© IG&H Consulting & Interim B.V.
Online communities are booming: ‘Time to get on board’
Woerden, 2009
Opportunities for financials with online communities
Online communities 2009 / 2© IG&H Management Consultants B.V., Woerden 2009
Inhoud
Introduction
1. What are online communities?
2. How did online communities change the financial consumer?
3. What can financials do with online communities?
4. What are the drivers of success with online communities?
Online communities 2009 / 3© IG&H Management Consultants B.V., Woerden 2009
Introduction
Google has bought 1.6% of the stock of Facebook for $240 million (2007)
The online community of LEGO© has a huge contribution in product development
Several financials in the Netherlands have started a online community (ABN AMRO, Rabobank, Achmea)
Hyves reaches 50% of the Dutch population (13+) at daily basis in 2008
MySpace has accumulated a total of 100 million members in 2007
The online community customer is buying 54% more than the traditional customer
Last several years online communities have grown explosively en reach a large group of potential customers on daily basis. The impact of these communities has also exploded.
The financial sector will have to deal with this phenomenon, like in the early days of the introduction of the Internet, and have to have a proper reaction. The positive side are the endless opportunities that these communities have to offer.
IG&H has done research in connecting online communities and financial services. This presentation will give you a overall view in the world of online communities and the highlights of the research.
Source: view slide 21
Online communities 2009 / 4© IG&H Management Consultants B.V., Woerden 2009
1. What are online communities?
Online communities 2009 / 5© IG&H Management Consultants B.V., Woerden 2009
A online community is the platform for the interaction between members
“A online community exists of people who communicate
socially or business wise on a technical platform. The
community is established with a common interest,
common problem, common task or common cause of the
members. The interaction is based on implicit or explicit
rules of conduct.”
Definition ‘Online communities’
Source: view slide 21
Online communities 2009 / 6© IG&H Management Consultants B.V., Woerden 2009
Online communities can be categorized in four groups
Ownership: start up realized by
members or by a corporation,
respectively top-down or
bottom-up
and
Nature of the relations:
personal or professional
contacts
Throughout the world the most and the largest online communities are bottom-up established Authenticity is the key factor in lifespan and growth of these communities (member-get-member) Self-organization of the community enables the community to be flexible to new demands of the
community and easy adoption of (new) goals
Personal Professional
Top
-dow
nB
otto
m-u
p
Bottom-up established communities are more likely to succeed
Explanation: classification based on two axes
Source: view slide 21
Online communities 2009 / 7© IG&H Management Consultants B.V., Woerden 2009
Examples of online communities
Top-down en personal
Top-down en professional
Bottom-up en personal
Bottom-up en professional
GoalHelp users to find
friends and stay in
touch
Involve active travellers in product development
Help users to maintain contact with friends and
make new friends
To let users profit from mutual business network and exchange knowledge (business opportunities,
vacancies)
Number of users
120 million user mainly in Brazil en
India
Unknown. 400 frequent participants in inquiries for
product development
6,2 million (reach: 49% of the Dutch population
(13+), 150 million daily page views, turnover est.
€ 10 million a year
21 million, 570.000 in the Netherlands, est. 100-200 million daily, turnover € 20
million a year (189% growth in 2007)
Market value est. € 1.2 billion Unknown est. € 100 - 300 millionest. € 500 million (source: American tax collectors
office)
Source: view slide 21
Online communities 2009 / 8© IG&H Management Consultants B.V., Woerden 2009
2. How did online communities change the financial consumer?
Online communities 2009 / 9© IG&H Management Consultants B.V., Woerden 2009
Online communities have changed the buyer behaviour drastically
Customers are looking for information via online communities like in the past with family and friends.
Inside online communities more and more experts rise and give advice to fellow-customers. Their opinion is highly appreciated.
Customers have low trust in financials and wants to compare a lot. Favourites are ratings and reviews of peers => Consumer product reviews
Also insights in already bought products or services are increasingly used, especially transaction products like stock.
Changes in buyer behaviour
Consumers in communities will more and more bundle to realize buyer advantages.
More often will customers buy and sell inside their network. Information about the purchases of peers are increasingly wanted by
consumers to compare other situations with their own => Peer reviews
Buyingcycle
Purc
hase
Use
Orientation
Buyingcycle
Purc
hase
Use
Orientation
Buyingcycle
Purc
hase
Use
Orientation
Online communities 2009 / 10© IG&H Management Consultants B.V., Woerden 2009
Offering insight in reviews of peers.
Peer reviews
Compare best use & ratings.
Social navigation
Overview of review summaries.
Review snapshots
Joint buying of products and
services.
Group-buying
Compare use of bought product or
service with peers.
Peers-information
Platform for mutual sales between
members.
Peer-to-peer buying
Financials react on changes in buyer behaviour, especially in orientation phase
Use of knowledge of the
community.
Expert information
Buyingcycle
Pur
chas
eUse
Orientation
Online communities 2009 / 11© IG&H Management Consultants B.V., Woerden 2009
Expanding group of ‘online-community-consumers’ shops longer, visits more often, buying more and is more loyal
Online-community-members
Community users visit nine times more often than non-community users .
Community users spend 54% more than non-community users .
56% percent of online community members log in once a day or more.
Customers report good experiences in forums more than twice as often as they do via calls or mail.
Community users remain customers 50% longer than non-community users.
User numbers of online communities is doubled in 3 years. More than 71% thinks their community is very important to them.
Cost per interaction in customers support averages € 8 via the contact center versus € 0.10 via self-service options.
Source: view slide 21
Online communities 2009 / 12© IG&H Management Consultants B.V., Woerden 2009
3. What can financials do with online communities?
Online communities 2009 / 13© IG&H Management Consultants B.V., Woerden 2009
Conceivable objectives of financials with online communities
Occasionally OftenDegree of usage
Reach specific target groups,
Reach large target groups,
Generate mouth-to-mouth advertisement,
Create strong bond with customers,
PR, Free advertisement,Product reviews,
Web care
Expert opinion,
Marketing
Product & OperationsSales
Learning environment,
Sell products,
Sell online service
Offering online service,Product development in cooperation with customer,
Test environment
Online communities 2009 / 14© IG&H Management Consultants B.V., Woerden 2009
How do I start a online community: Join, Buy or Make?
Low High High
Join MakeBuy
Middle High (initial) Low
Low High High
Influence on
Success rate
Investment
Reasons for choosing one of the options ‘Join’, ‘Buy’ of ‘Make’ is different for every organisation but successful examples within the financial sector are rare for the options ‘Join’ of ‘Buy’.
The factor in common for all options is the embedding of the target group in mission/vision/policy since the start up of the online community
Pro:
Existing target group ,
Authentic character
Con:
No influence on policy
Pro:
Target group within quick reach
Influence on policy
Con:
Loss of authenticity
Pro:
Strong influence on policy & management
Con:
Few authenticity
Slow start of community
Online communities 2009 / 15© IG&H Management Consultants B.V., Woerden 2009
“Make”-examples of online communities within financial sector aren’t very successful
Forum, expert vision, etc.
Meeting point for active 55+ and offering experts opinions in specific themes
Goedenwel.nl
Offering information about starting a enterprise and offering access a network of
peers Service
Regional platform for target group starting entrepreneursGoal
Rabobank Starterscommunity
Facilitate exchange of information, network and possibility for to trade between
members
Meeting point for entrepreneurs
Flametree
Communities of financials facilitate interaction for members but also serve their own goals
Offer online platform for members
Reach out to specific target groups, cheap marketing, collecting buyer information, learning in online environments
Sales and servicing (life-events customers)
General disadvantage is the lack of authenticity in top-down communities
Source: view slide 21
Online communities 2009 / 16© IG&H Management Consultants B.V., Woerden 2009
4. What are the drivers of success with online communities?
Online communities 2009 / 17© IG&H Management Consultants B.V., Woerden 2009
Focus
Look for common interest within a group; provide focus on target group or common interest
Keep on updating your community to developments and connect with demands of members (over-commercialisation)
Authenticity
Self-organisation of the community; the community will be flexible and
authentic
Include members in policy making, planning and implementing of the
community policy
Authorise long and frequent user
Impulse for growth from within community; ‘member get member’
Organise preconditions for user-generated-content
Connect to expected ‘look en feel’ of target group
Usability Optimalize the technical aspects of the platform
Good and quick routing on the platform
What are the drivers of success with online communities?
Dimensions Key Points
Online communities 2009 / 18© IG&H Management Consultants B.V., Woerden 2009
What to do next?
To successfully adopt online communities every organisation has to develop a fitting approach. The questions below will help to determine a organisation specific vision.
How do the developments of online communities influence my organisation?
Which online strategy has a fit with my organisation?
In which manner can a online community influence my business?
Which goals can my organisation reach with a online community?
How do I make / join a online community? What are my specific drivers for success?
Online communities 2009 / 19© IG&H Management Consultants B.V., Woerden 2009
Want to know more?
Do you want to know more of the vision of IG&H Consulting & Interim about online communities within the financial sector, please contact Floris van Ommeren, [email protected] .
© IG&H Consulting & Interim B.V.© IG&H Management Consultants B.V.
Woerden, 2009
Online communities 2009 / 21© IG&H Management Consultants B.V., Woerden 2009
Sources
Slide 3 Financieel Dagblad (2008); www.Google.com (2008); www.Marketingfacts.nl (2008)
Slide 5 Research Leimestier & Kremar (2004)
Slide 6 Porter (2004); A typology of virtual communities; Markus (2002); Characterizing the virtual community
Slide 7 www.hyped.nl (2008’); Financieel Dagblad (2008); www.Wikipedia.com (2008); www.Google.com (2008); www.Hyves.nl (2008); www.Orkut.com (2008); www.KLM.nl (2008); www.Linkedin.com (2008); www.Marketingfacts.nl (2008)
Slide 11 Research Forrester (2006); Research AT&T (2002); Research University of Southern California (2008); EBay (2006); Research Annenberg (2007); JupiterResearch (2006)
Slide 15 Slide 15 Interview IG&H met Flametree (2008); www.Flametree.nl (2008); www.Goedenwel.nl (2008); www.RabobankStarterscommunity.nl (2008)