August 21, 2023

Brand-Owned Networks Rake in Bigger Profits

Marketers are turning to brand-owned customer networks to empower their customers to become brand advocates.

Marketers looking to drive organic growth, improve customer loyalty and retention, increase CLTV, and build brand advocacy are using brand-owned customer networks.  

These customer networks  are owned by the brand within their domain and are designed around customer-to-customer conversation and engagement activities that have proven to increase the impact of “social dollars".

It is not anything new that brand-owned social communities have a positive economic impact. A study dating back almost 6-7 years proved this theory but many brands have yet to catch on.

The study conducted by University of Michigan Professor of Marketing, Puneet Manchanda, and Ross School colleagues Grant Packard and Adithya Pattabhiramaiah suggests a significant payoff for companies that set up their own online communities. 

The study analyzed data from an entertainment retailer that launched an online customer community. The study found  that customers who joined the community spent significantly more money with the retailer, representing a double-digit percentage increase in share of wallet.

The authors called this increase in spending from community participation the "social dollar" effect. 

Why does this social dollar effect occur? They hypothesize that community participation behaviors linked to social and informational benefits would moderate the effect. The results showed that customers who posted authentic content in the community, versus just lurking, and those who formed more social ties through friend connections, generated more social dollars. The endorsement of products and services also contributed to organic growth. 

In summary, the results suggest that the social attributes of online customer communities, like posting and connecting with others, may be more important drivers of economic benefits for brands. That is why marketers are turning to  brand-owned social networks to empower their customers to become brand advocates and because these social networks have engagement activities that have proven to increase the impact of “social dollars”.

Activate your data now

Connect emotionally with your customers within a first-party brand-owned social engagement platform.
Request Demo
Related Blog

You may also read

November 3, 2023
Evolution of Influencer Marketing – Organic Influencers
If we were to look at some of the most entrusted pioneering brands and crack their recipe for being on the top, our minds would
Read More
November 3, 2023
A Brand’s Future is it’s Community
We are living in the biggest paradox of our lifetime! We have more communities online than ever, & we have more communities dying than ever!
Read More
November 3, 2023
How Brands Transform Customers into Sound Brand Engagement?
Well, one would identify community as a buzzing concept, living at the curiosity of all the brands aspiring to settle in the minds of their
Read More