Internet Marketing Online Community

Topics FTM Online Community goes online Fundamentals of online community Launching online communities

Family Tree Maker Online FTM Online: an online genealogy center One of the first to create and leverage community –Provides access to information Databases of names and Web access to government records –Provides opportunities for collaboration Member generated content enables users to search other users’ family trees to find threads of their own history Creates a network of knowledgeable users and engenders a spirit of sharing –Enables FTM Online to tap into commercial opportunities Subscription services to Genealogy Library

Community Goes Online The debate: –Do online communities help us rebuild connections between friends and family? –Or, does participating in online community lead to increased alienation?

Community Goes Online The arguments for: –New technologies allow new forms of communication between close friends, acquaintances, and strangers –Online communities provide a focus for social interaction –New technologies improve communication between co-workers, customers and suppliers –Online communities enable consumer-to-consumer interaction –Marketers can use community-building technologies to generate customer loyalty, involvement, and repeat sales

Community Goes Online The arguments against: –Private time online comes at the expense of physical interaction with friends and family –Weak ties between strangers replace strong ties between friends and neighbors –Those who spend hours online often test higher on psychological measures of loneliness and depression

Defining Online Community Online communities combine 4 important features –Internet communication tools –Rules that define community membership –Collaborative production of material by members –Repeat use by members Communication is multidirectional –Users provide material –Users consume information Challenges faced by community builders –Building traffic –Maintaining member collaboration –Member retention

Personal and Extended Communities Personal communities –Are small in scale –Members know each other –Communication is direct between individuals A shared Web site Extended communities –Larger in scale and scope –Composed of many smaller areas that allow personal communities to flourish –Rely on a mixture of content and communication tools Web content publishing Centrally-managed discussions

Fundamentals of Online Community Online tools Rules Collaboration Repeat use

Online Tools Communication tools are the heart of online community Two categories of tools, based on the type and scale of communication possible Communication rings send messages directly between users –Everybody in the ring gets the message –Communication rings don’t scale – they break down as the group gets too big Content trees are indirect –They use a central gathering point such as a bulletin board or a Web site to collect and store information –Depend on hierarchies that create manageable discussions –Community members go to topic areas and discussion groups that match their interests

Online Tools Table 10.1 Types of Community Tools

Online Tools A shared list among friends, the simplest form of online community –The rule for membership is friendship –Collaboration is at the heart of shared messages –Message archives become the storehouse of community interaction networks demonstrate the structure of a communication ring Communication Rings:

A Discussion Ring Figure 10.4

Online Tools Best for unstructured, quick communication How it works –Like text-based telephone –An individual has a unique number that can be called Allows impromptu direct chats between users Allows one-to-one and one-to-many communication Uses: –Brainstorming –Sharing thoughts & ideas –Surfing the Web together Communication Rings: Internet Pagers

Online Tools Enables joint creation of community content Many tools are productivity oriented –Shared whiteboards –Enable file sharing Communication Rings: Groupware Communication Rings: Games and Simulations The shared experience of a game or simulation stimulates communication Immediacy turns an online game into a communication ring

Online Tools Content Trees Figure 10.5 Site Structure as a Content Tree Figure 10.5 Mining Company Homepage Content

Rules Strong communities have strong rules –Membership depends on passing through a difficult hurdle that creates shared values and experiences –Interests and opinions are strongly held Weak communities are easy to join –Examples are fan clubs, shopping club members, frequent flyer programs –Weak community ties are a serious problem for online marketers Strong and Weak Membership Rules

Rules Easily attained membership enables a community to grow rapidly, but ties are weak Costly membership breeds stronger ties but creates a wall around community Escalating membership: the practical answer –Attract new members with easy-to-attain membership –Full benefits are only attainable through higher levels of commitment Escalating Membership Rules

Collaboration Low cost: –Member-contributed material is cheap –Results in extensive content areas Current: –Member content reflects current interests –Active members keep their material current and interesting Creative: –While quality varies, thousands of users contribute creative content and unique points of view Credible: –The opinions of community members’ with credentials and expertise are trusted sources of information Member Content Has Desirable Features

Collaboration Heavy users will contribute most of the content –Most members will lurk – read content posted by others Small groups tend to produce more active members However, since not everyone in a group will contribute, large groups may be needed to generate a sufficiently large body of interesting and compelling content Observations About Member Content

Collaboration In 1985, the average American had 3 people with whom he felt comfortable discussion important matters Participation in online communities has changed this –Anonymity can encourage people to share personal concerns with strangers –People don’t have to worry with what their friends might think about their situations Online Tools Expand Discussion Networks

Repeat Use Companies that sponsor online communities on their Web sites –Learn more about the tastes and wants of their members –May receive useful feedback and suggestions from users –Which, in turn, enables better service and product definition This defines a community of users The challenge for marketers is to build increasing levels of commitment among users Figure 10.8

Launching Online Communities Building hybrid communities Mirror existing community benefits Emphasize growth first

Building Hybrid Communities Successful commercial communities merge sponsor and member content This can be risky for 3 reasons –Difficult to balance content quality and member freedom: what if members post junk? –Discussions and information posted online may hurt the reputation and brand of the sponsoring organization –Member content may involve the sponsor in legal problems No control results in off-topic messages, spam, and repetitious postings Too much control results in stifling member content and material that has been “sanitized” by the sponsor “Offensive” or damaging postings must be responded to quickly

Building Hybrid Communities Table 10.3

Mirror Existing Community Benefits Online business communities flourish because they mirror and extend the benefits of physical communities Three types of business-to-business communities stand out –Virtual trade shows –Professional forums –Supply chain networks

Traditional Tradeshows Tradeshows are expensive, yet important Tradeshows are useful for –Identifying prospects –Servicing existing customers –Introducing and / or testing new products –Building the firm’s image –Boosting morale –Gathering competitor information –Generating sales

Virtual Tradeshows PlasticsNet: Creating An Online Tradeshow Figure Serves the entire plastics industry Multivendor displays Exhibitors pay for aggregation and access to potential customers Visitors access the site for free

Virtual Tradeshow Benefits Key benefits of virtual or online tradeshows –Broader marketing reach –Increased sales –Access to industry info –Continuous exhibits –Helps smaller vendors drive traffic to their sites Tradeshow Costs are Dominated by Physical Costs

Tradeshow Cost Structure Figure 10.11

Professional Forums Goal is to combine professionals within a specialty Four factors determine whether a particular job can be the basis of an online forum: 1. A history of professional organizations 2. Reliable methods of verifying membership Guarantees quality of contribution Guarantees homogeneity of audience Prevents spamming

Professional Forums 3. Rapidly changing and complicated problems –Need for chat –Need of discussion of controversies and alternative approaches –Lack of alternative easily-located definitive information 4. Local or regional markets –No competitive restraints –Distributed knowledge –Periphery of practitioners

Professional Forums Professional Forum Benefits Figure “What benefits does the community offer?” How do you use the community? Post or read content Complete Transactions Participate in discussion forums

Supply Chain Networks Benefits of supply chain networks Operational efficiency Increase in sales Better prices Goal is operational efficiency, not community

Emphasize Growth First To summarize the concept of increasing returns: “Success breeds success” Increasing returns result when it’s easier to grow the bigger you already are Increasing returns creates –An urgency to grow –A reluctance to impose fees or restrictions –A strong need for alliances or partnerships Successful online communities leverage the effects of four virtuous (positive feedback) cycles in order to grow further

Four Increasing Returns Cycles with Virtual Communities Figure Transaction Offerings Member Loyalty Online Community Increasing Returns   Draw more members to community Promote member- to-member interaction Build member loyalty to community     Generate member- based content Content Attractiveness   Target products and offerings Member Profiles     Draw vendors and user spending to community

Content Attractiveness Attractive content helps reduce member churn and build loyalty This feeds into the loyalty feedback loop At the same time, focused content increases marketing effectiveness and improved member acquisition There is positive WOM & news media coverage Community visitors are more easily converted to active membership Content Builds Discussion and More Content

Content Attractiveness Member- generated content Member churn Content Attractiveness Hours Online Members Marketing effectiveness Member- to-member interaction Figure 10.16

Member Loyalty Member loyalty leads to increased hours spent online and a reduced churn rate Continuity and commitment lead to trust and collaboration The more members are committed to each other, the more connected they are to the community Loyalty builds social capital and leads to healthy chat rooms and discussion threads Loyalty supports customization and personalization Loyalty Builds Member-to-Member Relationships

Member Loyalty Figure Member churn rate Member Loyalty Hours of usage Members in community Customized interaction Contributions to member- generated content Member relationships

The E-Commerce Loop The e-commerce loop provides the commercial foundation for most virtual communities The combined e-commerce offerings from the sponsoring organization and its partners leads to revenues Vendors are valuable to members and help build the membership base A large customer base attracts more vendors Vendors Attract Members Who Attract Vendors

The E-Commerce Loop Vendor- marketing effectiveness Transaction Offerings Attractiveness to vendors Vendor- marketing spending Members in community Member willingness to spend Vendors in community Figure 10.18

Member Profile Loop Information generated by the community is linked to transaction activity, ad effectiveness, and ad rates More accurate information about members leads to more relevant ads with greater impact The member database becomes a key asset of the community Growth Leads to Increasing Understanding of Community Members

Member Profile Loop Advertising click- through Member Profiles Advertising revenue Data- gathering capabilities Targeted advertising Targeted transaction offerings Figure Transaction volume

Community Metrics Each of the Community Loops Suggests Ways of Measuring the Community’s Strength