Internet Marketing - Social Media and Crm

SOCIAL MEDIA & COMMUNITY PARTICIPATION IN E-CUSTOMER RELATIONSHIP MANAGEMENT

Dea Damgaard Madsen 19-11-1989 [e-mail] 2012 Fall Internet Marketing HA-DAT_INM Ravi Vatrapu

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Introduction
Research Question:

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Theoretical Framework: e-CRM Social CRM (sCRM) User Generated Content Social Media Marketing Online Community Affiliate marketing

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Methodology Results of Analysis iPhoneluppen.dk iPhoneluppens’ Facebook

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Discussion: Conclusion Table of Content

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Introduction
Due to the rapid increase of Web 2.0 technologies, the relationship between businesses and costumers has adapted in ways of attainment and retainment. Web 2.0 is defined by Kaplan & Haenlein (2010) as “a platform whereby content and applications are no longer created and published by individuals, but instead are continuously modified by all users in a participatory and collaborative fashion.”

Social media has derived from Web 2.0, and due to its popularity and influence, marketing strategy has altered in order to include social media as a new platform, both as a way of communicating to potential customers, but also as an opportunity to attain them. The widespread of companies on social media, especially Facebook, is increasing daily. Furthermore, an increasing number of consumers use social media as a platform to discuss products and seek advice and guidance1 . Facebook facilitates an easy two-way communication between companies and users, and the wordof-mouth effect makes it even more potent. Social media can interact with consumers to increase product awareness, but more importantly in this case, engender loyalty between a company and consumers.

‘iPhoneLuppen.dk’, is a Danish consumer portal owned by the company MuWo. It provides help to the consumers to find information about prices, models, contracts, tips, tricks and news about iPhones. It was established in 2010, and in its two years of existence, its popularity has grown, and it is one of the most used iPhone consumer sites in Denmark. Besides the website, iPhoneLuppen has implemented a blog, that feeds frequent news and updates, and a Facebook page with more than 6000 members. An interest sparked, as the Facebook site worked as a community, rather than just a page consumers ‘liked’. The members not only uses the group as a site to ask question to iPhoneLuppen, but they use it to discuss and ask for advice from one another. Due to the abundance of companies on Facebook, successful social media marketing is getting more demanding, as viewers and members expectations rises. It is not enough to just create a page, and expect that it immediately becomes popular and useful. The members need to be nurtured and engaged. I find it interesting how iPhoneluppen’s use of strategy has resulted in a popular and

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http://www.mckinseyquarterly.com/Marketing/Digital_Marketing/Demystifying_social_media_2958 3

engaging website and Facebook page. Nonetheless, the value that social media marketing can influence and play a big part of an internet marketing strategy today, as it is important to promote community participation and user generated content to maintain a good customer relationship management. This ultimately lead me to the angle of this paper. Research Question:

To what extent does the implementation of social media, as part of an internet marketing strategy, have an affect on the web portal: ‘iPhoneluppen’?

• How does the usage of social media affect the attainment and retainment of users? • What role does the community participation play in the execution E-customer relationship marketing?

Theoretical Framework: e-CRM E-customer relationship marketing, is defined by Chaffey as “using digital communication technologies to maximize sales to existing customers and encourage continued usage of online services customer life cycle”(2009). Some of the benefits when using the internet to implement customer relationship management can increase the depth and breadth and improve the nature of relationships and to lower costs. A vital part of CRM is customer engagement. It engages in persistent interactions that strengthen the emotional, psychological or physical investment that costumers has in a brand (Chaffey 2009). Forrester(in Chaffey, 2009) renders that engagement has four parts that can be measured both offline and online: Involvement, Interaction, Intimacy and Influence. Involvement being the website visits, the time spent and the pages viewed. Interaction is the comment and reviews contributed. Intimacy refers to sentiment tracking on third-party sites. Influence is the likelihood to recommend, brand affinity and to forward content to friends (Forrester 2007). Haven (in Chaffey, 2009) emphasizes that user engagement provides a more holistic appreciation of your customers‘ actions, recognizing that value also comes from actions people take to influence others. He suggest that once the engagement takes hold of marketing, the marketing messages will become conversations, and dollars will shift form media buying to customer understandings.
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Within CRM, the customer lifecycle shows the stages each customer will pass in a long term relationship (See figure 1). The first stage of the lifecycle is customer selection. Here different types of segmentation is taken into account. Customer acquisition refers to the marketing activities chosen to form relationships with new potential customers.

Figure 1: Customer lifestyle (Chaffey, 2009) Social CRM (sCRM) Social CRM (sCRM) is an outcome of regular CRM that, alongside the internet, has evolved. It recognizes consumers that have strong opinions about relationships as customers whom is being managed in a social media context, and that their willingness to engage with companies should not be assumed or taken for granted. Using public social network as part of a company’s CRM, does not only provide a true and accurate reflection of valuable customers from the integration of social behavior2. It also provides the opportunity to listen and engage with customers in new ways. Companies can hear what is being said, and automatically filter what is important and who’s influential. Questions and requests become a responsibility for a company to deliver. User Generated Content User Generated Content (UGC) refer to various kind of content produced by the end-users. Some of the most popular UGC-sites are sites such as YouTube and Wikipedia, but also on social networking sites such as Facebook and Twitter. On social networking sites the users have the possibility to customize their personal profiles, for it to achieve a vibrant and attractive state (Krishnamurthy & Duo, 2008). In many cases, UGC can be found on companies Facebook pages, as consumers are able to upload their own content onto the company sites. This can, for example, be in the form of

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reviews or recommendations. This is also known as eWOM (electronic-word-of-mouth). However, companies can not solemnly depend on UGC. The 1% rule (Nielsen 2006), concerning online communities, states that whilst 1% are heavy contributors, only 9% are intermittent contributor, and 90% are lurkers, whom do not contribute with any content.

Figure 2: UGC typology

Krishnamurthy & Duo (2008) have created a typology for UGC, where users are divided into 2 different categories of motivations for providing; rational and emotional. The rational motivation being the one where knowledge is shared and one advocate for a particular stand (Krishnamurthy & Duo, 2008). The emotional site, is where more personal information is shared, for example; social networking where people make connections, but also as a form of entertainment.

Social Media Marketing “Social Media is a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of User Generated Content.” (Kaplan & Haenlein, 2010).

Along with the proliferation of Web 2.0, the usage of social media has evolved, and in this category, the networking site; Facebook has become the most used platform. Its popularity is so great, that if
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it was a country measured in population, it would in fact be the 3rd largest in the world, after India and China (Lawrence, 2010).

“Social media can be viewed as a customer engagement and retention tool. Here social media are used to deliver customer service or are used as alternative channels to E-mail marketing to inform customers about new product launches or promotions” (p.482, Chaffey, 2011)

The social networking platforms have become more than just socializing communities, in which users connect and share information. Companies have seized on the marketing opportunities that lies within social media, to bring about customer services and to attain new customers. Chaffey proposes the framework; POST as part of a social media strategy (Chaffey 2011). The POST framework draws attention to the four most fundamental aspects to take into account, prior the launch on a social media. It is an abbreviation for: People, Objectives, Strategy and Technology. Firstly, it is important to understand ones audience and their behavior, but also how they adapt social media. Secondly, the objectives, are how different goals must be set on how the company can engage their audience. Thirdly, the strategy plan out how one may achieve these goals. The technology has to be chosen in order of what social media platforms are most suited.

Online Community An online community is a virtual community that exists online, with members that share common interests3. The community provides the opportunity for its members to share and communicate. “Satisfaction, commitment, group norms are found to have significant impacts on intention to continue using and intention to recommend in a community” (Ang, 2011 p.32) Lawrence Ang (2011), proposes 4 C’s of community relationship management (CoRM), that render the way one may manage its community: Connectivity, Conversation, Content Creation & Collaboration. For a social network to grow and prosper, companies must aim to enhance their community. Connecting with members and potential members is a paramount. Conversation should be encouraged to fuel exchanges. The sharing of experiences is a powerful tool, and companies should find changes interesting. UGC is a vital part of content creation, however as Ang (2011) states; 5-10 % of a community contribute and when creations are good, a buzz is created. Collaboration encourages multi users to contribute cooperatively to the completion of the project (Ang, 2011). Wikipedia being a good example of collaboration, shows how people can collectively
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contribute to the same project. When applying these principles, it is important to take notice of the likes and dislikes. People are prone to share experiences. Organizations should actively monitor conversations, as people are 65% more likely to buy a product after engaging with the community of experts and customers.

Affiliate marketing “A commission-based arrangement where an e-retailer pays sites that link to it for sales, leads (CPA-based) or less commonly visitors (CPC-based)4 .” iPhoneluppen gets their revenue from affiliate marketing, where if a visitor use a link provided by them to purchase a product, a certain commission is granted.

Methodology
To address a thorough answer to the research question, I will use an analysis based approach. I will analyze the way iPhoneLuppen endeavor the engagement of its consumers, and the way the consumers participate and generate content. This involves a general analysis of their internet marketing strategy, by using the SOSTAC model. Their Facebook page, will be analyzed by the usage of Chaffey’s (2011) POST framework. The analysis will be discussed and backed up with the relevant theory. Furthermore, I will conduct an interview with the CEO of MuWo, Christian Hahn, whom will provide an insight into their own strategy considerations and the effects siding from this.

Results of Analysis iPhoneluppen.dk iPhoneluppen uses a generic strategic approach, where they have a cost focus, as they aim to deliver the best free service. The online marketing model; SOSTAC, delivers a clear overview of the strategy of an online business. Situation Analysis: To analyze the current situation of iPhoneluppen, a SWOT matrix shows iPhoneluppen’s strengths, weaknesses, opportunities and threats: Objectives: Chaffey (2009) suggest that the 5 S’s provides an insight to where the organization aim to be:

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STRENGHTS
• Free service • Unbiased information • Consumer focus • Strengths in community & participation

WEAKNESSES
• only present on one social media platform • Customers perception of reviews • Lack of resources •Too many updates (spam) •FB page too confusing to gather wanted knowledge

OPPORTUNITIES • Expand in members and capacity
• Collaborating with companies to get special deals for its members • Launch on other Social networking sites. Ex: Youtube or Twitter • Develop an app for iPad and iPhone •Tutoring events •Launch the blog on news app such as ‘Google current’

THREATS
•Competitor sites with more resources and a larger community •Lack of revenue from affiliate marketing

• Sell: Aim to acquire and retain users, and to affect their purchase by using the recommendations and information provided. • Serve: Satisfying their users by delivering reviews and information of where to save money. • Sizzle:Try to get users to stick around for longer, by creating a great amount of content and interaction • Speak: Engage as many customers as possible • Save: Find the best prices, and create best reviews for users to elaborate on before making a purchase. Strategy: They have segmented their users, and they target everyone who has an interest for Apple products, especially iPads and iPhones. They provide online value in form of a successful consumer portal that guide and inform its users before purchasing a product. They possess a functional website with good web functionality, where contact through email is possible. Tactics: By mixing communication with social media, it provides users with easy communication and contact. To get more ‘likes’ they have launched ‘like campaigns’ to acquire more users and competitions to retain them. Actions: They have a full time employee who works with their Facebook page and website. The employees themselves are capable of maintaing these sites, and develop the website. This mean that there is no need for a third party to develop it for them. The reviews are done by the employees themselves most of the time. At some occasions, they are made by freelancers who

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has a relevant expertise and work. They do however, have some contact with external companies, as they send them products to review. Control: To monitor performances, iPhoneluppen uses web analytics such as Google- and Facebook analytics, and other user analytics. They have also launched customer satisfaction surveys.

iPhoneluppens’ Facebook The Facebook site of iPhoneLuppen is very thoroughly carried out, and with its 10000 members, its a viable community. To analyze the page, POST framework(Chaffey 2011) is implemented, to provide a clear overview of the social media strategy:

People: The segmentation of iPhoneLuppens user is wide, and it does not have any specific requirements, other than a common interest for iPhones. However, the users are divided into three different segments. There are three sub segments, as the interest vary for each groups; for some it may be a general interest of news and tricks regarding the iPhone. They are members of the group to gain more information and be kept up to date, and not necessarily because they are in the market of a new iPhone. Then there is a group whom also have the same interest, yet they do have specific knowledge, and they contribute with helpful information. The last subsegment contains users who are simply looking for advice on what iPhone to buy, and use the Facebook page in order to get stay updated with the latest news and tips . iPhoneluppen has addressed the importance of dividing the market into various segments in order to fully understand its users (Rodgers et al, 2007). They have provided the users the opportunities to share and communicate with one another, as they try to engage and spark conversations on their Facebook page. The Facebook page, however, as being a sub site to the original web portal, is mostly targeted to the dedicated users, who wants to be kept up-to-date. The segmentation approach on their Facebook page is consumer and product based (Rodgers et al 2007), where demographics and product related attitudes, internet usage and motives are all taking into account. To engage the users, iPhoneLuppen post relevant information daily. Furthermore they reward their users by creating contests where users can win prices (see figure 3). They have also created a monthly contest, where the most active user is rewarded, with the ‘iBruger’ (iUser) award (see figure 4). This is a

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Figure 3: Competition

Figure 4: ‘iUser’

method that is used to retain the users and keep them interested and engaged. The Facebook page works as a two-way communication forum, where users also have the opportunity to ask questions to iPhoneluppen and its members. A good example of this is where a users posts questions, and both iPhoneluppen and several members answer the questioning user (see figure 5). This shows how user contribute with their own content and become co-creators. Nonetheless, it also provides iPhoneLuppen, with useful data and information about their members, that could be beneficial towards improving the content, or to predict future content for the web portal.

Objectives: The main goal concerning iPhoneluppens’ Facebook page is to both attain and retain users. As their revenue is dominated by affiliate marketing, they rely solemnly on their users. Whilst being under no influence of hidden advertising, they strive to provide unbiased suggestions and to maintain an holistic approach. Facebook facilitates reaching out to new customers, as users can recommend the page, share links, ‘like’ to their friends. It is also a platform that offers a simple and easy two-way communication between the organization and its customers. It is crucial for iPhoneluppen to nurture its community to keep the users content and satisfied. Ang (2011), as mentioned earlier, enhances the importance that satisfaction and commitment have on the impact on the intention to stay active in the community, but also to recommend the community.
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iPhoneluppen strive to optimize their Facebook to fulfill the demanded requirements of their users, and as they put it; “if you want results, you need to go all in” (Christian Hahn, 2012)

Figure 5: Users posts on Facebook

Strategy: Ang’s (2011) 4 C’s of CoRM, emphasizes ways in which one should manage its community. iPhoneluppen’s objectives of gaining revenue from affiliate marketing, means that they need to stress the importance of their community. To obtain their objectives, connectivity with its members and potential members is paramount. The community need to be in constant growth, as new members can be potential for the increase of revenue. Therefore it is important to connect with its members, to gain knowledge from them, and use this to get more members. Thus connecting with new members is important, it is crucial that the connectivity with the current users is constant. This will make them feel like they have an importance within the community, to keep the general satisfaction level high, enhancing to possibility of the members recommending and sharing the community. Conversation is sparked, as iPhoneluppen daily post new information, but also directly ask their members questions. As seen in figure 6, instead of
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just posting the link to the review they created, they turn it into a question, where the members are encouraged to give their own opinion, aside their own review. This fuels conversation, as the members opinion is valued, and for potential buyers it provides a wide perspective of opinion. . This is also a part of the content creation, as the users play a large role in the creation of content (UGC). As the Facebook page, encourages its users to comment, post and like, they embolden user generated content. The content is to some extend rational, as it is users sharing experiences and advocating their opinions (Krishnamurthy & Duo, 2008). However, given that the community is based within a social network, users are more willing to provide emotional content, compared to a community on a formal site, such as a company’s website. This provides iPhoneluppen with a variety of user information, that can be used towards the improvement of CRM, as they get a deeper understanding into their customers needs. Collaboration between iPhoneluppen and its users creates the content of the Facebook page, and it encourages the members to contribute, thereby completing the pages content. The example above also shows how collaboration is encouraged to get a wide review and opinion on a product.

Technology: iPhoneluppen does not use any other social media platform, besides Facebook. The simplicity of Facebook, and the popularity of the social network is the reason why they do not implement a cross-media approach where they use various social media platforms, and connect them to one another. According to Christian Hahn, CEO of the company, they have decided to put their main focus on Facebook, due to their target group. “We do have Google+, but we do not use it as part of our marketing strategy, but more as a platform for SEO, author settings, etc. We do want a YouTube channel, however we do not have the resources to create our own videos yet, but we are working on it. Instagram is also an opportunity, but we have not looked into it yet, as our primary focus is to optimize our Facebook” They keep a simple two platform approach, where the website and the Facebook page is linked to one another. Instead of having a cluster of platforms, they put a focus on creating a functional Facebook page, and as they express; it is where their target group s most active. “Thinking you need to start using all social media platforms at the same time, is where many organizations fail. They believe that the maintenance of this may only require a few hours daily, but in reality, that is not case. The maintenance of Facebook marketing, let alone, can employ full time work, as there is always a need for optimization” (Christian Hahn, 2012). Nonetheless, they link to other websites, youtube videos and post various third-party material on their Facebook page and website.
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To ensure the obtainment of their objectives are being met in the correct manner, iPhoneluppen launched an evaluation that encourages its members to rate their free iPhone service, in order for them to improve it. This is another way to gather information from the users, to use towards the improvement of their site.

Discussion:
The analysis of iPhoneluppen presented competent results, that bring to pass an inisght into the strategy and methods used to achieve their goals. The SOSTAC model, presented in the SWOT diagram, shows the potential of the small company. All though their concept is within the red ocean, where there are plenty of competitors. Nonetheless, iPhoneluppen still manages to differentiate itself and succeed in the ocean of competitors. The objectives that include the creation of a free service is functional. The analysis shows an active community with plenty of positive feedback from its users. iPhoneluppen has shown to understand the segmenting of its users, as the way they have targeted them is correctly delivered. They have understood which channel are most preferable to the democratic and internet usage. The reviews and information released is based on the users product attitudes and motive for usage of the site to gain information of products and prices. There is an easy linkage between the website and the Facebook page, where the website is directed toward price comparisons and news, where as the Facebook is used more as a community and a forum, where discussion and sharing is encouraged. iPhoneluppen attempt to spread the word of their page on Facebook, in order to attain new users. A ‘like’ campaign was launched to create more attention and get peoples attention. According to Christian Hahn, they were very profitable, however they do not push invites to friends and users: “From experience I have given up on inviting my friends and other Facebook users, as it they feel like they are being spammed with nonsense. I do not feel that it works as well as when people join themselves. We have not invited anyone at any point, which makes all the members of free will. This makes the page much more functional, as this results in us having fully interested users” (Hahn 2012). This makes the content interesting and relevant for all users, thus motivating the users to engage. The increase of traffic on their website and activity on Facebook provides more data for the various analytical tools, used to monitor users behavior and needs. This can be employed on the eCRM where improvement and predictions of the users are made.

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The analysis of Facebook and the usage of Chaffey’s (2011) POST framework, provided an insight into the social media strategy, and how the information from the community on Facebook cpuld be used towards sCRM and CoRM. Putting a lot of effort and focus into Facebook, has been beneficial, as it is the most sufficient platform to channel and engange their target group. The Facebook site, is implemented to attain and retain users, by engaging the users, and motivating them into conversation. Making them contribute is a way of retaining them, especially as the more they contribute, the greater chance they have to be rewarded with the ‘iUser’ award, where prices are at stake. This motivational factor creates more activity from the users, thus satisfying them in hope for them to stay active. Another way in which they try to retain their customers are to provide them with interesting reviews and news. This all becomes important factors when attaining new customers. A community with positive feedback and a lot of activity, is appealing to new users and the attainment. The more in-depth analysis of the community, where the way management of iPhoneluppen Facebook page is dissected, showed how they succeed in connecting with their users on a daily basis. They reach out to their users in their daily post, where they often formulate a question to make their users feel included and that it was directed personally towards them. This is shown by the large quantity of comments, likes and shares from the users. As iPhoneluppen’s CEO mentioned, they have put all their resources into Facebook, thus making it a viable community.

Conclusion
To conclude, the implementation of Facebook as a social media, as part of internet strategy, has given of a positive outcome for the Web portal; iPhoneluppen. The popularity of their Facebook page, and the participation from its users, has provided a bundle of data from the users. The greater the amount of data that can be analyzed, the better and more concrete results can be extracted and the knowledge can be put towards e-CRM, thus creating better grounds for improvements. The way in which ‘iPhoneluppen use the social media to communicate with its users, by engaging them in conversation and motivate them to stay active, has a positive effect on the attainment and retainment of users. It is obvious that iPhoneluppen puts all its resources towards creating a good consumer focused environment for its user, where the two used platforms intertwine in a balanced manner. The usage of social media, is showed beneficial towards the implementation of e-CRM, to interact, service, attain and retain users.

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Table of Content
I. Ang, Lawrence. Community Relationship Management and Social Media. Journal of Database Marketing & Customer Strategy Management, 2011, Vol.18(1), pp.31-38 [Peer Reviewed Tidsskrift]

II.

Chaffey, D., Chadwick, F., Mayer, R., Johnston, K. 2009. Internet Marketing - Strategy Implementation and Practice. Fourth edition. Prentice Hall

III. Rodgers, S., Cannon, H. & Moore, J., 2007. Segmenting Internet Markets. In: Schumann, D., & Thorson, E., ed 2007. Internet Advertising - Theory and Research. Psychology Press. Ch. 7

IV. Chaffey, D., 2011. E-Business & E-Commerce Management - strategy, implementation and practice. Fifth edition. Rotolito Lombarda: Prentice Hall.

Online I. Krishnamurthy, S.,& Dou, W., 2008. Note From Special Issue Editors: Advertising with Users Generated Content: A Framework and Research Agenda, Journal of Interactive advertising (2). 14 November 2012 [pdf] p.184.

II.

Nielsen, J,. 2006. Participation Inequality: Encouraging More Users to Contribute.1 December 2012

III. Schaffer, Killian. "Mashable." Mashable. 29 July 2011. 12 Dec. 2012 .

IV. "Online Community." Wikipedia. 12 Oct. 2012. Wikimedia Foundation. 12 Dec. 2012

V. Chaffey, David. "Glossary." Glossary. Pearson Education. 12 Dec. 2012 .

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VI. Divol, Roxane, David Adelman, and Hugo Sarrazin. "The McKinsey Quarterly." Demystifying social media Apr. 2012. 12 Dec. 2012 .

VII. "IPhoneLuppen." IPhone: Den mest komplette iPhone portal med anmeldelser, priser mm. 12 Dec. 2012 .

VIII. "IPhoneLuppen - Alt om iPhone, tips & tricks, billige iPhones | Facebook." Facebook. 12 Dec. 2012 .

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