In tune with the times

The survey found that approximately 50% of Web 2.0 users worldwide are happy to use purchasing recommendations received from friends or acquaintances on the internet.

In the Middle East, the figure was remarkably higher - 84% reported gathering purchasing recommendations online.

Even more tellingly, many Web 2.0 users are also willing to use recommendations on purchases from unknown members of consumer platforms - around 40% of users worldwide, and 34% of users in the Middle East.

In looking at these new trends in consumer behaviour, an important question arises - what do they mean for established corporations?

Adapting to the Web 2.0 Model of Customer Interaction

"The results from the survey tell us that Web 2.0 usage has already reached a critical mass, both in the Middle East and in other regions around the world.

"The good news is that although Web 2.0 usage creates distinct challenges for companies, it also offers new opportunities," Hasbani noted.

Some of the challenges include:

• Diminished customer loyalty, as consumers defect to companies that participate actively in Web 2.0 venues and use social communities to drive buying decisions and form positive product opinions.

• Reduced online customer throughput, as customer traffic is channeled through social networking sites rather than through a company's website.

• Lower customer acquisition and retention, as competitors do a better job of using online channels to win customers, including cross-selling their products on both Web 2.0 platforms and traditional media channels.

Opportunities in store for companies

The advent of Web 2.0 does offer significant opportunities for companies to increase customer loyalty, increase operational efficiencies, and increase product success.

Companies that actively participate in Web 2.0 platforms and develop an understanding of evolving consumer behaviour in the Web 2.0 environment can find opportunities in the following areas:

Product development - Using Web 2.0 platforms, companies can perform easier, less expensive product research than ever before - partly because customers are already using online forums to describe exactly what they think about various companies' products and services. Companies that make an effort to obtain and analyse this data can gain an enhanced understanding of their customers' needs, preferences, and "pet peeves." This knowledge can lead to improved product development and shorter innovation cycles.

Sales and marketing - Web 2.0 sites provide new sales and marketing venues for companies - ones that are often already geared demographically to certain populations. For example, companies that want to target professionals may choose to advertise on LinkedIn, a business-oriented social networking site, whereas companies targeting the youth market may advertise on FunkySexyCool, a mobile-oriented social network run in cooperation with MTV.

Customer service - Web 2.0 platforms offer companies the ability to create very interactive high-quality customer service sites that network together customers, staff, and suppliers. In addition, companies can create customer service sites moderated by full-time employees that encourage end-user created content and wide participation among users - enhancing consumers' customer service experience and building loyalty.

Branding - There are increasing opportunities to brand companies on Web 2.0 sites, also at a much more favourable cost than through other media channels.

Key Questions

In light of the study, Sabbagh identified some key questions that companies should be asking themselves regarding Web 2.0:

• Do we know what our customers are saying about us on the web? Are we analysing that data and feeding it back into product development?

• Do we have a proactive method in place for responding to negative dialogue about our company on the web?

• Do we offer our customers an opportunity to interact directly with our company online? For example, do we have a blog on our website where customers can share thoughts, concerns and feedback?

• Do we have an online forum where our "power users" or "biggest fans" can offer advice and how-to information to other consumers?

• Do we have a presence, such as a virtual storefront, in online communities like Second Life?

Web 2.0 use is increasing and will continue to increase worldwide and in the Middle East, across both genders and all age groups. Unless businesses recognise and respond to the shifts in consumer behaviour driven by Web 2.0, their customer acquisition and retention will likely suffer.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM