HBR Study: “Community Built Around Product Sells More Product”

9 05 2007
  • eBay Community

In the Harvard Business Review issue – December 2006, a report on a research study conducted on eBay community participants revealed measurable financial performance among those customers engaged in its online community.

The experiment involved over 140,000 eBay customers who had bought or sold on eBay but who had not participated in the eBay customer communities previously. Approximately, 80,000 were invited to join the online eBay customer community while the remaining 60,000 were used as a control group. Of the people who were asked to join the community, 3,299 became active participants and 11,242 became lurkers. Over the course of a year the researchers compared the behavior of the active participants and lurkers to that of the control group and found that:

  • Lurkers and active participants won up to 25% more auctions
  • Lurkers and participants paid prices that were as much as 24% higher
  • Lurkers and participants spent up to 54% more money in total
  • Active participants listed up to 4 times as many items
  • Active participants earned up up 6 times as much monthly sales revenue
  • For first time sellers who were lurkers and participants, 10 times as many of them started selling on eBay after joining the community

The activities of the lurkers and participants resulted in 56% more sales during the year of the study for eBay.

Lessons Learned

Just as we have seen in other posts from InnoCentive, NineSigma, and Cambrian House, developing online community around product or services are essential for delivering the experiences people expect today – personal, immediate, participative, and creative.

And they pay off for site sponsors.

At the heart of this is that eBay has a community strategy that improves the buyer/seller experience for their most profitable customers and manages the reward and reputation of these VIPs.

Just another example that technology doesn’t create community. You need a good strategy that makes the experience essential to the end user and let’s them self-determine outcome within a predefined set of offerings that support the business.

 

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