Non-monetary social and network value: understanding the effects of non-paying customers in new media

Welcome to this Special Issue of the Journal of Strategic Marketing titled ‘Non-Monetary Social and Network Value: Understanding the Effects of Non-Paying Customers in New Media.’ The rationale for this Special Issue resides in the influential strategic shift, which is being observed from a conventional one-way paradigm, in which customers are viewed as relatively passive recipients of incoming marketing cues, to an increasingly two-way, interactive perspective, which recognises customers’ proactive, co-creative engagement, behaviours and relationships in crafting and co-creating their personal experiences with particular brands, products and organisations within broader social networks (Aaker, Fournier, & Brasel, 2004; Prahalad & Ramaswamy, 2004; Brodie et al., 2011; Sawhney, Verona, & Prandelli, 2005).

Within this evolving environment, firms are becoming increasingly focused on facilitating interactions, and building engagement, with key stakeholder groups, including consumers, consumer communities, public organisations and the general public (Bolton & Saxena-Iyer, 2009), thus resulting in complex sets of networked relationships influenced by each of the stakeholder groups involved (Mӧller & Wilson, 1995). However, while individuals’ interactive experiences and engagement within social networks may represent indirect revenue-generating opportunities they, typically, do not generate monetary value for firms directly. This Special Issue of the Journal of Strategic Marketing seeks to provide insight into the nature and dynamics typifying consumers’ non-monetary, social value generated within new media-based social networks, which remains extremely limited in the literature to date.

The objectives of this Special Issue are to highlight the increasingly important role of non-paying customers to contemporary organisations, the specific dynamics characterising such individuals across different contexts, the ensuing implications of these developments for the development of marketing theory, and the identification of key opportunities and challenges arising from these dynamics for strategic marketing. In pursuing these objectives we present ten papers featuring authors from eight countries addressing a range of contemporary theoretical and managerial aspects relating to firm value as generated by non-paying customers.

What constitutes a non-paying customer? While literature on this topic has remained sparse to date, we refer to a non-paying customer as a user of specific product(s) or service(s), which are offered for free, such that a mandate for the user’s financial payment to the firm does not exist, as it would in more traditional (i.e. paying customer) contexts. Examples of non-paying customer contexts include free email services (e.g. Gmail, Yahoo), search engines (e.g. Google, Bing), social media sites (e.g. Facebook, LinkedIn, Twitter), content marketing or the provision of free samples of products or services to consumers. As such, the emergence and rise of the Internet represents a key factor contributing to the profusion of free offerings, which has not only facilitated the rapid diffusion of information to large potential audiences, but also enabled the development of a range of complimentary (free) new information and communication technologies, as illustrated. Specifically, the rise of the Internet and its multitude of applications has endowed customers with significant opportunities for proactive, co-creative collaboration and co-production, rather than acting simply as more traditional, passive audiences (Sasser, Kilgour, & Hollebeek, 2013; Sawhney et al., 2005; Hollebeek et al., 2014). However, while specific benefits are presumed to exist for firms offering particular complimentary products or services, such as enhanced dissemination of positive word-of-mouth, little remains known regarding the dynamics characterising such potential benefits in the literature, thus providing the impetus for this Special Issue.

The rapid development of complimentary products and services over the last decade or so has sparked a need for the development of an enhanced understanding pertaining to the nature, types, dynamics and key consequences relating to free offerings, including ensuing implications for brand equity (Keller, 1993) and potential brand dilution effects (Keller & Sood, 2003). On a higher theoretical pane, the absence of financial user–firm transactions in non-paying customer contexts is likely to render a reduced relevance of the traditional, transactional view of marketing (Nicholls, 2000) – with a concurrent rise of more interactive, relational perspectives (e.g. service-dominant logic: Vargo & Lusch, 2004, 2008), and associated emerging concepts, including ‘co-creation’ (Prahalad & Ramaswamy, 2004) and ‘consumer engagement’ (Hollebeek, 2012, 2012; van Doorn et al., 2010). Given this observed theoretical shift, marketing scholars require a more in-depth understanding of the dynamics typifying free products and services in contemporary local, regional, national and global marketplaces, as Anderl, Mӓrz and Schumann illustrate in the opening paper of this Special Issue.

However, despite the importance of the online environment, as noted, free offerings may also be observed in specific offline formats, such as through the provision of free samples (e.g. Groeger, Moroko, and Hollebeek (2015), the second paper in this Special Issue), or by means of content marketing, which is rapidly gaining popularity (Koiso-Kanttila, 2004; Rowley, 2008). Content marketing examples include the provision of basic (sample) information designed to generate prospective customers’ interest, and convert them into paying customers receiving a more elaborate version of the product or service. This example also indicates the existence of a fluid, rather than fixed, conceptual boundary between non-paying and paying customers, thus concurring with Wieland, Koskela-Huotari and Vargo (2015) in this Special Issue, and providing opportunities for firms to transfer non-paying customers into future paying customers; thereby providing a further potential benefit of non-paying customers.

However, the provision of free samples to customers has been held to have potential undesirable consequences, including brand dilution, where consumers’ willingness to pay full price for the item is either reduced or annihilated. As such, the provision of free product samples, or discounts, is commonly recommended for short-term, as opposed to longer term adoption (Aaker, 1991; Kotler, Brown, Adam, & Armstrong, 2001). Analogously, the business model supporting the provision of free offerings in a more sustained fashion is paramount to ensure the long-term success of organisations offering complimentary products or services (Shafer, Smith, & Linder, 2005; Zott, Amit, & Massa, 2011).

The abundance of offerings designed to remain entirely complimentary to end users over a longer period of time represents a relatively new phenomenon; thereby raising questions such as: How do non-paying customers generate value for organisations? Which type(s) of value do these individuals generate for organisations? Which are the most successful types of free offerings? How may free offerings affect the organisation’s competitive advantage? Is a specific critical mass required to justify the offering of free products or services? Is it worthwhile offering free products or services from a bottom-line organisational performance viewpoint? How do firms’ business models sustain the provision of free products or services? What is the return on investment of specific free products or services? How do organisations convert non-paying, to paying, customers and under which conditions does it make sense to do so? What are the key characteristics of successful complimentary offerings in the long run? Are there any risks for the organisation relating to the provision of free offerings? How do firms preclude or discourage new entrants into their space of free offerings?

In response to these and related research issues we present ten papers in this Special Issue, each of which addresses a novel, specific aspect relating to the provision of free offerings in the contemporary marketplace. The opening paper by Anderl, Mӓrz and Schumann (2015), which is titled ‘Nonmonetary Customer Value Contributions in Free E-Services,’ addresses the ways in which users of free e-services may contribute to value creation for the organisation. Based on a literature review and in-depth interviews with Senior Executives of free e-service providers, the authors present a typology of non-monetary value contributions in the free e-service sector, which includes word-of-mouth, co-production, and network value effects arising from non-paying customers. In the second paper titled ‘Capturing Value from Non-Paying Consumers’ Engagement Behaviours: Field Evidence and Development of a Theoretical Model’ Groeger, Moroko and Hollebeek develop a taxonomy of non-paying customer engagement behaviours and ways in which these may generate customer value by drawing on a mixed methods approach and two field studies, thereby extending the work of van Doorn et al. (2010), Hollebeek (2012), Jaakkola and Alexander (2014), and Verleye, Gemmel, and Rangarajan (2014).

Third, in their paper titled ‘Extending Actor Participation in Value Creation: An Institutional View’ Wieland, Koskela-Huotari and Vargo address the notion of value creation from an institutional viewpoint. The authors suggest that the classification of actors into dichotomies such as ‘producers’ and ‘consumers,’ or ‘paying’ and ‘non-paying’ customers,’ are based on conceptually limited transactional, dyadic views on value creation and delivery. The article highlights the limitations of these views and draws on a service ecosystem perspective and its broader notion of co-created and contextual value to overcome these limitations. More specifically, the article, by connecting two frameworks (markets-as practice and institutional work), extends a generic actor-to-actor conceptualisation of value creation, in showing that all economic and social actors participate in value creation in a fundamentally similar way. That is, they enact value co-creation practices and simultaneously shape these practices by creating, maintaining and disrupting the institutions that guide their (re)enactment.

In the fourth and fifth papers comprising this Special Issue, the authors establish links between non-paying customers and relevant pricing issues. Dinsmore, Dugan and Wright’s (2015) paper, which is titled ‘Monetary versus Non-Monetary Pricing: Differences in Product Evaluations due to Pricing Strategies within Mobile Applications,’ addresses the notion of pricing in non-paying customer settings. In two studies, the authors find that consumers perceive products featuring monetary prices to be less novel, relative to products featuring non-monetary pricing (e.g. involuntary exposure to advertising), in the context of mobile applications featuring banner advertisements. Further, non-monetary/monetary pricing combinations were found to produce negative novelty inferences, similar to those found for offerings characterised by a monetary price only. Such negative inferences derived from the adoption of hybrid monetary/non-monetary pricing were found to be moderated by the individual’s belief in money as a symbol of success, such that those high in this belief made stronger negative inferences regarding product novelty. These inferences regarding product novelty are positively associated with, and fully mediate, the effects of these prices on customer purchase intent.

Nguyen, Conduit, Lu and Raohill (2015), in their paper titled ‘Engagement in Online Communities: Implications for Consumer Price Perceptions’ extend the notion of non-paying customer pricing to the domain of virtual communities. Drawing on social information processing and social identity theories, the authors argue that online community engagement is positively related to consumers’ perceptions of the fairness of dynamic pricing strategies, and that this relationship is fully mediated by relevant community norms, as well as rule familiarity. They further report the existence of a positive effect of community norms on perceived price fairness, which is found to be stronger among consumers with a higher level of online savviness.

In the sixth paper titled ‘Social Media Engagement Behaviour: A Uses and Gratifications Perspective’ Dolan, Conduit, Fahy, & Goodman, (2015) proceed by reporting on an investigation into the engagement construct within the social media context. Specifically, the authors develop a theoretical model, which explicates the role of social media content in facilitating engagement behaviour within the social media context. From a managerial point of view, the research provides an organisational blueprint for stimulating positively valenced engagement behaviour via social media, while dissuading the occurrence of any negatively valenced engagement behaviour. The authors also develop a typology of social media engagement behaviour, and report on a series of hypotheses exploring the relationships between social media content and engagement behaviour.

The seventh paper by Popp, Wilson, Horbel and Woratschek (2015), which is titled ‘Relationship Building through Facebook Brand Pages (FBPs): The Multifaceted Roles of Identification, Satisfaction and Perceived Relationship Investment’ adds to the literature by developing an integrative framework of key drivers of consumer–brand relationship on FBPs, including different targets of identification and perceived relationship investment. The empirical study undertaken in the context of team sport-based FBPs serves to confirm the hypothesised model. Consumer identification with the FBP, identification with other FBP users, and satisfaction with the FBP significantly influence loyalty towards the FBP. The perceived level of a brand’s investment in the relationship with the consumer both directly influences FBP loyalty and moderates key relationships.

The next paper by McIntyre, McQuarrie and Shanmugam (2015) addresses the key dynamics characterising online reviews. Specifically, the paper titled ‘How Online Reviews Create Social Network Value: The Role of Feedback versus Individual Motivation’ extends beyond the individual perspective deployed in the previous papers, by entering the conceptual domain of network-based value arising from free offerings. In a survey of Yelp reviewers the authors report that the most productive reviewers were found to be driven by publishing their writing to be read by strangers outside their social circle. In a longitudinal study of restaurant reviewers the authors find that although receiving positive feedback increases the probability that a novice reviewer will continue to produce reviews, this was not found to have any detectable effect on the productivity of established reviewers, or whether they continued to produce reviews at all.

Fernandes and Remelhe (2015), in their paper titled ‘How to Engage Customers in Co-Creation: Customers’ Motivations for Collaborative Innovation’ test a model, which considers an integrated set of consumer motivations for engaging, freely and voluntarily, in specific online collaborative innovation activities. Our Special Issue concludes with the paper titled ‘Co-Governance in the Consumer Engagement Process: Facilitating Multi-beneficial Value Creation’ by Rӧndell, Sӧrhammar and Gidhagen (2015). In this paper, the authors explore the dual, paradoxical effect of consumer engagement in activities such as the co-development of new products, which are anticipated to have positive effects (e.g. enhanced sales), while also resulting in reduced managerial control over specific brand-based messages disseminated via social media. In response to this tension the authors identify the need for a consumer engagement (self-) management process. By contextualising how activities within, and the co-governance of, the consumer engagement process are manifested, this paper discusses whether and how consumers’ new media activities may offer multi-beneficial opportunities for value creation to both social and economic actors within a service ecosystem.

We have enjoyed developing this Special Issue and hope you will enjoy reading and reflecting on the papers, and that it will foster discussion, debate and ideas for further research within your communities.

Linda D. Hollebeek
University of Auckland Business School,
Auckland, New Zealand and
NHH Norwegian School of Economics,
Bergen, Norway
Roderick J. Brodie
University of Auckland Business School,
Auckland, New Zealand