Analysis: The Role of Consumers in Creating and Curating Online Organisations

December 5, 2017

Paul MacDonnell, Executive Director, Global Digital Foundation
 

Introduction

What is the role of consumer feedback in online businesses and platforms? Consumer feedback online is not an electronic doppelganger of consumer feed-back in traditional bricks and mortar organisations. It is a necessary component in the remaking of businesses as online enterprises.

The creation of new ways for people to communicate and transact has been brought about with the help of widespread internet access, better and cheaper data storage, and algorithms that use data to recommend music, books, places to visit, and people to connect with. Shoppers, social media users, suppliers, workers, storage facilities, and content providers are brought together, in increasingly powerful systems—each according to their role, to buy, sell, store, dispatch, author, post, and provide feedback.

Online businesses like Amazon, eBay, Uber, Airbnb, and Facebook have used these developments to transform traditional business models and disrupt whole industries. But awe at their extraordinary growth has eclipsed the main reason for their success. They use organisational and technical tools to give people what they want. Their relationship with their customers and users is so close as to be collaboration in the act of creating the enterprise itself.

Turning the understanding and execution of this relationship into a branch of management science the emerging field of Customer Experience (CX) aims at synergies from combining structured data, such as billing, purchase history, and order-processing with unstructured data such as social media posts and online reviews. Unifying disparate back office processes with information about the customer’s preferences supports the development of a new, coherent and long-lasting relationship.

The tech giants have not only won many consumers, they have kept them by meshing them into these new kinds of relationships. And their example is a harbinger for almost all online organisations whose aim will, increasingly, be to bond with consumers and citizens online. In particular this means engaging them in dialogue on social-media—and listening to their public dialogue with others. For organisations that have successfully adopted this approach there are four outcomes: First, it builds trust and confidence for consumers to transact; second, it resurrects and democratises the relationship the wealthy used to have with stores where knowledgeable sales assistants knew their preferences, could advise them, and charge purchases to their account; third, it uses the flow of online information—comments, feedback, reviews, and conversations—from consumers to design, and redesign products and services; and, finally, it gives consumers and users access to, and a high degree of control within, local, national and international marketplaces for goods, services, information, and social contact.

Innovations brought by online businesses support consistency in consumer experience, transparency of pricing, and simplicity of payment. The major web platform businesses are leading a trend which—as Artificial Intelligence (AI), data processing, and the use of algorithms become less expensive and better understood—will be adopted by more public and private sector organisations.

Thus we have accounts with, are members of, or subscribe to—services provided online. This is an expanding Universe of relationships which is moving beyond books, music, and software into services provided by the likes of grocers, and accountants. Eventually the number of organisations we interact with online will dwarf the number we interact with offline.

So extraordinary and compelling have been the benefits online businesses have brought it is plausible that, if the entrepreneurs behind today’s platform giants had never started their businesses, enterprising consumer, trade, or voluntary citizen organisations would, by now, have launched ventures to do similar things. Woven into online businesses and social media sites is the power for consumers to be heard. This is not only a new era of consumer mass-enfranchisement. It remains, despite recent concerns about fake news and online hate speech, an opportunity for citizens everywhere to have their say too.

More organisations are engaging online

The past ten years show that the ground is being prepared for a world where more organisations will evolve to a point where their online engagement will become central to their business model. Whether businesses and governments are ready or not, consumers and citizens will lead them there.

The changing role of social media in particular has been rapid. In 2011 it was reported that only 20% of businesses interacted with customers through their website, while 6% viewed the size a customer’s social network as affecting their perceived value. By 2013 it was reported that 27% of businesses thought that social media was “most important to customers when they engage with brands”. The number of social media users is projected to rise from 2.14bn in 2014 to 2.62bn in 2018 and 3.02bn by 2021.

Consumer attitudes to today’s platforms

Understanding what consumers think about today’s platform businesess gives us an insight into what they will expect tomorrow from the increasing number of organisations that do business online.

An October 2015 survey conducted by Oxera found that 97% of consumers believe that online platforms offer benefits, in particular improved convenience, greater choice, and increased transparency. Thirty seven per cent of French and 57% of Polish consumers reported having met at least one person through a communication platform or social network. Customers reported that, over the previous month, information platforms had saved them 50 minutes (France and Germany) and 100 minutes (Poland); consumers who compared products and services online said that they had saved, on average, €127 (Poland) and €117 (Germany) in the previous year.

Though consumers said that they were most concerned about confusing or inappropriate content, privacy and security, a minority cited these as reasons for not using certain platforms. Asked why they did not use certain platforms 20% of French and 30% of Spanish consumers cited these as reasons. Beyond Europe attitudes to privacy and security vary. Generally speaking consumers in Europe are less willing to trade online privacy for convenience than consumers in the U.S. Consumers in Asia and South America are more willing to trade online privacy for convenience than U.S. consumers. This suggests that while privacy and security remain a concern they do not present any kind of threat to the future growth of online organisations.

The power of consumers

The way a number of platform businesses have responded to consumer pressure or anticipated potential consumer unhappiness demonstrates how online businesses have taken a radical approach to eliminating dissatisfaction and mistrust. In August of this year Amazon announced a new refunds policy that allows consumers the same terms for returning items to third-party sellers as they already have when returning goods to Amazon itself. This includes a ‘returnless’ refund, a facility Amazon says was requested by third-party sellers, which allows them to provide a refund without asking the consumer to return the product. Amazon’s intent here is to standardise the consumer experience and to eliminate ambiguity over what the terms of sale are to customers who use its platform.

Fake News and Fake Reviews

A significant and growing threat to online businesses, especially online platforms, are organisations who post information and reviews that are deliberately misleading. This is, in essence, a challenge to network and platform owners to curate their platforms or risk reputational harm. In October 2016 Amazon banned reviews that were posted in exchange for free or discounted products. The company still allows incentivised reviews on its Vine programme whereby identified and specially invited product experts can post ‘trusted reviews’ about new and pre-release products. This points to the importance for online retailers of curating the perceived objectivity of online reviews that are one of the most important components of its reputational capital.

Similarly Facebook’s very success has contributed to anxiety that organisations are using it to spread false stories. In March of last year Facebook launched a new tool that allows users to flag stories as potentially fake. Thus the company is seeking to enlist volunteers to curate content on the network.

Parallel to fake news on Facebook is the problem of fake reviews on sites like Yelp and Amazon. Fake reviews are, in essence, an attempt to defraud customers of online retailers. And there is evidence that the incidence of fake reviews on Amazon has grown during 2017. Systems, such as Amazon’s identification of reviewers as having made a “verified purchase” have likely gone some way to addressing this problem but it seems likely that Amazon and other retailers will need to consider stronger measures. In the case of retailers, such as Amazon, or Yelp these ought to include measures to empower consumers rather than just retailers to flag fake reviews.

Conclusion

Major Internet businesses would never have grown to the size that they have without converting their customers and users into the co-creators of their platforms. From the start this has relied on overcoming the potential for mistrust when doing business online. Without traditional customer representatives, or easy contact points, their strategy has been to pre-empt customer dissatisfaction through inviting consumers to share their experiences online, and through establishing protocols that make default decisions in favour of dissatisfied customers.

Notwithstanding the challenges, particularly those of fake news and fake reviews, the world’s major online businesses have radically exceeded the reasonable demands of consumers to be treated fairly. By doing so they have blazed a trail that, one way or the other, will light the way for more and more online businesses and government organisations. Their continued success and the future success of all online businesses will need the help of consumers to purge fake information from their websites.

 

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Views expressed in this article are those of the author and not those of the Global Digital Foundation which does not hold corporate views.