Social Dollars: The Economic Impact of Customer Participation in a Firm-Sponsored Online Customer Community

Forthcoming, Marketing Science

52 Pages Posted: 13 Jan 2012 Last revised: 7 Feb 2015

Puneet Manchanda

University of Michigan, Stephen M. Ross School of Business

Grant M. Packard

Wilfrid Laurier University - Lazaridis School of Business & Economics

Adithya Pattabhiramaiah

Georgia Institute of Technology - Scheller College of Business

Date Written: February 6, 2015

Abstract

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 significant 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 persist over the time period observed and arose primarily in the online channel. To assess the source of the social dollar, we hypothesize and test whether it is moderated by participation behaviors conceptually linked to common attributes of customer communities. Our results reveal that posters (vs. lurkers) of community content and those with more (vs. fewer) social ties in the community generated more (fewer) social dollars. We found a null effect for our measure of the informational advantage expected to accrue to products that differentially benefit from content posted by like-minded community members. This overall pattern of results suggests a stronger social than informational source of economic benefits for firm operators of customer communities. Several implications for firms considering investments in and/or managing online customer communities are discussed.

Keywords: Online Customer Communities, Online Customer Behavior, Social Networks, User-Generated Content, Retailing, Field Data

JEL Classification: M31, M3

Suggested Citation

Manchanda, Puneet and Packard, Grant M. and Pattabhiramaiah, Adithya, Social Dollars: The Economic Impact of Customer Participation in a Firm-Sponsored Online Customer Community (February 6, 2015). Forthcoming, Marketing Science. Available at SSRN: https://ssrn.com/abstract=1984350 or http://dx.doi.org/10.2139/ssrn.1984350

Puneet Manchanda (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-936-2445 (Phone)
734-936-8716 (Fax)

Grant M. Packard

Wilfrid Laurier University - Lazaridis School of Business & Economics ( email )

75 University Ave West
Waterloo, ON
Canada

Adithya Pattabhiramaiah

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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