online community eng

© 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?


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


1. What are online communities?


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’



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



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)



2. How did online communities change the financial consumer?


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


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


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.



3. What can financials do with online communities?


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


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


“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



4. What are the drivers of success with online communities?


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


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?


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] .


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)

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