Social Dollars: The Economic Impact of Customer Participation in a Firm-Sponsored Online Customer Community

Puneet Manchanda (), Grant Packard () and Adithya Pattabhiramaiah ()
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Puneet Manchanda: Stephen M. Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109
Grant Packard: Laurier School of Business and Economics, Wilfrid Laurier University, Waterloo, Ontario N2L 3C5, Canada
Adithya Pattabhiramaiah: Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30332

Marketing Science, 2015, vol. 34, issue 3, 367-387

Abstract: Many firms operate customer communities online. This is motivated by the belief that customers who join the community become more engaged with the firm and/or its products, and as a result, increase their economic activity with the firm. We describe this potential economic benefit as “social dollars.” This paper contributes evidence for the existence and source of social dollars using data from a multichannel entertainment products retailer that launched a customer community online. We find a significant increase in customer expenditures attributable to customers joining the firm’s community. While self-selection is a concern with field data, we rule out multiple alternative explanations. Social dollars persist over the time period observed and arose primarily in the online channel. To assess the source of the social dollar, we hypothesize and test whether it is moderated by participation behaviors conceptually linked to common attributes of customer communities. Our results reveal that posters (versus lurkers) of community content and those with more (versus fewer) social ties in the community generated more (fewer) social dollars. We found a null effect for our measure of the informational advantage expected to accrue to products that differentially benefit from content posted by like-minded community members. This overall pattern of results suggests a stronger social than informational source of economic benefits for firm operators of customer communities. Several implications for firms considering investments in and/or managing online customer communities are discussed.

Keywords: online customer communities; online customer behavior; social networks; user-generated content; retailing; field data (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (47)

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