Communities not only exist in neighborhoods. They also exist in the marketplace: from service establishments tocafes and diners, from weightlifting gymsand health clubs to bars. These are called“third places,” and the social interactionthey bring becomes the driver of consumption, says Mark Rosenbaum, a FulbrightScholar and an NIU College of Businessassistant professor of marketing who hasconducted various studies on third placesand the marketplace, which have been published in the Journal of Service Research.The benefit of having a business that caters— or encourages — these communities iscustomer loyalty.
“These are the customers who don’t payattention to coupons given out by competitors,” he says. “These are the customers whoprovide free promotion via word-of-mouth.”
Smart Business spoke with Rosenbaumabout the benefits of creating customer communities and why they are important.
What is an example of a successful customercommunity?
Customer communities often form spontaneously around neighborhood taverns,bookstores, cafes and coffee shops. Theseare simply adorned establishments whererelationships are the drivers of consumption.The ticket price of the product or service isaffordable; for example, a cup of coffee, sothe customer can come every day. The richness comes from the social interaction.
Why should these groups matter to othertypes of businesses?
Businesses have started to realize the loyalty benefits of these customer communitiesfor their own companies and are creatingcorporate-sponsored communities of theirown. Companies such as Jeep, HarleyDavidson, Neiman Marcus and Winnebagohave created exclusive customer communities that encourage social relationships withother customers around product ownership.If you own a Harley, you can belong to theH.O.G. club; Neiman Marcus created a community called ‘In Circle,’ which allows customers to join after they spent a certainamount at the store.
How do customer communities impact customer loyalty?
Satisfaction alone does not generate loyalty. Social relationships add value to anexchange and social bonds are the ‘stickinessfactor’ that attaches a customer to a specificfirm. By making customer-to-customer interactions easier, it provides a great value atalmost no cost to the organization.
Do online communities provide the samebenefits?
Online communities do offer organizationsbenefits. It not only provides a customer-to-customer place to exchange ideas, but thecompany gets the added benefit of listeningto the conversations and getting free marketresearch ideas. But it is too new to firmly conclude if online exchanges provide the samedegree of loyalty that face-to-face interactions do.
What if the firms don’t understand or developcustomer communities?
The market will create these communities if companies don’t. Untied.com was createdin response to dissatisfaction with UnitedAirlines. One has to wonder whether Unitedwould have been better served to have a blogwith positive and negative experiences on itssite. If communities are going to emerge anyway, you might as well be a part of it and havesome control. That said, business ownersneed to be aware that customer communitiescan sometimes take over and change theaura of a company or establishment. This isparticularly true online when negative comments can take over a forum or blog. In someservice firms, it is possible that a group of regulars can ostracize new customers.
How can customer communities be createdto produce a positive outcome for the firm?
Be proactive when creating your marketingplan; have discussions and plan for customersocial relationships. The ultimate customerloyalty lies in an organization creating, facilitating and encouraging customer-to-customer relationships.
The payoffs outweigh the negatives. Theorganization will have an opportunity tolearn from its customers; the customers gainknowledge and experience about the product/organization from existing customers,which lowers the risk of a potential customer’s purchase decision.
What are ways to successfully incorporatesocial relationships into the marketing plan?
- Have ongoing conversations with customers. Listen to what other groups are saying in the blogosphere and at your place of business and respond.
- Be obsessive with customer care, from service failure through service recovery. Remember, customer care is now the democratization of the customer and is no longer for the privileged few.
- Create and sponsor organizational communities. If you are a service organization think of ways you can get your customers to stop, linger and talk to other customers. People like to socialize and enjoy being in the company of other people.
MARK ROSENBAUM is a Fulbright Scholar and assistant professor of marketing for the NIU College of Business. Contact Rosenbaumat (815) 753-7931 or firstname.lastname@example.org.