The Effect of Customers' Social Media Participation on Customer Visit Frequency and Profitability: An Empirical Investigation

Rishika Rishika (), Ashish Kumar (), Ramkumar Janakiraman () and Ram Bezawada ()
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Rishika Rishika: Mays Business School, Texas A&M University, College Station, Texas 77843
Ashish Kumar: Department of Marketing, Aalto University School of Business, FI-00076 Aalto, Finland
Ramkumar Janakiraman: Mays Business School, Texas A&M University, College Station, Texas 77843
Ram Bezawada: School of Management, State University of New York, Buffalo, New York 14260

Information Systems Research, 2013, vol. 24, issue 1, 108-127

Abstract: In this study we examine the effect of customers' participation in a firm's social media efforts on the intensity of the relationship between the firm and its customers as captured by customers' visit frequency. We further hypothesize and test for the moderating roles of social media activity and customer characteristics on the link between social media participation and the intensity of customer-firm relationship. Importantly, we also quantify the impact of social media participation on customer profitability. We assemble a novel data set that combines customers' social media participation data with individual customer level transaction data. To account for endogeneity that could arise because of customer self-selection, we utilize the propensity score matching technique in combination with difference in differences analysis. Our results suggest that customer participation in a firm's social media efforts leads to an increase in the frequency of customer visits. We find that this participation effect is greater when there are high levels of activity in the social media site and for customers who exhibit a strong patronage with the firm, buy premium products, and exhibit lower levels of buying focus and deal sensitivity. We find that the above set of results holds for customer profitability as well. We discuss theoretical implications of our results and offer prescriptions for managers on how to engage customers via social media. Our study emphasizes the need for managers to integrate knowledge from customers' transactional relationship with their social media participation to better serve customers and create sustainable business value.

Keywords: social media marketing; social media participation; customer-firm relationship; shopping visit frequency; customer profitability; propensity score matching; quasi-experiment; difference-in-differences (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (78)

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