The study
Because engaging customers and developing co-creating customer communities can enhance business performance and customer value there has been a considerable increase in interest in these subjects as of lately. Due to co-creation of firms and consumers the boundary that separates firms from consumers becomes more and more blurry (Grönroos & Voima, 2013). Consumers increasingly participate in content creation, product development, support each other in product use, and promote products, services, or brands to other customers. These actions fall under the concept of customer engagement that aggregates the ways in which customers can influence firms (Doorn et al., 2010). However, academics and practitioners lack understanding on how customer engagement contributes to value co-creation. By using a case study approach on a public transport service system involving consumers, communities, businesses, and governmental organizations, Jaakkola and Alexander (2014) try to improve this understanding. The main strength of this paper is that, Jaakkola and Alexander (2014) are (one of) the first who conceptualize the role of customer engagement behavior (CEB) in value co-creation.

Results
This study shows that CEB affects value co-creation by customers’ diverse resource contributions toward the firm and other stakeholders. More specifically, CEB affects other stakeholders’ perceptions, preferences, expectations, or actions toward the firm. Therefore, CEB affects value processes between the customer and firm, and indirectly value co-creation between the firm and other stakeholders. Resources in this case are not only of informational nature but may also be for example physical labor, skills, and relationships. Besides the aforementioned, the study finds numerous other effects. Firstly, customers’ sense of ownership of the firm’s offering and empowerment in the service system are key drivers of CEB and this is supported by the firm’s provision of access and willingness to cede some control to the community. Secondly, engagement behaviors are motivated by the customers’ need to extend and improve the firms offering, either for personal or collective purposes. Thirdly, other stakeholders may provide engaged customers with recognition, legitimacy, and/or resources which further encourages these behaviors. Fourthly, the drivers, manifestations, and outcomes of CEB are iterative and cyclical, as the positive outcomes for each party further motivate them to engage in or support CEB. Lastly, customer satisfaction, trust, and commitment are drivers and outcomes of CEB, and customers’ motivation to engage relates to their expectation of value outcomes.

Managerial implications
Jaakkola and Alexander (2014) suggest that organizations can improve and differentiate their offering by incorporating the broad range of resources that customers and other stakeholders are willing to invest through codeveloping or augmenting behaviors. This means firms should consider how communities of customers can be involved within the firm and explore the potential to engage diverse stakeholders and their networks of relationships around a common cause, enabling greater customization and augmentation of the firm’s offering. More specifically, when customers feel empowered with passion and establish a sense of ownership of the offering, they are more willing to contribute for the benefit of the firm. Furthermore, through influencing and mobilizing behaviors, engaged customers impact other stakeholders’ willingness to engage with the focal firm and thereby offer a valuable channel to new customer and stakeholder relationships. Lastly, firms can encourage CEB by being open, accessible, and adaptive to customers’ resource contributions, but it requires that firms to some extent cede control over the offering to the engaged customers and other stakeholders.

This sound great, but be critical
Because this study focuses on a public service system, i.e. a railway station that has somewhat of a monopoly status, the generalizability of the findings is somewhat limited. Therefore, the findings may be most applicable to other public sector contexts where resources are limited and common causes can be more easily fostered within communities. However, I feel the findings are robust enough to apply to multiple others communities of stakeholders connected by an interest in a certain offering.

References

 Jaakkola, E., & Alexander, M. (2014). The role of customer engagement behavior in value co-creation: a service system perspective. Journal of Service Research, 17(3), 247-261.

Grönroos, C., & Voima, P. (2013). Critical service logic: making sense of value creation and co-creation. Journal of the academy of marketing science, 41(2), 133-150.

Van Doorn, J., Lemon, K. N., Mittal, V., Nass, S., Pick, D., Pirner, P., & Verhoef, P. C. (2010). Customer engagement behavior: Theoretical foundations and research directions. Journal of Service Research, 13(3), 253-266.

 

 

Firms realize that customers have a significant impact on whether a product or service goes to market successfully. Customer co-creation, the process where organizations and consumers work together to create ideas, products, and services, therefore has become a popular medium (Saarjärvi et al., 2013). Often in this case organizations steer product innovation, but customers have a say in it. One firm that also uses this new medium is DEWALT (BBC, 2016).

The company

DEWALT, is a subsidiary of Stanley Black & Decker and leader in the American professional power tool market for the construction, manufacturing, and woodworking industries. The company is founded in 1924 and since then millions of professionals have relied on the company to produce the latest durable products that solve new challenges on the worksite.

Business model

DEWALT follows a revenue based business model that aims to provide value in delivering optimized professional workhorse solution-tools, accessories, and services to ensure confidence for the toughest jobsite conditions. But besides making tools like utility knives and pliers, DEWALT is also known for making digital products like the TOOL CONNECT and CRIMP CONNECT mobile app that allow you to digitally connect and control DEWALT products. Moreover, DEWALT made an android-powered smartphone designed for building industry workers. The device is designed to survive a two meter drop on to concrete and can operate in temperatures ranging from -20C to 60C (Forbes, 2016).

Co-creation of customers

Because competition is fierce, many industry participants try to launch more tools with beter quality in a shorter time period. To not fall behind, DEWALT needed a fast and accurate assessment tool to be more reactive in the marketplace. Additionally, to understand the direction technology and innovation needed to go, DEWALT realized that launching products that meet the needs of tradespeople requires bringing them into the decision-making process for ideation, product testing and usability, marketing, and packaging. To meet the aforementioned challenges DEWALT launched the DEWALT Insights Forum, an insight community of 12,000 members who share ongoing feedback and which additionally allows invention submission where professional tradesmen and loyal customers submit ideas for new products. This community is built together with partner Vision Critical and includes customers, partners, employees, fans, donors, and alumni. The characteristics of an insight community compared to other communities is depicted below (Visioncritical, 2015) (DEWALT, 2016).

Using a Insight community, DEWALT gets rapid and ongoing feedback that allows them to make easier business decisions. More specifically, the insight community allows DEWALT to engage with customers in an ongoing dialogue that respects members individuality and their humanity, and which complements other data sources, like Big Data, CRM, and social media analytics. This together: builds better products as DEWALT better understands how its products fit and function in the lives of their customers, provides better service, and delivers better results. The advantages of the Insight community are depicted below (Saarjärvi et al., 2013).

While traditional market research can be impersonal, time consuming and expensive, the DEWALT Insights Forum creates relationships with members and saves the company time and money. The company saved more than $1 million in research costs in 2016 and almost $6 million since establishing the Insight community. DEWALT can now use one resource for the entire lifespan of a project and once products have launched they can follow up easily with satisfaction and quality surveys (Dewalt, 2016).

Overall, DEWALT is a business case which shows us that the theoretical advantages of customer co-creation can indeed become reality and benefit an organization significantly.

References

http://www.dewalt.com/en-us/company-info
http://www.bbc.com/news/technology-36082146
Hannu Saarijärvi P.K. Kannan Hannu Kuusela, (2013),”Value co-creation: theoretical approaches and practical implications”, European Business Review, Vol. 25 Iss 1 pp. 6 – 19
https://www.visioncritical.com/customer-stories/dewalt/
https://www.forbes.com/sites/shuchingjeanchen/2016/01/07/father-son-in-power-tools/#64dca70a6519

Advertising can be a profitable business and in the United States alone, advertising is a $200 billion industry. As consumers, we are all exposed to advertising on a daily base, either on the TV, via e-mail, social networks, or through other related online content. Yet advertising remains poorly understood by economists. This is mainly because offline data has been insufficient for business and academics to measure the true impact of advertising on consumer purchasing behavior (Lewis et al., 2014). In 2013, for the first time in the history of advertising in the United States, digital advertising surpassed TV broadcast advertising, which for a long period of time has been considered the best mass-marketing medium (IAB, 2014).

Because now a day people are more and more online and get more often exposed to online digital advertising, a lot of valuable data is generated which allows businesses and academics to reduce the information gap that is present in the advertising world.
In this study, Ghose & Todri-Adamopuolos (2016) go beyond the existing literature and with the use of individual-level data, research the effectiveness of online display advertising and the effects display advertising has on different consumer behaviors online. Studying the latter is a novelty compared to historical research of display advertising. In this case to understand consumers’ response to advertising, not just a probable exposure to it, often simple proxies were used like click-through-rates. Ghose & Todri-Adamopuolos (2016) surpass these relative simple methods and proxies and use an experimental framework that allows to compare the online behavior of two groups of users: those who view the display advertisements and those who do not view the display advertisements. What the data shows is that if consumers are just exposed to display advertisement this already significantly increases the interest of consumers to search for the displayed brand or product. Subsequently, the increased interest results in either active online searching for the product/brand or an increased likelihood to click on a related future display advertisement. Secondly, the longer a consumer looks at the advertisement the higher the probability a consumer goes directly to the website of the specific brand or product (36% bigger chance than average) instead of using search engines like google. Lastly, after seeing a display advertisement consumers are 7,1% more likely to buy the advertised product.

Practical implications for business

Ghose & Todri-Adamopuolos (2016) propose a model that demonstrates how advertisers can divide resources across the different types of display advertising. This model allows advertisers to use big data analytics in order to move advertising budget from less effective and cost efficient channels/media towards more effective advertising and increase the overall effectiveness and return on investment of the digital marketing strategy.  Furthermore, as the results signal that search advertising exposure only happens in a consumer’s funnel path after the consumer launches a search session that shows his or her interest for a brand/product, it is important for advertisers who would like to control the presence and the frequency of search advertising exposures that they examine what triggers consumers to initiate a search session before examining anything else. Lastly, it is important that potential consumers are targeted by businesses sooner in their shopping journey, as this could increase the effectiveness of the advertisements up to four times.

References

Ghose, A., & Todri, V. (2015). Towards a Digital Attribution Model: Measuring the Impact of Display Advertising on Online Consumer Behavior. (pp. 889-910) MIS Quarterly

Interactive Advertising Bureau (IAB). 2014. “IAB Internet Advertising Revenue Report: 2013 Full Year Results,” PricewaterhouseCoopers LLP.

Lewis, R., Rao, J. M., & Reiley, D. H. (2014). Measuring the effects of advertising: The digital frontier. In Economic Analysis of the Digital Economy (pp. 191-218). University of Chicago Press.