The Effect of Customers' Social Media Participation on Customer Visit Frequency and Profitability: An Empirical Investigation

By Rishika Rishika, Ashish Kumar, Ramkumar Janakiraman, Ram Bezawada. Information systems research, 2013

546 citations recorded by the source corpus.

In this study we examine the effect of customers’ participation in a firm’s social media efforts on the intensity of the relationship between the firm and its customers as captured by customers’ visit frequency. We further hypothesize and test for the moderating roles of social media activity and customer characteristics on the link between social media participation and the intensity of customer-firm relationship. Importantly, we also quantify the impact of social media participation on customer profitability. We assemble a novel data set that combines customers’ social media participation data with individual customer level transaction data. To account for endogeneity that could arise because of customer self-selection, we utilize the propensity score matching technique in combination with difference in differences analysis. Our results suggest that customer participation in a firm’s social media efforts leads to an increase in the frequency of customer visits. We find that this participation effect is greater when there are high levels of activity in the social media site and for customers who exhibit a strong patronage with the firm, buy premium products, and exhibit lower levels of buying focus and deal sensitivity. We find that the above set of results holds for customer profitability as well. We discuss theoretical implications of our results and offer prescriptions for managers on how to engage customers via social media. Our study emphasizes the need for managers to integrate knowledge from customers’ transactional relationship with their social media participation to better serve customers and create sustainable business value.

Subfields: Information Systems and Management, Marketing, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/02cc4a3e5bacad3e0f14c29b3b562967210f3420

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Citations in the corpus

The Effect of a Data Breach Announcement on Customer Behavior: Evidence from a Multichannel Retailer (2018, background): “creating matched pairs of treatment and control group customers who are similar on a set of observed characteristics, thus addressing the customer self-selection effect (Rishika et al. 2013).”
The usage of digital marketing channels in SMEs (2015, background): “In addition to the softer outcomes, a recent study indicates that in some cases, utilization of social media can also drive straight sales-related outcomes; customers who are committed through social media to the company are more profitable than those who are not committed to the brand on social med”
Path to Purpose? How Online Customer Journeys Differ for Hedonic Versus Utilitarian Purchases (2020, background): “…several path-to-purchase information channels have garnered considerable attention, including search engines (Ghose and Yang 2009), social media (Rishika et al. 2013), review sites (Chevalier and Mayzlin 2006), deal sites (Kumar and Rajan 2012), and retailer product pages (Huang, Lurie, and…”
Examining branding co-creation in brand communities on social media: Applying the paradigm of Stimulus-Organism-Response (2018, background): “Initially, Rishika et al. (2013) suggested the emerging concept of “Customers’ Social Media Participation” to explain the customers’ participation on SNSs and also advocated that their frequency of online visits to a company’s SNSs strengthened the association between customers and company.”
Advances in Social Media Research: Past, Present and Future (2017, background): “Some studies have also empirically identified consumers ’ social media participation as a key metric contributing to the profitability of a business (Rishika et al. 2013).”
Introduction to the Special Issue - Social Media and Business Transformation: A Framework for Research (2013, methodology): “In this issue, Rishika et al. (2013) make use of both approaches.”
What motivates customers to participate in social commerce? The impact of technological environments and virtual customer experiences (2014, background): “Third, no study to our knowledge has established the link between the technological characteristics of the social commerce environment and customer participation [6,50].”