Elsevier

Journal of Business Research

Volume 103, October 2019, Pages 34-44
Journal of Business Research

Cultivating loyal customers through online customer communities: A psychological contract perspective

https://doi.org/10.1016/j.jbusres.2019.06.005Get rights and content

Abstract

Despite a number of empirical studies showcasing the power of online customer communities in fostering customer loyalty, the underlying theoretical foundations for this phenomenon remain unclear. Drawing upon psychological contract theory, this study aims to provide a new perspective to understand the exchange relationship between e-retailers and customers through online customer communities. The proposed research model extends the classic trust-commitment framework and incorporates the constructs of feelings of gratitude and personal reciprocity. It addresses the psychological process in relationship development and opens the “black box” between higher-order mental constructs to investigate loyalty. The results of this study indicate that in order to build effective loyalty programs and generate economic benefits from investments in online customer communities, e-retailers should improve customers' awareness of the benefits they receive from these communities, design appropriate strategies to motivate customers' feelings of gratitude, and activate customers' gratitude-based reciprocal behaviors.

Introduction

Shopping in online marketplaces continues to gain popularity worldwide. In the United States, the number of online shoppers increased tenfold from 2015 to 2017, by which time approximately two-thirds of Americans had made at least one purchase in an online marketplace (Lazar, 2017). In China, the rapid development of e-commerce in the past ten years also shifted more than 400 million millennials from being offline consumers to online consumers (PWC Report, 2017). Although the broad base of online shoppers brings growing sales revenue, e-retailers still face significant challenges from fluctuating customer retention rates. It only takes a few mouse-clicks for online shoppers to navigate from one business to one of its competitors, and consumers can easily compare products and services from different e-retailers with low switching costs. Limited communication channels further hinder the relationship-building process between sellers and buyers. Against this background, many e-retailers start to incorporate relational exchange elements into their transactional platforms, aiming to increase customer engagement and cultivate customer loyalty (Kozlenkova, Palmatier, Fang, Xiao, & Huang, 2017).

One particular relationship-building initiative is the development of the online customer community. Through building and sponsoring an online community, e-retailers establish a cost-effective venue to assist post-sales services to customers (Dholakia, Blazevic, Wiertz, & Algesheimer, 2009). Frequent information updates in these communities also keep customers in an ongoing dialogue with e-retailers, thereby increasing customer involvement (Andersen, 2005). More importantly, customers' active participation in these communities produces a large amount of user-generated content. Exchanges of ideas, discussions of issues, and resolutions of problems greatly improves e-retailers' understanding of customer behaviors. Research has shown that online customer communities can bring significant economic benefits, such as double-digit percentage increases in customer expenditures, to firms (Manchanda, Packard, & Pattabhiramaiah, 2015).

While an increasing number of studies show the benefits of online customer communities sponsored by e-retailers, few efforts have been made to thoroughly understand the underlying mechanisms of the process. The classic commitment-trust theory in relationship marketing, which analyses the relational exchange process in psychological terms, has provided a basic framework for investigating the phenomenon. However, Guo, Gruen, and Tang (2017) argue that as this theory relies on higher-order mental constructs, it can only elaborate on the psychological outcome of the relational exchange process, rather than capture the relational exchange process itself. Furthermore, previous studies have largely addressed the issue from the perspective of e-retailers, emphasizing e-retailer investment in the relational exchange process while neglecting customer cognition and emotion. The commitment-trust theory has undoubtedly provided an important starting point to study online customer community. There is, however, a need to supplement this approach with a new focus on customer cognition and emotion so as to gain insights into the workings of the relational exchange process.

In an exchange relationship, one of the general rules is to achieve shared expectations regarding the terms and conditions of the relationship (Ring & Van de Ven, 1994). The relational contract, which is based upon trust, commitment, gratitude, and reciprocity, may serve to guide and regulate the behavior of the exchange parties. As such, psychological contract theory provides an appropriate alternative lens to help us investigate the underlying mechanisms in the relational exchange process, as it addresses a wide range of psychological expectations (Llewellyn, 2001). Psychological contract theory was initially created and developed to understand the employee-organization exchange relationship (Dulac, Coyle-Shapiro, Henderson, & Wayne, 2008; Rousseau, 1989). In recent years, this theoretical framework has started to draw attention from marketing researchers, because it has shown explanatory power in the relationship marketing context (Camén, Gottfridsson, & Rundh, 2012; Guo et al., 2017; Johnson & Sohi, 2016; Kingshott & Pecotich, 2007). Psychological contract theory provides a deeper understanding of the customer-company relationship exchange process and explains how and why customers display favorable attitudes to companies' relationship investments (Guo et al., 2017).

Following the psychological contract perspective, I investigated the following question in this research: How does online customer community cultivate loyal customers? I proposed that customers' perceived relationship investment of e-retailers and customers' feelings of gratitude to e-retailers are the critical bridging factors between customer-community relation and customer-e-retailer relation. Customer cognition and emotion both play an important role in obliging customers' reciprocal behaviors. The general and implicit obligations are the impetus for the formation of exchange relationships (Blau, 1964; Gouldner, 1960).

I collected data from three online customer communities to validate the hypotheses and tested the model using the method of structural equation modeling. The paper contributes to the existing literature in three ways. First, it goes beyond traditional commitment-trust theory and proposes a new angle to understand the phenomenon of using online customer communities as a relationship management tool. Rather than solely focusing on the higher-order mental constructs which concern the exchange outcomes, this paper investigates the underlying psychological basis in the exchange process. Second, it provides new insights into the dyadic relationship structure from a customer's perspective. This supplements existing research which mainly focuses on the e-retailer's perspective. Finally, the results from the empirical study have critical managerial implications which offer practical suggestions to e-retailers on how to cultivate customer loyalties through online customer communities by gaining a deeper understanding of customer cognition and emotion.

The paper is structured as follows. First, I introduce the research context and theoretical background. Second, I build the research model upon psychological contract theory and propose hypothesized relationships. Third, I describe the research design and the data collection process. Fourth, I report and discuss the data analysis results. Finally, I conclude the paper by summarizing research findings, explaining implications, and discussing limitations and future research directions.

Section snippets

Cultivating loyal customers through online community

Williams and Cothrel (2000) define an online community as an aggregation of people who share a common interest in online platforms. Online customer communities that are built or sponsored by e-retailers gather together individuals who share similar interests and these communities have been considered as customers' playgrounds in terms of the online shopping experience (Bi & Vogel, 2013). They are social extensions of e-retailers' transitional channels and supplement their e-commerce platforms.

Research model and hypotheses

Following psychological contract theory (Rousseau, 1989), I develop the research model as shown in Fig. A.1. I propose that customers' perceived relationship investment of e-retailers and feelings of gratitude to e-retailers are the critical bridging factors between customer-community relation and customer-e-retailer relation. In particular, I identify three essential elements in customer-community relation: satisfaction with community, trust in community, and community commitment. For

Research design and data collection

To examine the above hypotheses, I collected empirical data from three Chinese online customer communities. From 2010, online customer communities began to experience rapid development in China. Pioneering e-retailers, including Vancl, Jingdong, and Suning launched Vancl Star,1

Descriptive statistics

The demographics of the sample have been summarized in Table A.1. More than 70% of participants were between eighteen and thirty years old, and 28.6% community members were between thirty and fifty years old. There were almost twice as many female customers than male customers, with females comprising 62.9% and males comprising 36.6% of our sample. 11% of community members had high school or below high school education, more than 80% were diploma and university graduate, and 7.6% had

Conclusion

This study explored the underlying mechanisms of how online customer communities cultivate customer loyalty through a psychological contract perspective. In particular, I identified two crucial bridging factors between customer-community relations and customer-e-retailer relations: customers' perceived relationship investment of e-retailers and feelings of gratitude to e-retailers. I built a conceptual model and examined the relationships between customers' satisfaction with communities, trust

Acknowledgement

I would like to express my gratitude to Professor Douglas R. Vogel (the former Chair Professor of Information Systems at City University of Hong Kong) for the guidance and help in this research. I am also grateful to City University of Hong Kong (83 Tat Chee Ave, Kowloon Tong, Hong Kong) for providing the scholarship to conduct the empirical work. In addition, I am thankful to University of Canterbury (20 Kirkwood Ave, Upper Riccarton, Christchurch 8041, New Zealand) for the support in the

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