The Importance of an Online Brand Community in Social Commerce for Retailers

An online brand community (OBC) is an important platform for firms to differentiate and increase their competitive advantage. It allows companies to strengthen relationships with customers and involve them in brand co-creation (Tsai, 2012). Calkins et al describes community, alongside content and commerce, as “the 3Cs” that are fundamental to online retailing (Calkins et al, 2000). In recent years, OBCs have acquired considerable importance within brands’ communication strategies and managing relationships with their customers (Lopez, 2017).

Watch here: Why Online Communities are Better than Social Media Sites

Features of Effective Online Communities 

User Profiles

The consumer’s experience with an online brand community is the result of interactions with both other members and the community itself (Nambisan, 2011). Users may feel a lot more connected, if they have an online profile that they feel best represents them, to recognise and relate to other members online. For example, beauty retailer Sephora requires users to fill out profile where members indicate skin, hair and eye colour, that allows them to match other “beauty matches” to seek more relevant advice for beauty products. For other retailers, user information can be critical to gaining a further understanding of the user profile.

Photo Galleries to host User Generated Content

UGC brings an audience together and creates a true sense of a community. Effective examples include the UGC content that Debenhams rolled out across all brand pages, where customers can upload photos of their new looks to be featured and connect with the online community. Customers browsing the content can buy the product from the Instagram post. An effective online community could house this UGC in one place, to make it easy for other users to see all content uploaded.

Product Reviews and Discussion Forums

Whilst shopping online, users can be unwilling to make a transaction due to uncertainty in their online environment and decision making. McWilliam emphasises that trust, by definition, mitigates uncertainty and is the central construct that sustains both interpersonal and economic relationships (McWilliam, 2000). It is the contribution that eWOM makes to the building and maintenance of trust in an online environment that makes eWOM so important. Whilst product reviews are critical on product display pages, users should be able to explore and discuss this further in the retailers online community space. Product reviews on product pages do not allow the user to ask specific questions but live chats and discussion forums let the consumers take free reign, and develop meaningful relationships.

Users who contribute product reviews or post messages on online communities visit sites more than nine times as often as non‐users do, remain twice as loyal and buy almost twice as often”

(Brown, 2002).

Why are OBCs Important for the Company?

Online brand communities provide increasing returns to the firms at several levels:

1.) They Acquire Rich Data

Online communities acquire member-generated data on products offered by the firm as well as opinions and comparisons on competitors that sell similar products (Lopez, 2017). This is valuable for the business as they will receive first hand insight into what their customers are thinking and valuable consumer feedback. If the users are required to sign up to “become a member”, the company will retain valuable personal information which can give them more insight into their demographic, and can further use this information to personalise and segment their marketing practise.

2.) Community Relationships will, in turn, develop Loyalty 

If done right, OBSs will build genuine relationships between customers who can recognise and relate to each other based on shared interests. Frequent returns to the site to visit the community will develop brand loyalty and a deeper sense of loyalty to the community.

3.) Generates Sales and a Return on Investment

An online community will generate generous ROI for the company from brand loyalty, customer satisfaction and trust in the brand, from their “fellow consumers”. An analysis by McKinsey revealed that community members account for one‐third of all users, but generate two‐thirds of all online sales (Brown, 2002).

How can their effectiveness be measured?

Research by Preece outlines the attributes of online communities that can be measured for marketing managers to gauge and monitor how successful their community initiatives are (Preece, 2002).

Purpose: This refers to the involvement levels of members within the community. In turn, this indicates how well the online community services its purpose for the consumer. Indicators to the depth of interaction include;

  • Number of total posts
  • Number of posts, per user
  • Total time spent per user on the community, and time per social function
  • Bounce Rate
  • Conversion Rates – Orders directed from community to a purchase
  • Reciprocity – Number and quality of comments and responding posts to other users.

People: This determinant refers to the number of members within the online community. This can be easily tracked and measures, and the company can set themselves goals and targets. New members can be acquired by promotion and an online customer journey that directs them to the community landing page. The “people” aspect, also refers to the various types of members based on their level of participation as well as personal characteristics, that can be closely measured to gain a better understanding of the companies customer profile.

Policy: It is also important to implement policies to deter harmful behaviour, and generate trust among members. In order to boost trust, brands sponsoring a community need to properly manage the community’s mission and its policies, as well as the effects of relations between its members (Lopez, 2017).

Risks

Cost – The cost will largely be in the initial implementation and promotion of the online community. If the business has the scale and scope of e-commerce operations, this should not be a hugely costly task, and the subsequent costs will be small.

Functionality – Not all firms will have the scale and resource to be able to implement this. They must have the right user experience to support it. A clunky user experience, could actually have a negative effect. Research into the importance of seamless user experiences by Retail week indicates that, “25% of disruptive retailers offer seamless shopping experiences across all channels, compared with only 13% of non-disruptors” (Retail Week, 2018).

Commercial Risk – An OBC’s purpose satisfies customers on their search for information, social relationships and creating a personal identity linked to the brand (Lopez, 2017). The inclusion of commercial actions could be negatively perceived by customers. Research by Lopez indicates that brand community experience will be less positive if “consumers see the company is using the community for commercial purposes, rather than as a forum for conversations and relationships” (Lopez, 2017).

References

Brown, J., Broderick, A.J. and Lee, N. (2007), “Word‐of‐mouth communication within online communities”, Journal of Interactive Marketing, Vol. 21 No. 3, pp. 2‐20

Calkins, J.D., Farello, M.J. and Shi, C.S. (2000), “From retailing to e‐tailing”, The McKinsey Quarterly, No. 1, available at: www.mckinseyquarterly.com.

Martinez-Lopez, F., Anaya-Sanchez, R., Molinillo, S., Aguilar-Illescas, R. & Esteban-Millat, I. 2017, “Consumer engagement in an online brand community”, ELECTRONIC COMMERCE RESEARCH AND APPLICATIONS, vol. 23, pp. 24-37.

McWilliam, G. (2000), “Building stronger brands through online communities”, Sloan Management Review, Spring, pp. 43‐54.

Nambisan, P. & Watt, J.H. 2011, “Managing customer experiences in online product communities”, Journal of Business Research, vol. 64, no. 8, pp. 889-895.

Preece, J. (2001), “Sociability and usability in online communities: determining and measuring success”, Behaviour & Information Technology, Vol. 20 No. 5, pp. 347‐56.

Retail Week . (2018). How-to guide: Standing out with rich media.Available: https://www.retail-week.com/analysis/how-to-guide-standing-out-with-rich-media/7028655.article. Last accessed 4th April 2018.

Tsai, H., Huang, H. & Chiu, Y. 2012, “Brand community participation in Taiwan: Examining the roles of individual-, group-, and relationship-level antecedents”, Journal of Business Research, vol. 65, no. 5, pp. 676-684.

 

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