Lecture 12 Community

Community — Today’s Objectives Objectives will be to: Develop a clear definition of community Discuss 10 criteria for assessing a successful community Explore how communities function and create value Discuss the benefits of commercial communities Examine the ways in which effective communities can be created

Community Defining Community and Assessing Successful Community How Community Changes and Functions on the Internet The Value and Benefits Created by Online Communities How Members Progress in Their Relationship With a Community The Ways in Which Effective Communities Can Be Created EBay Example Conclusion

Community Defining Community and Assessing Successful Community How Community Changes and Functions on the Internet The Value and Benefits Created by Online Communities How Members Progress in Their Relationship With a Community The Ways in Which Effective Communities Can Be Created EBay Example Conclusion

Community Criteria People Criteria Process Criteria Culture Criteria Technology Criteria Membership is a conscious choice Member base has achieved critical mass and sustainability Members feel a great sense of trust Members achieve benefits of scale Roles are not hierarchical or imposed Effective facilitation and site structure keeps activities on track A spirit of participation and feedback is clearly cultivated A sense of affiliation is achieved through ownership of equity in the community Efficiency in interaction is maximized The community is easily navigable Community is a set of interwoven relationships, built upon shared interests, that satisfies individual needs that would otherwise be unattainable.

Community Defining Community and Assessing Successful Community How Community Changes and Functions on the Internet The Value and Benefits Created by Online Communities How Members Progress in Their Relationship With a Community The Ways in Which Effective Communities Can Be Created EBay Example Conclusion

How the 2Is Affect Online Community Individualization Interactivity Less accountability — punishing an individual’s inappropriate behavior becomes more difficult on the Internet More anonymity — user identity can be easily disguised by logging on with aliases Convenience — communication and resource sharing can take place anytime Reach — elimination of geographical boundaries allows for the creation of both large and effective communities Community

How Communities Function

The Foundation of Community

Open vs. Closed Communities Open Communities Closed Communities Membership policy: Open to all regardless of individual profile Used typically for: Communities based on a more general and highly accessible topic of interest Examples: Yahoo.com Talk.com Launchcast.com Membership policy: Outsiders generally not allowed inside community Members must fit specific qualifications Used typically for: Extranets or intranets between well-known parties and sources, dealing with highly specific and / or sensitive data exchange Examples: Corporate intranets or extranets (e.g., Ford Motor Company and its suppliers) Physicians Online

Community Defining Community and Assessing Successful Community How Community Changes and Functions on the Internet The Value and Benefits Created by Online Communities How Members Progress in Their Relationship With a Community The Ways in Which Effective Communities Can Be Created EBay Example Conclusion

Transfer of Value Triangle User to Administrator: Examples of Types of Value Created and Shared Community subscription fees Content fees Fees to engage in an activity (e.g., online video game participation) Commission fees (e.g., for goods sold through the community) Increased value for selling online advertising space User to User: Examples of Types of Value Created and Shared User-generated content (e.g., information/opinions/advice) Distribution of digitizeable goods (e.g., MP3s, shareware) Transactions for goods Relationships/support/conversation Transfer of Value in Communities Administrator to User: Examples of Types of Value Created and Shared Administrator-generated content/proprietary content (e.g., articles/editorials) Mailing lists Newsletters Webcasts (e.g., of guest speakers) Supervised chats (e.g., chats featuring guest Q&A) Offline events (e.g., parties for members within geographic proximity) Rewards points (e.g., to use on goods or services traded within the community)

The Creation and Transfer of Value Outside of Communities Community Benefits to Parent Firms

Community Defining Community and Assessing Successful Community How Community Changes and Functions on the Internet The Value and Benefits Created by Online Communities How Members Progress in Their Relationship With a Community The Ways in Which Effective Communities Can Be Created EBay Example Conclusion

The Membership Life Cycle

Intensity Patterns During the Four Relationship Stages Exploration/ Expansion Awareness Commitment Dissolution Level of Intensity Time

Community Defining Community and Assessing Successful Community How Community Changes and Functions on the Internet The Value and Benefits Created by Online Communities How Members Progress in Their Relationship With a Community The Ways in Which Effective Communities Can Be Created EBay Example Conclusion

The Community Applicability Model Consumer Attributes Product Attributes Community Pursue Creation Consumer attributes are behavioral Is the target group of your product or service made up of active online users? Are members of your target group likely or willing to share information with others? Are members of your target group involved in the process of discovery? Do members of your target group value interaction with like-minded people? Can the community grow organically? Product attributes are emotional Can the product generate critical mass? Does the product elicit passion? Does the product address or revolve around a certain lifestyle? Do benefits of information aggregation arise from product complexity?

The Three Levels of Community

Community Building Strategy

The Community Growth Path

Four Key Stages of Customer Relationships Community Levers Four Key Stages of Customer Relationships Awareness Exploration / Expansion Commitment Dissolution Outline community benefits clearly and early on in the process Anticipate and readily answer questions and concerns, quickly establishing a sense of trust Establish a call for action and further exploration Makes community exploration easy through efficient site structure Show everyone individual attention (e.g., welcoming e-mails, guides for novices, chat conversations for new members, use of CRM marketing to tailor site functionality) Begin the process of equity creation (e.g., member points and loyalty programs) Increase equity building (e.g., through tiered loyalty programs, increased rewards) Recognize individuals’ contribution and participation Develop members (e.g., through leadership opportunities, community roles, guides or watch-persons) Spot departing friends early and find solutions to prevent dissolution Make the “leaving process” fair and efficient Seek and listen closely to feedback Allow the option of returning

Community Defining Community and Assessing Successful Community How Community Changes and Functions on the Internet The Value and Benefits Created by Online Communities How Members Progress in Their Relationship With a Community The Ways in Which Effective Communities Can Be Created EBay Example Conclusion

EBay’s Community

The Power of EBay’s Network Effect Monthly Unique Visitors (in thousands)

Community Defining Community and Assessing Successful Community How Community Changes and Functions on the Internet The Value and Benefits Created by Online Communities How Members Progress in Their Relationship With a Community The Ways in Which Effective Communities Can Be Created EBay Example Conclusion

Community — Conclusion Real community is accomplished by meeting criteria along four dimensions: people criteria, process criteria, culture criteria and technology criteria Communities differ by their foundations — shared interests of information, shared interests in activity and shared interests arising out of commonality Within a community, value is created in three different ways: user-to- user, administrator-to-user and user-to-administrator Communities can generate significant benefits outside of themselves, such as to a parent firm, through both cost and revenue benefits