Customer participation in creating site brand loyalty

CUSTOMER PARTICIPATION IN

CREATING SITE BRAND LOYALTY

JONNA HOLLAND is AssistantProfessor in the Department ofMarketing, University of Nebraska-Omaha.

STACEY MENZEL BAKER isAssistant Professor of Marketing atBowling Green State University,Bowling Green, Ohio.

J o n n a H o l l a n dS t a c e y M e n z e l B a k e r

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A B S T R A C TThis article explores the development of an e-business marketingmodel that capitalizes on customer participation and the likelyconsequences of such efforts, principally site brand loyalty. Aconceptual model illustrates how consumers’ goals in visiting awebsite (task or experiential) affect their propensity to be sitebrand loyal and how characteristics of the site, includingpersonalization and community, are related to brand loyalty. Themodel also shows that creating site brand loyalty leads topredictable affective, cognitive, and behavioral outcomes fromcustomers, such as repeat visits to and patronage of the site, fewerintentions to defect to competitors, and more favorable attitudestoward the site. Case studies of corporate websites provideempirical evidence to support the model. The paper concludes bysuggesting that customer participation in the e-business modelfundamentally changes the way brands are developed. That is,producers no longer create an image for a brand and pass it on to

© 2001 John Wiley & Sons, Inc. and

Direct Marketing Educational Foundation, Inc.

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the consumer; instead, the producer andconsumer are interactively creating the e-businessbrand.

INTRODUCTION

In sharp contrast to the alienation wrought byhomogenized broad-cast media, sterilized mass“culture,” and the enforced anonymity of bu-reaucratic organizations, the Internet con-nected people to each other and provided aspace in which the human voice would be rap-idly rediscovered. (Levine, Locke, Searls, &Weinberger, 2000: p. xxi.)

The above quote from The Cluetrain Manifestorepresents one of the least conventional views ofthe transformational power of the Internet. Thecentral message of the Manifesto is that marketsare primarily conversations, and through theInternet customers have regained the power toparticipate actively in the marketing process.This message is similar to the proclamations ofmany more conventionally accepted voices inthe business literature. For example, in relation-ship marketing, or one-to-one marketing, thefocus is on two-way interactive communicationwhere the customer actively participates in his/her value creation (Duncan & Moriarty, 1998;Peppers & Rogers, 1997).

Technology, which has fundamentally im-pacted the way that marketers develop relation-ships with their customers (Baker, Buttery, &Richter-Buttery, 1998), has been a driving forcein customers’ renewed ability to participate inthe marketing process. As Baker et al. suggestthe evolution of customer participation hascome full circle from the agricultural age whenthe typical exchange involved a one-to-one bar-ter, to the Industrial Revolution when ex-changes were characterized as one-to-many, tothe Information Age when target marketing al-lowed for one-to-many segments, and now tothe Age of Communication where two-way in-teractive communication allows for the buildingof relationships.

Although many acknowledge that the Inter-net is changing the way companies and individ-

uals conduct business, few recognize that theInternet represents not just another distribu-tion channel, retailing model, or vehicle foradvertising, but rather it may be a completelynew business model (Bambury, 1998; Deighton,1997; Hoffman & Novak, 1996; Kalakota & Rob-inson, 1999). The primary factor driving thedevelopment of this new business model is theneed to capitalize on the increased capabilitiesof a multimedia network that allows for a “manyto many” communication environment (Hoff-man & Novak, 1996). It is now technologicallypossible to allow customers to become activeparticipants in the marketing process—every-thing from designing products to establishingprices and creating communication vehiclesand distribution channels (Hoffman & Novak,1996; Peppers & Rogers, 1997). However, tofully achieve this type of participation and tobenefit from it, firms must implement new e-business models designed around the complexfusion of business process, enterprise applica-tions, and new organizational structures (Kala-kota & Robinson, 1999).

Purpose

Traditional marketing channels have either fa-cilitated product or information flows, but whatis emerging over the Internet is an integratedchannel of interaction. Thus, a focus on engag-ing the customer in this channel is central tothe new business model. The goal of this re-search is to examine potential methods of en-couraging active customer participation in themarketing process and the likely consequencesof such efforts. The traditional marketing con-cept of brand loyalty will be examined as a keyconsequence of this type of participation. Thecharacteristics of the online environment thatinfluence the development of brand loyalty andthe resulting consequences will be outlined. Aconceptual model will be presented to contrib-ute toward developing an e-business marketingmodel that capitalizes on customer participa-tion. Empirical support for the model is dem-onstrated through case studies found on exist-ing corporate websites.

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BRAND LOYALTY

Traditional Views of Brand LoyaltyBrand loyalty is a concept with which most mar-keters are quite familiar; therefore this sectionwill not serve as a comprehensive review of theliterature, but rather a summary of the keypoints relevant to the current research. What isbrand loyalty? In general, brand loyalty is un-derstood to describe the characteristics of thoseconsumers who have a strong commitment to abrand, because they view that brand as beingmore satisfactory than the alternatives and thisevaluation is reinforced through repeated use(Day, 1969; Jacoby & Chestnut, 1978). The lit-erature is quite clear on what brand loyaltymeans; however, there are differences of opin-ion on its measurement. The instrumental con-ditioning perspective views behavioral measuressuch as actual purchase patterns as being thebest indicators of brand loyalty. This line ofresearch maintains that brand loyalty developsfrom the positive reinforcement received fromtrying a brand and being satisfied with it, whichleads to repeat purchase (Jacoby & Chestnut,1978).

The problem is that behavioral measures can-not distinguish between actual brand loyalty(i.e., affect for the brand) and “spurious” repeatpurchase patterns that may result from conve-nience, availability, inertia, or other factors. Thecognitive school proposes that only measures ofa consumer’s mental processes and beliefs canmake the distinction between actual brand loy-alty and spurious behavior (Day, 1969; Lutz &Winn, 1974). From this perspective, brand loy-alty is the result of the consumer’s search andattribute evaluation process, which leads to be-liefs of brand appropriateness or superiorityand repeat purchase. An example of this is themodel put forth by O’Guinn, Allen, and Se-menik (2000), which defines brand loyalty as afunction of experience and involvement levels.Customers who have a high experience levelwith a given product category and are highlyinvolved with the category will tend to be brandloyal.

One method of resolving the debate whilecapitalizing on the advantages of each approach

is to combine them. Dick and Basu (1994)present an integrated model that demonstratesthe advantages of looking at both attitudinaland behavioral components. Examining con-sumers in traditional, off-line environments, thestudy measured relative attitude toward thebrand as well as repeat patronage. Those con-sumers exhibiting both high repeat patronageand holding a high relative attitude toward thebrand were found to be brand loyal.

Brand Loyalty in the OnlineEnvironment

Is there reason to believe that the current mea-sures of brand loyalty can be applied to theonline environment? Although there are newconsumers discovering the Internet daily, thenumber of new users is being outpaced by thegrowth in new websites available (Hanson,2000). This means that the battle for “eyeballs”or visitors will soon shift from the current em-phasis on attracting new users to concern withretaining existing ones. Recognition that ob-taining new customers to a site is not only moredifficult as online competition increases, butalso more costly, will drive managers to reem-phasize brand loyalty (Hanson, 2000; Peppers &Rogers, 1997).

In light of this, the new e-business modelsmust consider the value of favorable consumerattitudes and repeat patronage to the website.Online measures of these brand loyalty factorsmay differ from traditional marketing environ-ments, however. For example, not all websitesare transactional in nature, therefore measuresof “repeat patronage” that focus on purchasemay need to be altered. Differences in websitetype and functions may impact the develop-ment of brand loyalty; therefore a discussion ofthe most common website models is warranted.

Types of WebsitesCommercial websites may be designed for awide variety of functions. The first order ofdistinction is between sites that are consideredportals and all other sites. Portals, also known asgateways, are “web sites that serve as startingpoints to other destinations or activities on the

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World Wide Web. Portals also commonly pro-vide services such as e-mail, online chat forumsand original content” (net.lingo.com) Some ofthe best known sites with the highest usage ratesare portals such as Yahoo, Excite, and AOL.Portals are large and amorphous, and by defi-nition often serve as a starting point as opposedto a destination site (although they can beboth). Therefore it may be simpler to beginexamination of relevant constructs in relationto more focused sites where consumers attemptto “arrive” as opposed to “just pass through.”

Among typical destination sites there arethree primary models based on the method ofrevenue generation (Hoffman, Novak, & Chat-terjee, 1995):

1. Sponsored content or advertising-basedsites, which follow the traditional televi-sion model providing free content to us-ers and deriving revenues from advertis-ing space sold (for example cnn.com orwhatis.com).

2. Fee-based or subscription-based sites,which obtain revenue up front from con-sumers and provide password-protectedaccess to content (for example, WSJ.comor Forrester.com).

3. Online storefronts or transaction-basedsites, which provide product informa-tion, take orders, payment, and arrangefor delivery (for example, amazon.comor JCPenney.com).

4. A combination of the above.

StickinessRetailers have long understood the value ofkeeping customers in a store longer and gettingthem to return more often (Hirschman, 1981).In the online world, this concept is called “stick-iness” (Gillespie, Krishna, Oliver, Olsen, &Thiel, 1999). Stickiness is “the sum of all theweb site qualities that induce visitors to remainat the site rather than move on to another site”(whatis.com). In other words, site stickiness isthe ability to encourage customers to staylonger, navigate more deeply into a site, andreturn more often (Gillespie et al., 1999).

How well does this concept relate to brandloyalty? An examination of each of the elementsof stickiness is necessary. First, visit duration; if aconsumer visits a site and stays for a longer thanaverage period of time, is this an indication ofbrand loyalty? E-Bay has been heralded for itsability to generate longer-than-average connecttimes and is said to have a very loyal customerbase (Anders & Weber, 1999; Bradley & Porter,2000). But longer-than-average duration at anygiven site could be the result of any number offactors. Issues such as confusing navigation,slow connect and load times, difficulty with con-tent, or difficult shopping and transaction sys-tems would contribute to increased visit dura-tion, but not to customer satisfaction. However,if a consumer remains at a site by choice, and isreceiving a value in exchange for his/her time,then stickiness is a positive characteristic.

How does one’s goal for being online affectstickiness? Novak, Hoffman, and Yung (2000)outline two types of online activity—task-ori-ented (work, online search for product infor-mation, and product purchase) and experien-tial (which involves fun and recreationalactivities, as well as traditional non-goal-directedsearch, or “surfing”). Experiential uses of theWeb were positively correlated with time spentonline, while task-oriented activities were nega-tively related. The authors conclude that “theonline experience does not yet offer the requi-site levels of challenge and arousal, nor do theyinduce the sense of telepresence and time dis-tortion, necessary to create a truly compellingonline customer experience” (p. 32). It may beas well that consumers do not desire a “compel-ling online experience” for task-oriented activi-ties, at least not as it is defined in the study.Perhaps efficient, low connect times, or eventransactions that do not require visiting the sitemay be preferred for task oriented activities. Anexample of an efficient, yet extremely short con-nection to a web site would be a customer witha standard re-buy order with a supplier whowould only need to log on and click a single boxto initiate the exchange. This transaction maycontribute to customer satisfaction, but cer-tainly not to above average duration of visit.

Stickiness may also be defined in terms of



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depth of visit, or number of web pages viewed ata given site. In fact, some researchers (Hanson,2000) define visit duration by number of pagesviewed, which circumvents issues of low trans-mission speeds, slower end-user computers, andother delays that would contribute to longervisits, but not to positive attitudes. But it couldbe argued that depth of visit does not solve all ofthese issues since confusing site design couldalso lead to multiple page visits. However, ingeneral website visitors continually make a judg-ment as to the value of continuing on at a givensite or clicking away. Huberman, Pirolli, Pitkow,and Lukose (1998) propose that the decision tocontinue on at a site is a function of user expec-tations and uncertainty. In their examination ofduration of visit on the Xerox company website,they found that each consecutive page viewedmust be of increasing value for a consumer toexpect or estimate future web pages to be ofvalue. This function creates a sharply upwardsloping curve where ratings of current pagevalue must increase to increase the likelihoodthat the visit will continue. When visitors firstarrive at a site they are more willing to keeplooking at additional pages even if the value ofthe current page is low. Consumers seem to beoptimistic at this point that future pages will bevaluable. However, the longer the website visit,the higher the page quality must be for the visitto continue. This analysis leads the researchersto the conclusion that visit duration is a goodmeasure of website value.

This may not always hold true, however, asthe distinction between task orientation andexperiential orientation may be relevant here. Ifconsumers knows what information they want,why would they want to visit more rather thanfewer web pages in order to meet their needs?For an efficient transaction, most customerswould prefer to arrive directly at the page theyneed and to have their needs met with a fewquick clicks. However, for users with a moreexperiential orientation, a site with a great dealof value, both in terms of content breadth anddepth, as well as other factors, would most likelyinvite more page viewing per visit than a sitethat was less valuable to the consumer.

The final aspect of stickiness under consider-ation is that of repeat visits. In most cases, con-sumers who return to a particular site do sobecause they expect the site to be of value tothem. There are still examples, however, of cus-tomers who may in fact find a given site com-pletely satisfactory, in part because a repeat visitis not necessary. An example of this would bethe consumer who receives an e-mail notifica-tion that a previously unavailable item can nowbe shipped, requiring only an affirmative e-mailreply to complete the order. The efficiency ofthis transaction may be received quite positively,but would not contribute to a repeated visitsmeasure.

The distinction between task and experien-tial orientations in Web usage may demonstratea new application of the traditional ongoingsearch model (Bloch, Sherrell, & Ridgway,1986). Consumers going online for recreationalpurposes or “surfing” will display the character-istics of ongoing searchers (those who searchfor the sake of knowledge and for the fun of it).Those who are online with a task orientationwill more closely resemble traditional consum-ers in the problem-solving mode (as in pre-purchase search). Clearly consumers may ex-hibit either tendency depending on thesituation. It is up to marketers to understandthis behavior and to design websites that willmeet the needs of consumers in both groups.

In conclusion, site stickiness, as measured byduration of visit, depth of visit, and repeat visitsmay be an effective indicator of favorable atti-tudes leading to brand loyalty for experientialuses of the Web, but efficiency measures unre-lated to stickiness may be more appropriate fortask-oriented uses of the Web.

METHODS OF INCREASING BRANDLOYALTY/STICKINESS

Many managers recognize the potential value ofincreasing site stickiness. First, a site must buildrelevant and valuable content, providing suffi-cient depth and breadth to warrant consumerinvolvement. Additionally, leading websites are



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already incorporating a variety of tools designedto increase site stickiness. These include:

● Allowing the user to personalize the site(Yahoo, Excite, and MSN Network, for ex-ample)

● Building online communities in which us-ers post information or form discussiongroups (Yahoo, Geocities)

● Inviting user feedback in response to col-umnists (ZDNet)

● Adding games to the site (Yahoo)● Using extensive hypertext cross-references

to other parts of the site (ZDNet and manyothers) (source: www.whatis.com)

Although each of these methods of increas-ing site stickiness may also have an impact onbrand loyalty, examining them all is beyond thescope of the current study. Given the uniquecharacteristics of the Internet that allow for amany-to-many communications model and un-precedented interactivity, it could be arguedthat the techniques of personalization and com-munity building are the most fundamental forfostering consumer participation in marketingefforts. At a minimum, these two areas will con-stitute a good point of departure for this initialinquiry into online brand loyalty.

PersonalizationPersonalization, as the ultimate form of cus-tomization, is the final result of understandingand meeting the unique needs of the customer.“One-to-one marketing” is a fundamental con-cept of interactive marketing and is key to cus-tomer retention and creating brand loyalty(Peppers & Rogers, 1997). The goal is to in-crease customer retention simply by making loy-alty more convenient for the customer thannon-loyalty.

Personalization can be thought of as a spe-cialized form of product differentiation (Han-son, 2000). This differentiation can take theform of product modification to incorporatefeatures designed to more fully meet the needsof the individual. It may also take the form of anextension to the consumer’s search and evalua-tion capabilities through choice assistance tech-

nology (such as the product recommendationson amazon.com). Personalization not onlymeets the customer’s needs more fully (provid-ing functional benefits), but also is traditionallya sign of status (providing emotional benefits)and uniqueness (providing self-expressive ben-efits).

Personalization is likely to contribute to thecreation of brand loyalty for both task-orientedand experiential uses. For the former, person-alization is likely to increase the efficiency ofachieving goals. Sites that know the consumer’spreferences and pertinent information will beable to screen out unwanted information orproduct options, improve the accuracy ofsearches, and speed the completion of transac-tions. For both task-oriented and experientialuses, personalization will have a positive influ-ence on the consumer’s attitude toward thebrand if the customer’s needs are in fact morefully met, or if a greater bundle of benefits isreceived. Personalization will also increase thelikelihood that this positive attitude will be cou-pled with the behavioral component of repeatvisits to the site. The customer has now partici-pated in the marketing efforts by investing timeand energy into providing the information nec-essary for the personalization effort; therefore,loyalty to the site, as measured by repeat visits iseasier than beginning over again with a compet-itive site.

Not all types of products lend themselves topersonalization (e.g., many consumer goods).Consumers must both desire and value personal-ization for it to have effects on brand loyalty.Furthermore, excessive personalization wastesconsumer time and potentially increases cus-tomer confusion. Peppers and Rogers (1997)suggest that when there is little difference in thevalue (or profitability) of a firm’s customers,and they have similar needs, then there is littlevalue to personalization for either the companyor the consumer. Furthermore, personalizationcan be very expensive for a firm. However, ifthese efforts create a competitive advantage forthe company, defined as long-lasting and defen-sible market position with above-normal profits(Porter, 1985), then personalization will, infact, pay for itself.



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An examination of current corporate web-sites provides evidence that companies are us-ing personalization to increase customer satis-faction and create loyalty. An Internet searchfor the word “customized” turns up more than1,173,515 web pages (AltaVista.com). Just asmass production was the hallmark of yesterday’sIndustrial Age, mass customization has the po-tential to dominate the Information Age (Digi-toe, 2001). One case in point is the launch ofMillstone Personal Blends, a subsidiary ofProcter & Gamble. The site offers coffee loversa personalized way to create their own customblend of coffee. At this site, customers partici-pate in the marketing process by creating theirown product and naming it. Customers answera variety of questions regarding their taste andsensory preferences. This information drivesthe creation of a unique coffee blend that canbe produced, packaged, and named for eachindividual consumer. In fact, customers can cre-ate multiple personal blends depending ontheir moods or situational needs. These prefer-ences are stored in the customer’s profile sothat more of the coffee can be ordered at afuture date. The goal, according to Proctor &Gamble is to “personalize the consumer’s expe-rience” in order to maximize customer satisfac-tion and profitability (ATG, 2001).

Another site providing evidence to supportthe value of personalization is Earthlink, anInternet Service Provider. This ISP encouragescustomers to personalize the start-up page, toincrease the ease of use and value of its services.More than 50% of EarthLink’s customer basehas used the Personal Start Page service (PSP).The result of this increased personalization isincreased brand loyalty and decreased brandswitching as measured by a churn rate of only4.2%, one of the lowest in the ISP industry(Meehan, 2000).

Community BuildingThe second technique used to increase sitestickiness is the building of virtual communities.These are groups of people who share commoninterests and needs who come together onlineto share a sense of community with others, with-out the constraints of time or space (Hagel &

Armstrong, 1997). Virtual communities capital-ize on the interactivity and many-to-many com-munications potential of the Web. They maytake the form of usenet groups, discussion fo-rums, or chat rooms, among others. These com-munities have some of the characteristics ofsocial gatherings, such as membership rules andnorms, multidirectional communication, andusers are responsible for contributing as well asconsuming information (Hanson, 2000). Dueto their ability to provide feedback to and infor-mation about companies and brands, virtualcommunities are a building block toward thetype of consumer participation in marketingthat has been discussed earlier, and thereforeshould be examined for their potential impacton brand loyalty.

Hagel and Armstrong boldly state, “thosebusinesses that capitalize on organizing virtualcommunities will be richly rewarded with bothpeerless customer loyalty and impressive eco-nomic returns” (1997, p. 2). Similarly, Lamonnotes, “being first to establish a ‘robust’ buyerand seller community is critical to e-commercesurvival, not to mention success; second placewon’t cut it in this mad scramble” (2000, p. 18).

How can this be? What are the benefits toconsumers of an online community? Again, avariance may be predicted for task-oriented ascompared to experiential uses of the Internet.In terms of increasing efficiency in goal attain-ment, online communities can provide access toinformation not available through any othermeans. Online communities provide a readysource of “word-online” (as opposed to word-of-mouth) experience with companies and brands.Just as consumers value personal recommenda-tions for most products above all other informa-tion sources, online consumers may obtain thesame types of experience based evaluationsfrom the online community. A site that supportsan active “critical mass” of involved consumerscan be a valuable information resource (Han-son, 2000). This may contribute to positive atti-tudes toward the site for task-oriented uses.

Consumers who participate in an online com-munity with an experiential orientation reapadditional benefits. While the provision of use-ful information produces functional benefits



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for the consumer, the social aspects of partici-pating in a community produces both emo-tional and self-expressive benefits (Duffy, 1999;Meehan, 2000). In many online communitiesresources are abundant (personal experience,knowledge and opinions), giving and sharingare culturally valued, and status is determinedby prowess, contribution, and reputation (Bam-bury, 1998). The idea of both producing andexperiencing content along with the social in-teractivity is very rewarding to experience-ori-ented Internet users.

Encouraging online community is likely toincrease site stickiness as well as positive attitu-dinal responses that may facilitate brand loyalty.However, allowing for users to communicatewith each other on a company’s site does notautomatically foster a sense of community.What is necessary is a critical mass of users witha sense of collaboration, loyalty, and social trust.These are necessary to produce social capital,the sense of connection between individualsthat arises from familiarity and participationthat provides the energy for communities tothrive (Hanson, 2000; Meehan, 2000).

However, the benefit of increased brand loy-alty arising from community building effortsmay be offset by the risks. According to Peppersand Rogers (1997), we are experiencing a shiftin power from producers to consumers. This isbecause virtual communities are more than so-cial in nature; they represent a group with acritical mass of purchasing power and a viablecommunication network about products, qual-ity, and prices. This consumer participation inthe marketing effort may be seen as a threat tosome companies.

Again, a search of corporate websites yieldsnumerous examples of corporate investment inthe belief that there is a relationship betweenonline community and building customer loy-alty. One of the communities most writtenabout is EBay, Inc., where establishing a sense ofcommunity and trust were two keys to the auc-tion site’s success (Bradley & Porter, 2000). Twoother companies who have taken this strategicinitiative are AT&T WorldNet Service and LycosQuote.com. For Internet service providerAT&T, the primary concern was customer re-

tention (Participate.com, 2001a). A community-building program called AT&T WorldNet Com-munityPort SM was launched in October 1998.According to AT&T, the increased services ofonline community building tools improved thecompany’s ability to meet the needs of its cus-tomers. One of the primary results was thatthere was “a lower overall churn rate among[AT&T’s WorldNet] customers, which reallypoints to the power of community to enhancecustomer loyalty and retain customers” (Partici-pate.com, 2001a).

The primary concern of Lycos Quote.comwas to “attract new visitors, keep them on thesite longer, and keep both [current and newcustomers] coming back” (Participate.com,2001b). Online community tools were imple-mented which enabled investors to learn fromexperts and communicate with peers. To meetthe needs of its customers, a variety of commu-nication venues were offered such as messageboards, online seminars, live chats, and volun-teer programs. Managers attribute the successof the site to the implementation of these com-munity-building tools. As of April 2000, the sitehad over 4,000 users subscribed to its commu-nity services, with an average of 7,100 uniquevisitors per week.

A CONCEPTUAL MODEL FOR DEVELOPINGSITE BRAND LOYALTYTo conceptualize the process through whichcustomers become loyal to websites, we proposea model that summarizes our previous discus-sion and case study evidence (Figure 1). Themodel identifies only one of the potential indi-vidual factors that influence the customer’s on-line experience—usage orientation. As with tra-ditional consumers in the search mode, onlineconsumers may exhibit a task-orientation onsome site visits and a more experiential orien-tation on others. Thus, the model shows thatthe factors that drive brand loyalty will differ fortask-oriented as compared to experiential usesof the Internet. As noted earlier, those with atask orientation will find a site more valuablewhen it allows them to complete their task effi-



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ciently and effectively. In contrast, those with anexperiential orientation will find a site morevaluable when it provides them entertainmentand enjoyment. Other individual factors (e.g.,general involvement with the Internet) as wellas situational factors (e.g., time constraints)might influence the consumer’s online partici-pation as well.

The model also suggests that marketers canfocus on at least two areas to enhance the con-sumer’s online experience and develop websiteloyalty. Websites that foster personalization canenhance the company’s ability to uniquely meetthe customer’s needs. Personalization not onlyincreases the bundle of benefits to the cus-tomer, but also raises the costs of switching.Once the visitor has invested time and energyinto the personalization process, there is a dis-incentive to start all over again with anothersite. Finally, websites that encourage consumersto build online communities clearly enhancethe participation level with the brand. For ex-ample, customers communicate among them-selves about potential new uses for and benefitsderived from patronage of the brand.

Once brand loyalty is developed in a market,what are the consequences? And, of what ben-

efit is brand loyalty to the firm? As the modelshows, site brand loyalty leads to cognitive, af-fective, and behavioral reactions from custom-ers, such as repeat patronage and favorable at-titudes toward the site and its brands, both ofwhich are obviously tied to increased revenue.Furthermore, increasing brand loyalty is amethod of increasing the inelasticity of demand(O’Guinn et al., 2000). Brand loyal customersare generally less sensitive to price increasesbecause they value the benefits of the brand.And finally, increasing brand loyalty reinforcesthe differentiation of the brand, which de-creases the likelihood that customers will switchbrands in the face of increasing competition(Crispell & Brandenburg, 1993; Dick & Basu,1994; Meehan, 2000). Thus, site brand loyaltyleads to a competitive advantage for the e-busi-ness. That is, customer participation in the e-Business model will be fundamental in develop-ing a sustainable competitive advantagethrough customer value (Slater, 1996; Woo-druff, 1997).

Empirical evidence from the marketplacesupports this model. For example, in the LycosQuote.com case study the online communityimplementation had a positive impact in the

F I G U R E 1Customer Participation in Creating Site Brand Loyalty



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development of increased brand loyalty (Partici-pate.com, 2001b). This increased brand loyaltyhad measurable results for each consequencepredicted in the model: affective, cognitive, andbehavioral. Site users who became communitymembers increased the length of time spent onthe site, returned more often, and generatedmore activity (as measured by community post-ings) compared to users who were not commu-nity members. A survey of site users indicatedthat community members were more likely tovisit the site daily and refer others to it.Through the increase in the site’s paying cus-tomer base, seminar registrations, and otheractivities, Lycos Quote.com reports a 535% re-turn on investment for the online communityinitiative (Participate.com, 2001b).

According to a recent Yankee Group Report,these results are not atypical (Meehan, 2000). Asurvey of companies implementing a commu-nity strategy shows increases in brand loyalty inboth the business-to-business market and in thebusiness-to-consumer market. Return on invest-ment (ROI) is influenced both directly and in-directly through increased sales, reduced costs,improved tracking of promotional expendi-tures, and increased customer satisfaction. Forexample, a 1999 survey indicated that across avariety of websites, online shoppers who arecommunity members buy at a much higher ratethan non-members (Yankee Group Report,1999). In some industries a successful commu-nity implementation can yield ROI as high as400% (Meehan, 2000).

POTENTIAL BARRIERS TO CUSTOMERPARTICIPATIONThere are, of course, potential barriers to in-creasing customer participation. Many Internetusers are reluctant to supply personal informa-tion;, in fact this issue topped the list of person-alization concerns in a recent survey conductedby Forester (Hagen, Howe, & Berman, 1998).Marketers must be judicious in both obtainingand using such information. Furthermore, per-sonalization may not add value to many prod-ucts and services. Clearly, customers must per-

ceive a value to the personalization before theywill relinquish their privacy and give of theirtime to participate in the marketing effort.However, if companies can define how person-alization will provide the customer functional,emotional, and/or self-expressive benefits, thenthey will be more likely to obtain the type ofparticipation that will lead to increased sitebrand loyalty.

Similar issues pertain to building online com-munities. Not all brands or companies can cre-ate enough interest or have the requisite emo-tional and social involvement needed to build asense of community. As more online discussiongroups, chat rooms, and communities develop,the competition for the customer’s participa-tion will greatly increase. Companies must un-derstand the usage orientations and other indi-vidual factors that motivate customers to jointhese groups, and determine the types of bene-fits they will obtain. Websites that understandthe customer’s online experience will be bestequipped to provide customers with what theyneed to make participation valuable, and thusincrease site loyalty.

A final barrier to developing site brand loy-alty is the steady progression of “me-too” com-petitors who also will be vying for the custom-er’s attention through attempts to personalizetheir sites and build brand communities. Thus,the key to sustainable site brand loyalty will be inconsistently providing superior customer value.

FUTURE RESEARCHAt this point in time there is a variety of casestudy evidence supporting the positive effect ofwebsite personalization and online communityon increasing customer loyalty. What is neededin the next stage of study is further investigationinto the specific effects of consumer differencessuch as task or experiential orientation. Fur-thermore, a number of exciting and intriguingresearch questions remain in terms of how cus-tomer participation influences the creation ofsite brand loyalty. First, extensions to this workshould seek to delineate other factors thatwould impact the customer’s participation inthe marketing effort. Second, further investiga-



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tion into the consequences of such participa-tion will provide marketers with the informa-tion needed to implement participationenhancing strategies. And finally, characteris-tics of brands that support personalization andcommunity-building efforts require more ex-ploration.

CONCLUSIONThe traditional marketing concept calls for anorganization to focus on customers (Kohli &Jaworski, 1990); the need for such a focus hasnot changed. But is a website on the Internet aproduct, a store, a service, a vendor, or a chan-nel? The integration of these functions and theblurring of these distinctions is the challenge ofbuilding the new e-business model (Kalakota &Robinson, 1999). Duncan and Moriarty (1998)suggest that the common denominator amongall of the marketing functions is communication.Communication is at the heart of relationshipmarketing and is the basis for understandingand developing customer value in the off-lineworld; it becomes even more important in the“many-to-many environment” of the Internet.

This new communication model shifts thepower by enabling customers to participate inthe marketing effort. Today the balance ofpower between producers and consumers is inequilibrium, and the boundaries between themare blurring (Berthon, Holbrook, & Hulbert,2000). In addition, just as with previous mediatechnologies (e.g., radio, television, printingpresses), the Internet has changed the way thatinformation is made available (Yadav, 2000). Ashappened when other technologies becameavailable, firms may languish for a time untilthey learn how to compete in the new environ-ment. For example, what arose out of the one-to-many market segment era, was a one-waycommunication model where the firm imbuedits brand with an image to differentiate it fromall the other brands. What arises out of themany-to-many marketing era will clearly bemore interactive and involve negotiation be-tween the producer and the consumer as towhat a brand’s image and meaning will be. Aquote by Dick Anderson, General Manager of

IBM Web Management personifies this perspec-tive: “We have around 1 million visitors a weekto ibm.com. The activity that you have when youhave that level of traffic coming to your site is avery critical part of what your brand image is. Infact, you might say it’s beginning to set thebrand image.” (2000, p. 70). Thus, in the newage of interactive communication, producersand customers are co-creating the e-businessbrand. When customers desire this sort of par-ticipation in creating an e-business brand, itseems brand loyalty will also be fostered.

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Customer participation in creating site brand loyalty