How to use new world Internet and digital for building loyalty. Customer loyalty is arguably more important for online businesses than brick-and-mortar businesses since competitors can be reached by just one mouse click. In the Web 1.0 world, publish and commerce based sites needed be secure, reliable and available to enable loyalty. In 2004, Web 2.0 brought a world where users can contribute to and be part of every web interaction. The web is now not just an extension of a company’s operation that needs to “function” and Reichheld’s principals of Loyalty around “listening to your Partner, and creating mutual satisfaction” that were applied to traditional marketing now need to be deeply entrenched in digital strategy.

1. CRM & Web 2.0
Joe Watkins
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Table of Contents
Web 2.0 & CRM: how to use new world web for building loyalty.......................................................... 3
Web 2.0 & New World Web ............................................................................................................... 3
Maslow & Hygiene Factors ................................................................................................................. 3
Price sensitivity ................................................................................................................................... 5
Content ............................................................................................................................................... 5
Data, Insights & Customer Targeting .................................................................................................. 6
Conversation ....................................................................................................................................... 8
Impact of Mobile and Emerging Technologies ................................................................................... 9
Concluding thoughts on Loyalty and Future Web ............................................................................ 11
Bibliography ...................................................................................................................................... 12
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Web 2.0 & CRM: how to use new world web for building loyalty.
Customer loyalty is arguably more important for online businesses than brick-and-mortar
businesses since competitors can be reached by just one mouse click. In the Web 1.0 world,
publish and commerce based sites needed be secure, reliable and available to enable
loyalty. In 2004, Web 2.0 brought a world where users can contribute to and be part of
every web interaction. The web is now not just an extension of a company’s operation that
needs to “function” and Reichheld’s principals of Loyalty around “listening to your Partner,
and creating mutual satisfaction” (Prewitt, 2002) that were applied to traditional marketing
now need to be deeply entrenched in digital strategy.
Web 2.0 & New World Web
The move from Web 1.0 to Web 2.0 occurred when websites changed from being static sites
on which users could passively view content created for them, to sites on which users could
generate and publish their own content. Wikipedia states that the “term Web 2.0 is
associated with web applications that facilitate participatory information sharing,
interoperability, user-centred design and collaboration on the World Wide Web.” Web 2.0
enabled us to move to the social media enabled world we now live in. The first glimmerings
of Web 2.0 appeared in 1999 and started to gain real traction by late 2004. Web 1.0 was
about publishing content and commerce, Web 2.0 is about people and a “Participatory
Web”. This open, participatory web environment encourages user contribution, enhancing
potential customer loyalty.
The “New World Web” has become more than just Web 2.0 as originally defined. Social
Media has become significantly more sophisticated than simply websites that allow users to
publish content and mobile based web browsing is predicted to surpass PC based browsing
by 2014 as predicted by Morgan Stanley (Ingram, 2010). New technologies and models are
emerging that extend the options that users have to connect, engage and transact.
Maslow & Hygiene Factors
As applies across all customer touch points, before trying to create online communities,
special loyalty programs, or other innovative web solutions, organisations need to address
key hygiene factors to drive trust and continued loyalty to ensure negative experiences do
not turn customers into detractors.
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Maslow’s hierarchy of needs provides a guide to the order and priority with which needs
should be addressed through online functionality or programs. Organisations should first
ensure that their online experience is simple, secure and easy to use and can be accessed
anytime from any place or device. Once the core physiological and security needs have
been addressed, businesses can explore how to target customers with personalised
offerings and programs that help to engender affinity with their brand through conversation
and engagement in communities with which the brand is associated.
Attractiveness of a website alone is not enough to inspire loyalty however it will engender
trust to drive initial engagement (Stafford, 2011). After initial engagement it is necessary
that the site provide interesting and relevant content that is easy to find to confirm loyalty.
With so many good websites out there, if a user cannot find what they are looking for they
will find a new website quickly.
Businesses need to ensure that every online experience across every device is consistent
and meets the customer service promise as well as consistently meeting the core needs of
security, reliability and ease of use. This is supported by Fred Reichheld (Prewitt, 2002)
who argues that long-standing relationships arise from trust gained over many transactions
rather than a specific directed effort to “manage” loyal customers. In this new “Internet
World” it would be easy to conclude that loyalty is non-existent when it is so easy for
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customers to search for lower prices or other offerings in one mouse click; however
Reichheld’s research found that customers want trustworthiness now more than ever
(Prewitt, 2002).
Price sensitivity
The wide range of options open to consumers and the ease with which prices can be
compared on the internet would often lead to a theory that price is a key driver in consumer
choice in the internet world. However research shows that while prices on the internet are
often 9 to 16 per cent lower than in offline stores, the online dispersion of prices can be as
high as 33% (Lee-Kelley et al, 2003). This research also showed that price sensitivity of
Internet grocery sales was lower than for the same products purchased in offline stores.
However consumers do tend to focus on price where little other information is provided to
differentiate products (Lee-Kelley et al, 2003).
Research highlights that a positive experience in offline channels can lead to lower price
sensitivity when the product is subsequently purchased online. Further supporting the
suggestion that “price does not rule on the web, trust does” (Reichheld and Schefter, 2000).
Saba is currently running a campaign where in-store customers are given a promotional card
offering a prize when the card code is entered online, subsequently offering discounts off
products purchased in-store or online. This is helping to drive loyalty and repeat purchase
as well as educating customers on their online channel. It could also be said that a positive
experience online will drive lower price sensitivity and repeat purchasing online.
Content
Delivery of useful, valued content to customers will drive loyalty and enhance brand value.
If it is done consistently it will create a relationship based on trust. Content initiatives can
also extend to the offering of premium content, special promotions, or access to exclusive
information or networks for valued customers (Lichtenberg, 2007).
IBM set up its Business Insight portal to give customers access to thought leadership
content, information, case studies, articles and tools. Customers that sign up to the
program are sent invitations to exclusive Business Insight webinars, product launches,
workshops and special events. IBM is adopting this strategy to position themselves as
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leaders and trusted advisers for IT Professionals. By consistently delivering valuable content
IBM is establishing and building this relationship of trust.
Looking back to Maslow, IBM would not have been able to build this portal unless or until
the IBM Public Website was up to scratch from a security, ease of use and reliability
perspective; firstly to ensure that its core web asset delivers an excellent experience, and
secondly because users of Business Insight will go to the main website and should not have
a subsequent detractive experience.
Data, Insights & Customer Targeting
Collection of customer data to enable targeted and personalised content and offers can now
be executed more extensively and data insights can be collected from a wider array of
sources across web, social media and mobile. Amazon was already leading the way in this
area before Web 2.0 by giving customers book suggestions or offers personalised to each
individual based on purchase history.
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The data insights themselves can uncover a niche audience, point of difference or customer
interest around which a marketing strategy can be built. An excellent example of this is Air
New Zealand. After identifying a prime target market of ex-pat kiwis living in Australia, it
executed two successful campaigns in 2007 and 2008 to build a data base and start an
ongoing dialogue with this segment (HOST, 2007). The “Home Sweet As” campaign included
two innovative competitions and resulted in 30,000 opt-ins for this audience. This campaign
derived further insights that indicated there was an opportunity to create an online
environment where this “community” of ex-pat Kiwis could come together. In 2009 Air New
Zealand created the “Home Sweet As Portal” to give this audience a place to come together
as a community and converse through blogging functionality on the site.
This community was actively managed and fostered, and continued to grow, later amplified
through Facebook and Twitter integration. Four years after the initial campaign, this online
portal is now directly generating revenue with the addition of the functionality to purchase
and book flights on the site. If the campaign were initiated now, it would be possible to
engage the same size audience through Facebook and Twitter faster and without the need
to spend the initial time building the customer database before building the online
community.
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Conversation
Andy Lark, CMO of CBA, states that we have seen a “monumental shift in participation”
(McIntyre, 2011). He says it is not enough to just transmit; now he has to engage with
customers to listen, capture their thoughts, reward and incentivise content production.
Andy Lark states that it isn’t enough to give customers good content – “content matters less
than the conversation” (McIntyre, 2011).
A one-way marketing driven conversation no longer engages customers. Building trust and
earning loyalty is the act of creating a dialogue with customers: talking, sharing and listening
(Lichtenberg, 2007). Web 2.0 has given marketers a number of new ways of engaging with
customers through blogs, forums, chat rooms and communities to facilitate conversations
with customers. When customers can contribute ideas or opinions it improves the
connection that the customer has with the brand, but when the brand truly listens to the
customer and acts on it, the business can deepen customer loyalty.
Whilst this concept of customer driven innovation is not entirely new; blogs or communities
have replaced formal research methods and enabled more companies to achieve this and to
embrace a customer community in an ongoing, real-time, and informal way. Ducati, the
Italian motorcycle company, is leveraging these new technologies to engage an online
customer community on an ongoing basis to provide feedback on design, performance and
experience (Lichtenberg, 2007).
However the target market and corporate value proposition should determine the extent to
which a two way conversation would be appropriate. Listening should always be in place to
input into customer insights and to enable engagement and response from a customer
service and sales point of view. However the creation of an online community or blog
function should not be done if it is not appropriate to the audience segment or value
proposition.
There must be a clear purpose and content strategy for a defined audience to enable a
successful community strategy. Westpac’s “Ruby Connection” is a good example of an
online community for women in business purposed with helping them to be successful
professionally or in business. If Westpac set up “The Westpac Community” it is unlikely
that it would be successful. Businesses need to determine through insights an angle that
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brings an audience together, a purpose they can stand for to that community and plan how
to deliver value.
Post Purchase engagement is becoming more important for responding to and addressing
post purchase issues and to validate the purchase decision. This engagement can help to
recruit advocates for products or brand which is now particularly important as people rely
more heavily on user generated content in their search for products and services. Forrester
Research found that 86% of respondents to a survey use ratings and reviews for online
purchases and 44% go online before buying products in-store (Hall, K. 2010). While this will
help drive customers to a site, it is not in itself driving new customers’ loyalty. However
businesses should consider how to reward or bring the customers that do write reviews
further into their online conversation to drive increased loyalty with this segment.
Impact of Mobile and Emerging Technologies
With Mobile based web browsing predicted to surpass PC based web browsing by 2014
(Ingram, 2010), and a wide range of new devices coming out such as Tablets, Digital Tables,
Virtual Gaming and other new technologies, it is necessary to keep these new trends on the
radar in the race for customer loyalty.
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Customers are now able to access the internet anywhere anytime through mobile devices;
they can be targeted based on location (Near Field Communication, Apps or RFID); they
carry a computer 24/7 that has the capacity for a multitude of functions; they can watch
video content or have video calls; play games; SMS or even just make or receive normal
phone calls. At a minimum, businesses need to ensure that the strategies positioned above
and online assets can be experienced through mobile devices. However mobile trends are
requiring marketers to consider more than just content or conversational strategies to drive
loyalty. Mobile requires consideration of how the wants, needs or problems that customers
are trying to solve can be addressed functionally through a mobile device.
CBA’s Property Guide App is an example
of an application that helps customers
through the process of property search,
research and financing. The idea was
driven by a data insight that revealed that
72% of customers use a laptop or mobile
phone to access property information but
the information was difficult to find and
use (Wee, 2011). The app uses
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augmented reality, Google maps, and integrates RP Data to give customers the ability to
map sales history, property listings, demographics, and median prices along with financial
tools such as calculators and guides. It also enables customers to call or arrange an
appointment with a loan specialist. The App was the first to cover all facets of the home
buying process and taps into the problem that the customer is trying to solve in a functional
way.
Concluding thoughts on Loyalty and Future Web
The “New World Web” of Web 2.0, social media, mobile devices and emergent technology
brought a change that enabled customers to share experiences and content, anywhere, any
time through any device. This change to the web from being a publish and commerce
medium to an environment that by its very nature is participative and about conversation
means that loyalty strategies now need to have digital as a core enabler of loyalty rather
than simply needing to ensure the web experience functions well and conveys the brand
message consistently.
Companies need to ensure the core online experience meets base hygiene factors of
availability, security and ease of use before exploring more sophisticated loyalty initiatives
through digital. However, listening and building insights through digital channels should be
initiated immediately, and when a business understands the purpose or position for which it
should stand in these communities, it should enter the conversation providing valued and
targeted content consistently to build trusted relationships. It is now more than just
listening, conversing and provision of content; companies need to think about the problems
customers are trying to solve and explore ways that these needs can be functionally
addressed.
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Bibliography
1. Stafford, P. Attractive websites not enough to inspire loyalty, University of Melbourne Study
Reveals. Smart Company, 2011.
2. Lichtenberg, J. User Web 2.0 Tools to Drive Loyalty, iMedia Connection, 2007.
3. Prewitt, E. Customer Relations: How to Build Customer Loyalty in an Internet World,
CIO.com, 2002.
4. McIntyre, P. Virgin Banker Takes the Firm, AdNews 2011.
5. Reichheld, F.F. and Schefter, P. E-loyalty: your secret weapon on the Web”, Harvard Business
Review, 2000.
6. Lee-Kelley, L. & Gilbert, D & Mannicom, R. How e-CRM can enhance customer loyalty,
Marketing Intelligence & Planning, Emerald Insight, 2003.
7. Hall, K. Internet has killed customer loyalty, says research, ComputerWeekly.com, 2010.
8. Guo, M and Liu C. Loyalty of Web 2.0 Sites: The Role of Sense of Belonging, Association for
Information Systems, 2010.
9. Ingram, M. Mary Meeker: Mobile Internet Will Soon Overtake Fixed Internet, Gigaom, 2010.
10. Wee, S. Best Media Innovation Winner, Media Federation of Australia, 2011.
11. HOST, Home. Sweet As, Creative Showcase, IAB Australia, 2007.
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