Social Dollars: The Economic Impact of Customer Participation in a Firm-Sponsored Online Customer Community
University of Michigan, Stephen M. Ross School of Business
Grant M. Packard
Laurier School of Business & Economics
Scheller College of Business, Georgia Institute of Technology
Many firms operate customer communities online. This is motivated by the belief that customers who join the community become more engaged with the firm and/or its products, and as a result, increase their economic activity with the firm. We describe this potential economic benefit as “social dollars.” This paper contributes evidence for the existence and source of social dollars using data from a multi-channel entertainment products retailer that launched a customer community online. We find a double-digit increase in customer expenditures attributable to customers joining the firm's community. While self-selection is a concern with field data, we are able to rule out multiple alternative explanations. Social dollars persisted over the time period observed and arose in both online and offline channels. Participation behaviors conceptually linked to customer communities moderate the social dollar. Specifically, posters (vs. lurkers) of community content and those with more (vs. fewer) social ties in the community generated more (fewer) social dollars. Several managerial implications for firms considering investments in online customer communities are discussed.
Number of Pages in PDF File: 50
Keywords: Online Customer Communities, Online Customer Behavior, Retailing, Field Data, Social Ties
JEL Classification: M31, M3working papers series
Date posted: January 13, 2012 ; Last revised: August 20, 2014
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