1. INDIVIDUAL ASSIGNMENT
BUSN32 Business Economics: Internet Marketing, Branding and Consumers
29.02.2012
“Who is companies` new customer in the Internet era?”
Judyta Pokrywka,
Lund University
Numer of words: 2960
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2. Table of Contents
INTRODUCTION AND LITERATURE REVIEW ......................................................................................... 3
RESEARCH QUESTION .......................................................................................................................... 4
EMPIRICAL EXAMPLES, THEORIES AND MAIN CONCEPTS ................................................................... 5
DISCUSSION ......................................................................................................................................... 7
CONCLUSIONS ..................................................................................................................................... 9
REFERENCE LIST ................................................................................................................................. 11
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3. INTRODUCTION AND LITERATURE REVIEW
Paradigm shift is currently transpiring due to growing importance of social media and
the ubiquitous Internet. The shift genuinely influences the way business activities are
conducted and alters ways of social interaction (Karakas, 2009; Van Zyl, 2008), therefore its
importance is ample. Even for customer-focused organizations, this phenomenon stands for
one of the biggest challenges facing businesses nowadays (Baird & Parasnis, 2011).
Internet became the global arena, where users access company`s information, learn
about product prices, share recommendations and feedback (Pires et al., 2006). One of the
terms used to describe the online reality is World 2.0 - “an interactive, hyper-connected,
digital ecosystem where users create knowledge, innovate, collaborate, entertain,
communicate using mobile devices, write blogs, share photos, develop projects and express
themselves to the world” (Karakas, 2009, p.23). Interactions in World 2.0 are flexible, easy to
maintain and cost effective (Van Zyl, 2008). According to HsiuJu (2011) more and more
consumers develop trust in information found in online thematic groups, compared to
consumption-related information shared offline. Such peer-to-peer networks changed the
model of communication from one-to-many to many-to-many (Stalnaker, 2008 cited in
Karakas, 2009) and into multimodal conversations (Muniz & Schau, 2011). Online consumers
tend to participate and communicate more than ever before, they are also more active and
social (Kozinets, 1999 cited in Cova & Pace, 2006). Interaction takes place within groups
built around a shared association or brand-relationship. Such community groups are “a
mixture of proxy marketing and participants’ personal marketing” (Cova & Pace, 2006,
p.1101). The social software, or so called Web 2.0 tools (O’Reilly, 2005), not only have
encouraged a 24/7 collaborative world, but also popularized culture of sharing. Tools
adoption is quick, since they are intuitive and easy to acquaint with. They organize space
where seekers of knowledge and its keepers can interact (Boateng et al., 2010).
Contemporary customers want to be influential rather than be passively influenced
(Firat & Shultz, 1997 cited in Cova & Pace, 2006) and are adopting increasingly active roles
in marketing content co-creation. This eventually leads to consumer empowerment defined by
Wathieu (2002 cited in Cova & Pace, 2006) as giving customers control over tasks usually
conducted by marketers. As a result, consumers have more control over the relationship they
have with their favorite brands (Fournier, 1998; Deighton, 2002; Holt, 2004 in Cova & Pace,
2006) and co-create everything, even promotional messages (Berthon, Pitt, McCarthy, &
Kates, 2007 cited in Hanna et al., 2011). Ultimately, companies no longer administer
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4. communication. They rather provide a communication arena for those empowered consumers
(McWilliam, 2000 cited in Cova & Pace, 2006), nonetheless this must not mean laissez-faire
approach (Cova & Pace, 2006).
World 2.0 brought about a new term – Enterprise 2.0 (McAfee, 2006 cited in
Schneckenberg, 2009), which stands for Internet technologies and business practices enabling
employees to collaborate and interact in order to produce and exchange knowledge in
information affluent business contexts. There the Web 2.0 tools serve as building blocks
facilitating collaboration within or between companies. Aligning with this concept,
implications for businesses and employees input will be addressed.
Provided a short literature review and few empirical examples, this paper`s purpose is
to investigate internal customers` role in the Internet era. Contribution to the field of research
concerning methods of internal customer relationship management, interactivity in knowledge
management and online communities potential is intended.
RESEARCH QUESTION
Having introduced the shifting paradigm and virtual communities concept, the
customer`s characteristics shall be further investigated. Researchers examine the phenomenon
of consumers acting as “partial employees of online communities” (HsiuJu et al., 2011, p.90),
yet for the purposes of this paper I would like to take it a step further. I would like to extend
the already existing concept of employees as internal customers. According to Mohr-Jackson
(1991) internal customers create products, services and generate customer satisfaction, which
are critical facets in any business. Each employee simultaneously is company`s customer and
due to social media revolution this approach became stronger than ever. The meaning of
internal customer is re-newed and re-defined by adding new online aspect to it. Thus the
research question is: as a marketer, how to successfully evolve with new internal customers in
the Internet era? I will analyze real life examples in order to come up with a relevant answer.
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5. EMPIRICAL EXAMPLES, THEORIES AND MAIN CONCEPTS
Companies have to face and appreciate social forces that influence their customers.
They must show strategic agility (Doz & Kosonen, 2008) and make use of collective
intelligence of people both inside and outside the organization (Nambisan and Sawhney, 2007
cited in Karakas, 2009). Therefore companies establish relationships with internal customers
to build “vibrant new business ecosystems” (Tapscott and Williams, 2006 cited in Karakas,
2009, p.24), instead of relying solely on R&D resources. This enables them to benefit from
the vast pool of talent and ideas, stimulates creativity and enhances innovation.
Many companies` R&D return of investment has declined, sometimes followed by
introduction of products that are not fulfilling users` expectations due to poor customer
insights. To overcome that, some firms started using open-source strategies and crowd
sourcing, reaching internal and external users. Procter & Gamble leveraged its R&D expenses
via network of customers, employees and experts aiming at finding ways to increase
productivity and spread innovation (Bughin, 2012). A common objective united various
groups, making internal customers one of the parts of solution and benefiting from online
enovronment. Another example is Best Buy, which engaged 2,500 employees to connect with
customers via Twitter (Bernoff, 2011). This strategy would not have been feasible without
personally engaged employees who had been given access to and enticed to use social media
within their workplace, which is not a common practice. Intel also realized the potential of
internal customers and came up with a creative campaign Sponsors of Tomorrow (Intel, 2010)
inspired by its employees` insights. Each movie commercial shows employees during
everyday tasks, yet with a fun twist. USB inventor is revered like a rock star, engineers during
a party do not behave like ordinary guests or employees` jokes completely differ from a
random person`s jokes. This campaign was a success since it rapidly went viral online,
integrated internal customers and managed to stimulate online discussions between Intel users
and Intel employees. It also appreciated employees and encouraged them to speak up with
feedback and new concepts. Personally, I believe that featuring real employees in the clips
fructified with their eagerness to brag about it online, thus strengthened Intel`s brand
recognition and its perception as technology innovators and fun individuals.
Following Grant`s (2011) argument, employees tend to contribute more once they are
put in customer`s shoes. This was the case of my previous employer – Hilton Worldwide –
where each staff member who successfully completed three month probation period could
spend a complimentary night in the hotel and benefit from all onsite services. This helps
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6. employees see things from customer`s perspective and as a consequence gives them personal
guidance of what is valued and expected from them. Having experienced service personally,
employees develop a propensity to stand out in their efforts and better understand customers`
concerns. This policy benefits all – customers are satisfied, employees focus on providing
high-quality service, and Hilton capitalizes on customers` spending. Taking employees
positive input out of the equation, the whole system falls short, negatively influencing all
areas crucial for hospitality business. Keeping in mind that guests often rate hotels in online
portals, this is a smart move to make in order to ensure satisfactory results and receive
positive feedback by utilizing already existing resources. Hilton does not forget that
employees as well share their work experiences online, which is why in 2011 the company
launched Hilton 360` platform, uniting employees from all over the world and encouraging
them to share their ideas, acquaint with job-related stories or organize charity events. Thanks
to this strategy company`s presence online is holistically designed and executed. Hilton
creates a concise brand image, which is confirmed by both internal and external customers.
This results in trust and customer loyalty to the brand, but also builds Hilton`s strong image as
a reliable and respected employer.
Having analyzed those examples, it can be stated that the key components in ensuring
employees` positive input are mutual trust, engagement on all corporate levels and culture of
sharing (Graham and Hall, 2004; Smith and Kollock, 1999 cited in Van Zyl, 2008). Since
company-employee relationship is volatile, loyalty and appreciation play a vital role in setting
the ground for successful cooperation for both sites of the agreement. One of the adequate
strategies proposed is targeting HEROes - highly empowered and resourceful operatives.
They are play a vital role in conducting business activities in the age of individuals directly
participating in online company`s presence (Bernoff, 2011). HEROes are critical for
spreading the e-word of mouth since they operate in the digital world where they interact with
company`s external customers. Their performance affects others perception about given
company. Company cases I have used as examples seem to have identified their internal
HEROes and successfully built on their personal input.
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7. DISCUSSION
The marketing dynamics shifted and company-employee interaction vastly differs
from how it worked even few years ago. Today, internal consumers are brand e-ambassadors,
directly influencing company`s messages and their meaning. As a result, employee`s input
online became the new aspect in contemporary organizational communication (Miles et al.,
2011). Technological breakthroughs provided employees with new channels to express their
views about the employment or working conditions that were not previously accessible. The
rise of digital world has altered the environment from passive Web 1.0 to interactive Web 2.0,
where users are simultaneously information initiators and recipients (Hanna et al., 2011).
Platforms like Facebook, YouTube, LinkedIn or Twitter connect employees with
geographically unlimited audiences where they can share messages not necessarily desired by
the organization (Miles et al., 2011) or on the other hand can come up with creative ideas and
significantly boost company`s reputation. Online communication is as a double-edged sword,
since employees might publish anything – starting from ambitious and noble initiatives to
negative and risky opinions.
Examples provided in the previous part of this paper focused on one perspective,
which covers positive aspects of customer empowerment, which shall be addressed in the
conclusion part of the paper. The second perspective on the other hand represents the new
generation of employees (and therefore customers) differing in job mindset compared to
previous generations. The job is “no longer sacrosanct, and it is no longer for keeps” (Mishra,
2011, p.110). Young managers will continue working in a given position only until the their
job fulfills their professional ambitions. The so called Facebook generation shares their
experiences online without clear distinction to personal or professional sphere, redefining
privacy and ways of information flow (Mishra, 2011). This entitles companies to act
beforehand or react when needed, since no reaction is the worst possible strategy in the era of
transparency and swift information flow. Nevertheless it has to be stressed that raising
concern online is the highest level of escalation being an end result, not an immediate reaction
to malfunction (Mishra, 2011). That kind of behavior never is employee`s preferred choice
due to risk of public exposure, however there are tools to successfully overcome this barrier.
For instance blogs or discussion fora offer an anonymous channel for expression, which
cannot be controlled by companies, reaching current and possible future customers. Bad
publicity quickly spreads over the Internet and there are no best-practice guidelines on how to
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8. overcome that. When a negative, first-hand information goes online, it is almost impossible to
erase and its consequences from the web.
According to Quinton & Harridge-March (2010) marketers and companies need to
realize why and how employees` online engagement may impact their business. Forrester
Research (2007, cited Quinton & Harridge-March, 2010) shows the importance of collective
individualism and online communities` role in creating a changing dynamics business
environment. Due to increasing online involvement and its impact on who the customers trust
or whom they ask for feedback, relationships developed via social media can be powerful
(Quinton & Harridge-March, 2010) and must not be undervalued. World 2.0 shows also a
threat to any organization which underestimates the power of online internal customers.
Due to more participative customer`s role and new technological capabilities,
companies need to introduce new practices. Boateng et al. (2010) suggest three steps which
make the new framework functional for a company. Firstly, understand the Web 2.0 with its
functions and outcomes. Secondly, understand the learning process which is a natural part of
online interaction and discover how it can be accessed. Identify which tools support the
learning process and internally seek for individuals or groups of people, who can give the
company an additional performance boost. Lastly, each company needs to develop
understanding of factors applicable for itself and its context. These steps are crucial for
developing a way to learn and benefit from the already existing base of loyal internal
customers` knowledge.
All in all, traditional focus on linear and broadcast mass-media communication is
replaced by non-linear and feedback-allowing approach (Rowley, 2004). Emergence of the
Internet and social networks gave a power boost to open innovation and knowledge exchange
online (Bughin, 2012). Marketers became technologists, since they have to be familiar with
latest online advancements. Empowering them to embrace their skills in professional
environment gives companies great benefits, like for instance solution development by
utilizing customer opinions (Bernoff, 2011) or ideas that could be easily transformed into
marketing campaigns. Realizing what role employees play in this setting is a crucial stage for
developing strategic decisions concerning for instance social media strategies.
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9. CONCLUSIONS
Social media became a natural part of our lives and made people communicate online
on a daily basis. The hierarchy of communication has been reversed from top-down to
bottom-up due to the rise of the Internet era and transparency it entitled. The balance of power
in meaning-making shifted from marketers to consumers (Deighton & Kornfeld, 2008). This
can be seen as a source of valuable insights, however this may also pose a threat to companies
not prepared for instant reactions, when as a result even minor issues may have major
outcomes (Mishra, 2010).
Having this said, it is apparent that the marketing landscape has been changed and that
online platforms created spheres of influence that made marketers change their practices
(Singh, 2005; Walmsley, 2010 cited in Hanna et al., 2011). World 2.0 has profoundly
accelerated globalization and might also significantly improve organizational efficiency.
Globally spread socio-technological innovations lead to personalized, yet collective learning,
of which companies should take advantage of. Once realized that the radical change in
conducting business is inevitable and eventually new behavior will become norm, the
potential threat can be transformed into a win-win situation. Accessing these opportunities
from a organizational learning perspective, appreciation of the fact that employees views are
critical for growth and development, enhances company`s chances on the competitive market.
Online transparent communication should be taken into account when setting future
strategies, for it certainly impacts the company`s image and performance. Albeit managers are
aware of the importance of online customers, employees seem to be an overlooked group in
the context of sharing and creating online. Following Bernoff`s (2011) reasoning, companies
must react to communities growing power and one of the best methods is to engage
employees in the process. Acknowledging that company`s staff are the innovators is a
milestone for setting new corporate mindset.
Online communities and open communication stimulate collaboration (Tapscott and
Williams, 2006, cited in Van Zyl, 2008), create a culture of sharing, increase personal
satisfaction and develop productivity (IBM, 2007 cited in Van Zyl, 2008). Such approach
prevents defensive actions and enables employees to extend their ideas in cooperation with
other users. Given that companies learn and create through dynamic interactions between staff
(Nonaka and Takeuchi, 1995 cited in Boateng et al., 2010), this might be enhanced by
cooperating in the environment which is preferred by Internet users. However the main facet
is enhancing technology innovation and preventing chaos. Once employees get familiar with
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10. the collaborative work culture, they will feel more secure and efficient in using Web 2.0 tools
at work. In case of absence of that culture, lack of trust or willingness to share – employees
will not partake or in the worse scenario will start publicly fighting and depreciating
company`s image (Schneckenberg, 2009). Smartly used Web 2.0 tools can leverage
organizational learning and knowledge exchange, but it is dependent of company`s openness,
freedom of initiative and employees` empowerment.
Summing up, World 2.0 has the potential to resolve differing interests of company`s
functioning with individual`s views, by using the assets that the company already possesses
and overlooks - employees. It also provides valuable ways of sharing ideas and administering
pools of knowledge. Web 2.0 tools harness collective intelligence, which can be used for
solving common organizational goals. This might be the real panacea for current challenges
marketers face, yet it will not work, unless marketers and companies acknowledge the
paradigm shift with all its outcomes and come up with structures and schemes that address the
new World 2.0. Web 2.0 tools proved to be powerful in their simplicity, however if
employees are not given access to them or are not educated in how to use them in professional
setting – their business potential will never be realized and employees enthusiasm will not be
utilised. The research question of how to successfully evolve with new internal customers in
the Internet era? can be indirectly answered by asking another question: why struggle to
communicate, when we can cooperate? Bilateral communication, mutual trust, sharing and
empowerment seem to be the cornerstones of success.
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