to mine for additional product and service ideas. A danger of allowing unfiltered customer contributions to be posted on a company’s web site is the possibility of harmful information being posted. Bad information can be either innocently incorrect information, posting of scams, or predatory behavior. Monitoring is critical to identify when harmful information is posted. ENTERTAINMENT

Entertainment is a need that can be provided through many channels, such as games for children- and sports-oriented sites, short movies for media companies (and recently consumer products companies with strong brands, such as BMW), and contests for general consumer product companies. Most brands can gain equity from an association with enjoyment. PRODUCTIVITY

Assisting customers with real productivity enhancing services can be a strong driver of brand equity. Home improvement sites can support project areas where customers can develop and store design ideas in private web areas. Business to business technology companies are currently achieving this goal while also linking customers’ designs with catalog and inventory databases to assist in the shopping process. While no purchase is necessary, this facilitation enhances the likelihood that the purchase will be made at the site. Customized tools can be provided to assist customers in developing better designs. Copyrights: Journal of E-Business (International Academy of E-Business). All rights reserved.

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Journal of E-Business, Vol. 1, Issue 2, December 2001

FEEDBACK

Many consumers appreciate the opportunity to provide feedback to the company about their likes and dislikes about products and their wishes for future design changes. One way to create this in an online community is to establish volunteer consumer panels. Customers are asked for their opinions and perceptions of existing products and services, new product ideas, and even marketing campaigns. Consumer panels can be implemented as simple questionnaires, detailed interviews, or on-line focus groups. In addition to being great sources of information for product development, consumers are provided with an opportunity to vent frustrations, support features they like, and feel that their opinions are valued. DESIGN OF COMMUNITY SITES

The design of any community functionality must consider two very important issues, usability and sociability. USABILITY.

Usability refers to the degree to which the site can be used efficiently and effectively by the customer. The primary design issues related to usability include: navigation, feedback, registration process, representations of participants, content format, and support tools (Preece, 2000). Navigation: Ease of navigation is clearly one of the most important design issues. Research has shown that frustration with unclear navigation leads to immediate and substantial dissatisfaction. Feedback: Providing feedback for a variety of activities is critical. Navigation feedback should be used to inform users of where they are within the community space. User actions such as changes to preferences, registration information, content submissions and other activities should also result in immediate and clear feedback. Registration process: The path to enter and traverse the registration process must be made clear. While registering, users should be informed of the privacy policy and other policies that may affect their decision to join. Representations of participants: For communities that allow users to communicate with each other, how the customer is represented is critical to the value that they receive. Usernames, avatars and other methods vary tremendously in the technology and bandwidth required as well as the domains in which they tend to be most successful. Content format: There are many ways to present community content. Information communities can include chat rooms, bulletin boards, FAQs, and many other formats. For each, there are design guidelines that can maximize its usability. Support tools: Support tools are critical for the success of a community. Basic customer service functions such as FAQs and live chat are very common. Automated functions can also be included.

Copyrights: Journal of E-Business (International Academy of E-Business). All rights reserved.

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Journal of E-Business, Vol. 1, Issue 2, December 2001 SOCIABILITY

Sociability refers to the policies that govern who can join the community and how members of the community interact (Preece, 2000). The customer needs that are addressed by the community define much of the design. Who will join the community and how their needs are addressed are directly linked to this decision. Policies on membership, moderation, company participation, privacy, and intellectual property must be carefully considered and posted clearly on the site. Membership: Membership policies are necessary at the creation of any community. Many communities are open to anyone wishing to join. Others are limited to customers who have purchased products on-line or even to those reaching a particular sales threshold. Limiting membership in the community creates artificial value by creating a sense of community identity. This can be achieved without constraining total membership by creating special subgroups within the community with restrictive membership policies. Restrictions can be based on company-based criteria such as purchase volume (such as frequent shopper clubs) or extrinsic criteria defined by the customers themselves (such as fan clubs or support groups). Moderation: The company must determine how the community will be monitored and protected. Moderation policies are critical to define the community and for legal protection. In unmoderated communities, all contributions are allowed regardless of content. This must be clearly stated along with a warning that incorrect or even hazardous material may be present. There are legal challenges and dangers to this policy, but is appropriate in some domains, such as stock trading chat rooms. If the company wants to maintain control of site content and practice, there must be a moderator assigned to manage all interactions. The moderator is responsible for evaluating all content and removing anything that is perceived as hazardous or fraudulent. However, this cannot lead to the removal of negative opinions about the company or its products because this would significantly reduce the credibility of the site and it would cease to be a valid community. Company participation: Moderation involves monitoring and filtering the content provided by participants. In some cases, the company provides experts to contribute information of its own. These experts can post content such as articles and product ratings or they can respond to specific participant questions and requests. There are several challenges for these experts. In order to maintain the community feeling, they must act as supporters of the community, responding to the needs of participants. If participants perceive that the experts own or lead the discussion, the intrinsic value of the community is reduced. On the other hand, experts can be used to seed conversation to keep it active and to guide it in directions of interest to the company, provided this is done subtly. A credentials policy should be included for information sharing communities. When a participant is providing an opinion as an expert, there must be a validation of this expertise so other participants can judge the validity of the contribution. Privacy: One of the main benefits of company sponsored community is the opportunity to collect data about key customers and their opinions about products and services. However, it is critical that a clearly stated privacy policy is posted in an obvious location. If it is later revealed that the company is collecting data that violates its privacy policy, the public relations cost would be considerable. The privacy policy should enumerate which interactions between customers will be monitored, what data will be collected, and how it will be used. Copyrights: Journal of E-Business (International Academy of E-Business). All rights reserved.

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Journal of E-Business, Vol. 1, Issue 2, December 2001

Intellectual property: Communities where participants accomplish work need to have a policy regarding copyright/patent ownership. In general, participants should have all ownership of intellectual property created or posted to the community site. However, companies can reserve the right to use postings as quotes or testimonials in marketing materials. Information sharing communities must have policies regarding free speech. Restriction of free speech could be legally challenged, but protecting the community is critical. A clearly posted speech policy can be used to restrict access to any participants who violate the community rules. CONCLUSION

On-line communities can be created easily, but designing them to effectively build brand equity and customer loyalty requires a thoroughly developed strategy. This paper has provided a basic overview of the design parameters that must be considered when developing an on-line community. Usability design parameters such as navigation, feedback, and process control are critical to facilitate customers’ use of the community. Sociability issues such as registration policies, codes of practice, free speech, and company monitoring are necessary to facilitate customers feeling comfortable within the community and maximizing the achieved brand equity. But building an effective community is a challenging task and can require significant initial investment in time to develop the design and sociability policies as well as in technology to support the community’s usability. But the potential rewards are equally significant. Hunter (2000) suggests that when building community is part of a company’s mission, it can lead to closer relationships with customers. Other companies can match price and functionality, but a relationship takes time to develop so once you have one, the customer will be more loyal. REFERENCES

Gschwandtner G. 2001. How Power Brands Sell More. Selling Power. April, 2000. p68-73. Hunter V. 2000. Creating B-to-B Community Spirit. 1to1. 11/2000. p42. Jakala M. and Mikkola L. 2001. Technology makes you feel better? Attempts to mediate social support through technology in health care. In Usability Evaluation and Interface Design Volume 1. M.J. Smith, G. Salvendy, D. Harris and R.J. Koubek (eds). Lawrence Erlbaum & Associates: Mahwah, NJ. Preece J. 2000. Online Communities. John Wiley & Sons: New York.

About the Author: Mark Resnick, Professor of Industrial and System Engineering. Florida International University. Email: [email protected]

Copyrights: Journal of E-Business (International Academy of E-Business). All rights reserved.

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