Does community participation increase sales or loyalty?

August 27th, 2010 francois Posted in Interesting Links, buying behaviour, communities | 27 Comments »

communitybikesm What do you think? Research based on eBay support communities that was published in the Harvard Business Review a few years back seemed to indicate that it did.

Some of those same researchers, including Utpal Dholakia who helped us with the writing of our book, The Hyper-Social organization, went back and re-examined the eBay support communities – this time making sure that they corrected the results to account for self-selection bias. The results – community participation could actually have a negative impact on buying and selling. The recent study was published in an article titled “Impact of Customer Community Participation on Customer Behavior,” in the Journal Of Marketing Science, and can be accessed online here. What they found is that community participation has mixed effects on customers’ likelihoods of participating in buying and selling behaviors. In fact, they found that community participation had a negative impact on the number of listings and amount spent, suggesting that people who participated in the communities were educating themselves to be more efficient.

That does not mean that you should do away with online communities! Even the authors of the paper say so themselves.

There is also other research that looks at the impact of peer buying on buying behavior in communities. What this study found is that people with high status within the community would buy less than average – suggesting that they have nothing to prove by buying anymore. Those with low status were not very well connected to the community and peer buying did not influence them much at all. The middle tier – those with medium status – were very much influenced by peer buying and made up amply with their buying for the other two groups.

So while education may lead to short term efficiencies and less revenue from the buyers and sellers in eBay communities, they could also lead to increased customer satisfaction and higher lifetime customer value – which was outside of the scope of this research project. It could also lead to more customer acquisition through word-of-mouth, another metric that felt outside the scope of this research.

What do you think?

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Thierry de Baillon Says:
August 27th, 2010 at 11:28 am

Pretty interesting results… which in fact trigger for me another question.
Most commercial website are optimized for visitors to buy more, accompanying their journey through the site up to the shopping act (or bidding act, in eBay’s case). Does community participation DIRECTLY lead to less sales, or is it only a side-effect of a loss of efficiency of traditional digital techniques?
What I would definitely like to know is if the fact of getting involved in communities lead to some kind of “impermeabilty” to push marketing… Any clues?

Anonymous Says:
August 27th, 2010 at 11:35 am

Twitter Trackbacks…

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francois Says:
August 27th, 2010 at 11:45 am

Hi Thierry — the study showed that there was a direct impact between community participation and reduced revenue. It suggests that people educate themselves and become better at buying and selling. It does not show a relationship between community participation and push marketing impermeability – but based on theoretical research they do say that company-sponsored communities, where peers help one another, is a way for companies to engage with customers who no longer trust the information coming from those companies.

francois Says:
August 27th, 2010 at 11:46 am

BTW – there is a link to the full study in the body of the blog post.

The Camel Says:
August 27th, 2010 at 12:02 pm

Thank you. That was an informative read. I think your conclusion is a little ambiguous. The study seems to have found a “negative” (ie a reduction in) bidding and amount spent, but the revenue wasn’t impacted, hence the suggestion of efficiency.

Having used ebay since it opened and quite heavily until recently, I’d have liked to have seen more discussion on the impact of ebay’s rising and quite complex fee system on selling behaviours as well as the (potential) impact on the acquisition of PayPal and changing nature of ebay’s payment system. What I’m getting at is I’d like to see if the reduced listings and lower payments were a result of community management or because of unpopular ebay policies (or both).

Ari Herzog Says:
August 29th, 2010 at 5:56 pm

Skip the web for a moment and look at a book club, for instance. Do members of a book club lead to any incentive to buy books? Or, to discuss (and therefore spread loyalty about) a book?

fgossieaux Says:
August 27th, 2010 at 11:13 am

New blog post: Does community participation increase sales or loyalty? http://bit.ly/d3Ls37

This comment was originally posted on Twitter

SaraJDizzle Says:
August 27th, 2010 at 11:13 am

RT @fgossieaux – New blog post: Does community participation increase sales or loyalty? http://bit.ly/d3Ls37

GrahamHill Says:
August 27th, 2010 at 11:15 am

RT @fgossieaux: New blog post: Does community participation increase sales or loyalty? http://bit.ly/d3Ls37

cdeniaud Says:
August 27th, 2010 at 11:29 am

RT @fgossieaux: Does community participation increase sales or loyalty? http://bit.ly/d3Ls37

tdebaillon Says:
August 27th, 2010 at 11:29 am

RT @fgossieaux: New post: Does community participation increase sales r loyalty? http://bit.ly/d3Ls37 [triggers more questions. I commented]

CreamyAdorable Says:
August 27th, 2010 at 11:29 am