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Treating customers as online equals boosts business

24 August 2010 Inderscience

Companies hoping to benefit from the emergence of online tools, such as social media, blogs, and wikis, must develop ongoing relationships with their customer and encourage interactions between customers. When customers see that a company is devoting resources, effort and attention to enhancing relationships, they are more likely to become advocates for that company's products or services, new business research finds.

Customers are no longer passive consumers of goods and services, they expect to play a role in the creation, manipulation, and evaluation of digital content. This shift in attitude is epitomised by online photo galleries, such as Flickr and Picasa Web Albums, by the social networking tools such as Facebook and MySpace, and by the advent of blogging, citizen journalism and platforms such as Twitter.

According to Hanna-Kaisa Ellonen and Miia Kosonen of the School of Business, at Lappeenranta University of Technology, in Finland, it is so-called Web 2.0 in particular and, more broadly, social media that have empowered customers to participate and engage in interaction with fellow customers and the companies offering products and services. The shift has led increasingly to customers using various types of discussion forums and  blogs  to  exchange  opinions  and  product  information,  and  information resources, such as Wikis, to  publicly  edit content,  regardless of  the  company's  presence or otherwise.

Companies that are rising to the challenge of social  media  can successfully engage in this conversation, they explain, and there are many examples of organisations from computer companies to online shoe sellers that have done so. Ellonen and Kosonen point out, however, that while there are several isolated examples of companies successfully adopting a social media strategy as part of their marketing and customer services, the concept is still rather novel and little  scientific research in the business arena has been done to reveal how interactions between company and customer function at the social media level.

Writing in the International Journal of Electronic Marketing and Retailing, the researchers explain how they hoped to remedy this situation and to identify and  categorise  different  types  of  social-media-mediated  interactions as well as to explore   how   such interactions   support   customer collaboration to mutual benefit of customer and company. As such, the team conducted a comparative case study by looking at four  communities  from  the  media  industry  operating  with  different social-media applications including wikis, blogs, discussion forums and an online forum for short messages. The areas investigated were a global comic magazine, a dieting community, a local newspaper, and a business daily.

The team found that the type of interactions between customers and the companies involved in each case area are related  to  the  diversity  of  the  different  forms  of customer  collaboration possible.

"The  Dieting  Community  interactions  mainly  represented  the relationship-oriented  mode  and  in  this  case,  customers  collaborated  virtually  in  the idea generation for product improvements, testing, giving peer support, exchanging information about customer values and needs, content production and maintaining the quality of the product," the team explains. "Business  Daily  and  Comic  Magazine  operated  in  both  interaction  modes  and benefited  from  virtual  customer  collaboration  in  relatively  many  ways,  while  local newspaper, which only operated in the instrumental  mode, allowed fewer collaboration opportunities."

The team adds that one lesson  company managers  must learn if they are to improve customer relations and sales through social-media applications is that they must play by rules of social media and treat customers as equals. This is something new that companies need to learn in order to benefit from social media in their customer relationships, the team says.

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