Nefa Fadhilah Humairah, 44027935, MKTG3509, Conceptual Paper

Tapping Social Media to Increase

Customer Loyalty in Business Market

Abstract

Social media as the new phenomena in business market offer opportunities to connect

and interact with other people easily. A new way of communication can help company to get

higher feedback and recommendation to build better customer relationship. This online

platform has been viewed as the new marketing tools to engage the customers in the

communities. The contents shared by the customer on the social media can gives company

path to repair the mistakes and come up with better performance in the future. The

communities itself that will directly connect to loyalty as place to gather customer with the

same admiration towards the brand. Many components will draw the association between

social media and brand loyalty. This paper will focus on connecting the dot of how tapping

social media can increase the brand loyalty.

Introduction

Easiness for accessing information about brand that we are willing to buy whenever

and wherever you want are one of social media role in the market. Nowadays, social media

has developed into customer needs following the trends which also has significant impact on

a brand's reputation (Kim & Ko, 2012, p. 1481). Customer feedback and recommendation

have become important aspect to consider in order to increase brand loyalty in company. This

papers aims to discuss the concept in which social media have empowered consumers by

having strong brand communities in the market and also on how social media can help

company to increase its brand loyalty. Marketers potentially value brand communities for its

ability to construct social relationship and built it into oppositional loyalty (Thompson &

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Shinha, 2008, p. 65). Although social media marketing and brand loyalty discuss separately

from prior research, the association of these current marketing topics requires additional

theories and conceptualization discussion to proof one aspect can beneficial to others.

Literature Review

Tapping Social Media to Business Market

Social media as communication tools has shifted marketing communication between

company and the customers from one-way to two-ways communication in business market

(Kim & Ko, 2012, p. 1480). Social media is internet-based applications that facilitate users to

interactions, collaborations, exchange and sharing the particular content. Flexibility to chain

and link media, retailers, customers, events and media itself lead social media to become a

low cost and more effective marketing activities in building relation with customer (Kim &

Ko, 2012, p. 1481).

Social media is relatively new marketing aspect that become consideration of

customer relationship management trigger (Malthouse et al, 2013, p. 270). As a place for

customer to interact and exchange information about brand with others, social media viewed

as platform that have opportunity to reduce misunderstanding (Kim & Ko, 2012, 1481) and

have direct respond from customer about the brand itself (Pitta, Franzak, & Fowler, 2006, p.

425) where company can build up the customer relationship by having collaborative and

engaging activities with the customers.

Customers have ability to access information about the brand, compile feedback to

help brand audit process, and reduce negative customer perception of the brand which all

opportunities can improve the customer relationships.

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Customer Relationship Management

Wulf, Odekerken-Schroder and Iacobucci mentioned that relationship quality

influences loyalty of the customer behaviour as its result from good maintenance of

relationship between company and the customer in their research 2001.

Customer Relationship Management is a systematic and proactive relationship build between

the brand (company) and the customers which start from initiation and finish by execute it to

different variety of customer-channels (Malthouse et al, 2013, p. 270). Deep understanding of

the context which in our discussion focus on the brand should be perform to meet customer

relationship criteria (Price & Arnould, 1999, p. ). Engagement of the customer clearly seen as

the part of customer relationship management followed by customer trust that arise from the

engaging interactions and activities (Price & Arnould, 1999, 38).

Customer engagement become essential part of customer relationship management because

good engagement both from low and high customer engagement will have positive

association with customer relationship management. Since company no longer has control for

the information in high customer engagement, the message and information can be over

exposure which can change into positive or negative attitudes of customers and awareness

can directly create as the impact of the exposure.

The statement “regular and frequent interaction is an important correlate of friendship

formation and maintenance which sociability is viewed by many as intrinsic to friendship

Price & Arnould, 1999, p. 54) will followed by the good quality of relationship that

commonly results on the greater satisfaction, trust a commitment (Wulf, Odekerken-Schroder

& Iacobucci, 2001, p. 36).

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Brand Community

The literature shows that brand communities is valuable to the market (Thompson &

Sinha, 2008, p. 78) because it opens opportunities to engage, collaborate with, and actively

contribute on customer relationships (Dholakia, Bagozzi, & Pearo, 2004, p. 241). Community

is part of human association who share homogenous lifestyle segments (Muniz, Jr. &C.

O’Guinn, 2001, p. 426) and should shares consciousness, moral of responsibility rituals and

tradition (McAlexander, John & Koenig, 2002, p. 41). Cognitive, emotional, creation of

nature material and negotiation of meaning are the part of context that people share within the

community. Community member’s usually voluntary join without much effort and implement

sense of values, beliefs and conventions that they share with group of people (Dholakia,

Bagozzi, & Pearo, 2004, p. 244).

Communities happens in face-to-face and virtual ways. Virtual communities

collaborate and interact online to share same goal and interest within the community

members (Dholakia, Bagozzi, & Pearo, 2004, p. 244). This type of interaction need more

understanding and commitment from the people because they share same aspect but in

different plat form which more limited to control the information. In other hand, brand

communities is group of people who has brand that more specialized and non-geographically

group (Muniz & O'Guinn, 2001, p. 412). interpersonal ties and enhance mutual appreciation

for the certain brand (McAlexander, John & Koenig, 2002, p. 44). In the brand community,

high interaction level entails customer involvement to participate and contribute the

information (Dholakia, Bagozzi, & Pearo, 2004, p. 245). Engagement of customer also

happens in brand community through accommodating customer to experience the brand,

analyse the meaning and co-create brand experience (McAlexander, John & Koenig, 2002, p.

44). Customer behaviour such as membership or participations to be loyal and committed to

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the brand (Muniz & O'Guinn, 2001, p. 424) influences by the brand community with high

level of customer likelihood to purchase the brand again in the future.

Brand Loyalty and Retention

Brand community lead us to customer loyalty as the extended part of brand loyalty

(McAlexander, John & Koenig, 2002, p. 38). Brand loyalty is feeling of commitment to the

brand (Duffy, 2003, p. 480) that consists of trust, perceive value, emotion elements on

building relationship (Pitta, Franzak & Fowler, 2006, p. 422). Loyalty programs are so

innovative nowadays, starting with give the customer prizes, special recognition and

privileges (Wulf, Odekerken-Schroder & Iacobucci, 2001, p. 33) which will generate with

good performance on the financial result (Duffy, 2003). Loyalty program aims to maximise

shares of customer for the brand and keep customer relationship in good performance by

engaging customer interaction in the brand community.

Behaviour change of customer as impact of marketing activities may change customer loyalty

behaviour in term of purchasing frequency and spending time do research on particular brand

in daily basis (Wulf, Odekerken-Schroder & Iacobucci, 2001, p. 37). Brand loyalty is likely

become an impact from consistent and committed relationship build between the brand and

customers. The finding recommends company to invest on customer relationships since it

results in increased loyalty on having good customer relationship. Brand also play an

important role because brand represent the products and the personality of the company itself

so brand loyalty can’t be success without the brand (Duffy, 2003, p. 483). Customer loyalty

offer significant opportunities as part of overall business strategy.

Theoretical Development

In providing a theoretical basis and support for this paper, customer relationship

management, brand communities and brand loyalty ties will point out from prior research

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theory. As it clearly seen, company always keep on aiming to have better performance of

brand loyalty because it opens opportunities to have better financial performance (Duffy,

2003, p. 482). The problem arise when company want to gain better performance for their

brand and suggestion come to tapping social media as customer relationship management

tools to help advance brand loyalty performance.

Brand plays important role as image of the products and the company because

customer need something to that they easily remember and associate with it. Brand make it

easier for customer on making purchasing decision and to remember which brand have left

them good experience. In 2006, Pitta, Franzak and Fowler has come with model theory that

shows that loyalty significantly impacted by the customer relationship management through

having brand communities which support Carlson, Suter and Brown theory about brand

community. Customer acknowledge themselves as member in the community which they can

engage and have social interaction in group of the brand that they admire. Brand communities

has recently shifted from face-to-face or direct community activities to virtual communities

where people can gather and share the brand that they admire online to the other members

(Dholakia, Bagozzi & Pearo, 2004, p. 245-246). The theory from Dholakia also shows that

social influence which can we put as social media has direct impact to customer decision

making and participation. Participation is a part of customer relationship that needed in the

brand community.

Traditional model of customer relationship management stated that customers are

passive in responding action of purchasing behaviour from company. Malthouse come up

with new theory that customer relationship management also allows customer to be an active

participant by increasing customer opportunities in customer engagement. To leverage up the

brand loyalty performance, the company need to consider customer feedback as the critical

information on managing relationship to customer as mentioned by (Malthouse, 2013, p.

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272). Maintenance as the traditional customer relationship management components can be

develop by put up to date and new approach of marketing in the business market. Social

media as the new marketing activities in the market viewed as competent marketing approach

to help the shifting.

From Schultz, Don and Bailey research, it shows that consumer can be driven by

media and channels to build relationship with the brand. Pitta, Franzak and Fowler once again

emphasize the theory that online activities including social media can boost customer trust,

increase the perceived value and build loyalty from customer relationship. Carlson, Suter and

Brown writing shows that company aims to have recent trends and compete with competitors

on using tangible marketing tools such as frequent flyer programs, customer loyalty bonuses,

and free gifts, the company can use social media to coop both tangible and intangible benefits

for the customers (Wulf, Odekerken-Schroder & Iacobucci, 2001, p. 41). The customer can

be a community member that control and can manage the information that they share

however the information they given can be over-exposed and need company guidance to limit

and provide the appropriate content and amounts of the information (Malthouse, 2013, p.

273). In the context of this paper, social media seen as the next marketing tools that can help

gaining brand loyalty and will result with good financial performance of the company.

Conceptual Model and Proposition

As identified within the literature review, there is a shifting of brand communities’

communication from one-way to two ways communication where we can see an open

opportunity to tap new communication tools to generates positive result on brand

communities. In other hand, marketing activities now develop and offer new way of

communication that make people communicate easier and happen in more effective way by

having social media as the platform to communicate.

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To address the solution, I use the opportunities to tap social media in order to increase

customer loyalty. As acknowledge from the literature review, brand loyalty is the extended of

brand communities because brand communities play significant role of change in brand

loyalty.

P1. Social media marketing is positively significantly impact brand communities

Brand communities should cover criteria of sharing consciousness, sense of moral

responsibility, ritual and tradition in a group. In Carlson, Suter & Brown works, social media

viewed to fit those criteria. Shifting from one-way to two-ways communication also makes

social media become an effective and efficient plat form to interact and run the communities

which known as virtual communities.

In the community, customer will be influences by the community perception about the

brand that they share the admiration with. It is the impact of message and information

exposure in the social media which derives from their perception towards the brand image.

The lauder and interactive the communities are, the more customers are being influenced by

the brand communities. Malthouse already mentioned idea that customer relationship

management can have impact to the community by having customer engagement. Social

media can give customer space and opportunities to shape the message that they share in the

community.

P2. Brand communities have strong association with brand loyalty

In Thompson and Sinha study, brand communities have been viewed as an important

factor that influence brand loyalty which will generates the increase of the company

revenues. As mentioned on the literature review, that having brand communities through the

customer relationship will be a good investment to increase the loyalty of customers. To join

community people do not need prior approval, one person can joined many communities for

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different brand at one time. This set as an issue that the company use brand communities also

to compete with the competitors.

The communities can help company focus on their target market which will become

more efficient and low cost to share and interact within the communities. Rather than

approaching people one-by-one, company can approach, inform and educate customers that

already in the communities. A person will join and leave the communities voluntary, when

they join the communities that means they gain interest and willing to contribute or at least to

know about the brand itself. Members of the communities for specific brand has become easy

target market for company to approach because they already show willingness to know the

brand by join the community (Pitta, Franzak & Fowler, 2006, p. 427). Customers’ voices will

be gathered in the communities then being analysed and reviewed to develop better

performance for the brand in the future.

The membership of people who join the community is more beneficial as a tools to

increase brand loyalty compare to customer acquisition tool (Carlson, Suter, & Brown, 2008,

p. 291). The interaction and information shared on the communities engender customer sense

of loyalty. The large the communities get, the more participation happens in the platform

which will gather more information. This approve that brand communities can influence

directly to the increase of brand loyalty.

P3. Social media marketing has significant impact for brand loyalty

Social communication affect customer relationship positively (Kim & Ko, 2012, p.

1484). Higher number of customers interactions and activities entails many involvement

build up by the customers within the communities which will result on the stronger

relationship among the customers and between the customers and the brand. Responsiveness

and the engagement of customer interaction in the communities will increase the customer

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life time value. Loyalty derives from how many time the customer purchases the brand itself

for several different time including in the future (Dholakia, Bagozzi & Pearo, 2004, p. 246).

The more engagement and interaction will lead to greater feeling of belonging

towards the current product they have and put initiation of the next purchase as consideration

to gain better social acceptance within the communities. Social identities is a necessary aspect

to build long-term relationship within the communities. Long-term relationship should be

maintain to perform customer loyalty behaviour towards the brand. Brand communities is

place where customer-centric relationship performed from the interactions and engagement.

Customer can also control and manage about contents that shared and discuss in the social

media platform. Negative and positive perspective of customer towards a brand will both

shared in the social media. Customer may cannot aware which information is valid and which

is failure as the impact of information exposure.

Figure 1.

Meaningful experience in the communities will likely to strengthen ties of the

customer on having mutual emotional bond with the brand. Customer trust will build the

loyalty among the members of the communities. The events can be a place for customer to

have community gathering. Nowadays, social media can replace the events as the place for

the customers to gather and discuss the certain brand information (McAlexander, Schouten &

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Koenig, 2002, p. 41). As social network develops and grow to help company perform better

on the marketing strategy, brand loyalty will also arise in addition of gaining benefits and

added value for both customers and the brand company (Zaglia, 2013, p. 216).

Malthouse put customer engagement and brand loyalty (retention) as their new

customer relationship management model. In other hand, they only put social media as the

strategy to implement new customer relationship management model because social media

offers benefits and effectiveness that will satisfy needs of the customers who wanting more

information about the certain brand (McAlexander, Schouten & Koenig, 2002, p. 42). I

believe social media is a new phenomenon that has big impact for the brand loyalty which

correctly design and work directly to help building customer relationship through the

customer engagement process as you can see at figure 1.

Discussion

Theoretical Implication

Social media as two-ways communication tools has become a trends and daily

activities that help people life become easier and more effective. As the company need new

marketing tools to increase brand loyalty, social media come to make better performance of

customer relationship. Social media should be the right platform to tap into the company as

tools to gain customer trust and added value to increase customer commitment towards the

brand. In theory, brand communities theory has a very positive relationship with the brand

loyalty because communities can directly lead customer to become loyal to the brand.

However in life, the practice will not as simple as the theory model propose.

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Practical Implication

Social media may expose over information which can lead to communities that not

support the brand. “Haters” communities have been made and became new tactics for the

competitors to put certain brand down by sharing negative comments and experience.

Social media has been associated with young people because majority of the users are young

people. Not all segments can be consider to gather as community in social media platform. In

practice, many brand targeted adult and elderly people which not relevant on using social

media.

The beneficial aspects arise from the feedback and review that the company get from

the social media platform. If there’s negative comments or experience, the company can

straight away confirm and take action about it. Customer really need quick action and

response so it will be suitable for company to response and serve the customers via social

media to reduce the time and cost as the more effective approach. The model is risky to

implement but when the process work surely it will help the company increase the brand

loyalty.

Limitations

The theory about social media marketing is not focusing on the specific type of social

media platform. Social media offers different range of application, website and others shape

of communication tools online. Information that share to the customers via social media is

most likely will always over-exposure. Even though, the brand only share short yet

meaningful message, the response from customers will be overwhelming. Different person

has different personality and perspective which they can actually share and discuss on the

social media platform. Customers gain knowledge and trust information easily from the

online basis platform nowadays which will likely to increase customer trust to the brand.

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Company has limited access to control the load of information. However, company can also

interact and actively discuss about the brand itself on the virtual communities.

Communities still related to the brand communities that gather and having face-to-

face interaction such as VW communities that often run events to keep the group enjoy and

excited about the brand itself. Only a few number of literature talk about virtual or online

communities since the social media phenomena has just booming and become sensational

topic to discuss in the business market.

Future Research

The further research should have more research support for specific social media

platform because social media topic is very broad. Information given from social media also

vary in the type. Photo, video, article or others contents may impact different to the customer

relationship. Limited explanation about how brand communities keep the customers good

perspective of the brand. Communities has also variation of people either it’s based on

location, age, education, social background or others aspect.

Conclusion

In conclusion, social media has provided the easiness and effective way to

communicate to the customers which will help company gaining the customer loyalty

towards brands. Customer relationship significantly derives from the interactions between

customer and the brand. Traditional customer relationship management has shifted and

develop with the new concept that need social media as tools to have two-ways

communication with the customers on online basis platform. Brand communities has role as a

place to scope and gather the customer who has admiration towards certain brand. Here social

media try to tap into the business in order to collect feedback and recommendation from the

customer. This help company to perform better in the market and keep the customer to

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purchase the brand. Trying to change the lacking aspects and learn from the past mistakes are

the way the company will grow and perform better than they used to be. The increase of

brand loyalty will result for the good result on company’s financial performance.

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