Nonmonetary customer value contributions in free e-services

Offering services for free, a prevalent business model online, raises new questions for both service providers and marketing researchers: How do customers of free e-services contribute value without paying? What are the nature and dynamics of nonmonetary value contributions by nonpaying customers? On the basis of a literature review and interviews with senior executives of free e-service providers, this article presents a comprehensive overview of nonmonetary value contributions in the free e-service sector, including word of mouth, co-production, and network effects, as well as attention and data as two new dimensions, which have not been addressed in prior marketing research. By putting these findings in the context of the existing literature on customer value and customer engagement, the authors shed light on the complex processes of value creation in the emerging e-service industry, while also advancing marketing and service research in general. This study identifies several promising research avenues, such as the question of the extent to which customers are aware of the nonmonetary value they provide firms.

[1]  Michael A. Kamins,et al.  Promotional Bundles and Consumers' Price Judgments: When the Best Things in Life Are Not Free , 2009 .

[2]  M. Hatch,et al.  Toward a theory of brand co-creation with implications for brand governance , 2010 .

[3]  Katherine N. Lemon,et al.  Customer Engagement Behavior: Theoretical Foundations and Research Directions , 2010 .

[4]  C. Grönroos,et al.  Critical service logic: making sense of value creation and co-creation , 2013 .

[5]  S. Stremersch,et al.  Indirect Network Effects in New Product Growth , 2007 .

[6]  Felix Eggers,et al.  Music for free? How free ad-funded downloads affect consumer choice , 2011 .

[7]  Robert W. Shoemaker,et al.  The Effects of Free Sample Promotions on Incremental Brand Sales , 2004 .

[8]  Wayne D. Hoyer,et al.  Consumer Cocreation in New Product Development , 2010 .

[9]  C. Shapiro,et al.  Network Externalities, Competition, and Compatibility , 1985 .

[10]  Lawrence Feick,et al.  Incorporating word-of-mouth effects in estimating customer lifetime value , 2006 .

[11]  R. Brodie,et al.  Customer Engagement , 2011 .

[12]  M. Sawhney,et al.  Collaborating to create: The Internet as a platform for customer engagement in product innovation , 2005 .

[13]  Vineet Kumar,et al.  Making "freemium" work , 2014 .

[14]  Dominique M. Hanssens,et al.  Modeling Customer Lifetime Value , 2006 .

[15]  Dwayne D. Gremler,et al.  Electronic word-of-mouth via consumer-opinion platforms: What motivates consumers to articulate themselves on the Internet? , 2004 .

[16]  Kimberly A. Neuendorf,et al.  The Content Analysis Guidebook , 2001 .

[17]  Jan H. Schumann,et al.  Targeted Online Advertising: Using Reciprocity Appeals to Increase Acceptance among Users of Free Web Services , 2014 .

[18]  B. Libai,et al.  Social Effects on Customer Retention , 2011 .

[19]  Michael Trusov,et al.  Determining Influential Users in Internet Social Networks , 2010 .

[20]  Kenneth C. Wilbur A Two-Sided, Empirical Model of Television Advertising and Viewing Markets , 2008, Mark. Sci..

[21]  Chris Janiszewski Preattentive Mere Exposure Effects , 1993 .

[22]  Lerzan Aksoy,et al.  Undervalued or Overvalued Customers: Capturing Total Customer Engagement Value , 2010 .

[23]  A. Muñiz,et al.  How Brand Community Practices Create Value , 2009 .

[24]  A. Payne,et al.  Managing the co-creation of value , 2008 .

[25]  R. Casadesus-Masanell,et al.  Business Model Innovation and Competitive Imitation: The Case of Sponsor-Based Business Models , 2013 .

[26]  Anand V. Bodapati Recommendation Systems with Purchase Data , 2008 .

[27]  Stephen L. Vargo,et al.  Service-dominant logic: reactions, reflections and refinements , 2006 .

[28]  V. Zeithaml Service quality, profitability, and the economic worth of customers: What we know and what we need to learn , 2000 .

[29]  Sumit Sarkar,et al.  Speed Matters: The Role of Free Software Offer in Software Diffusion , 2009, J. Manag. Inf. Syst..

[30]  Katherine N. Lemon,et al.  Quantifying the Ripple: Word-of-Mouth and Advertising Effectiveness , 2004, Journal of Advertising Research.

[31]  K. Ruyter,et al.  Understanding Willingness to Pay for Social Network Sites , 2013 .

[32]  C. Anderson,et al.  Free: The Future of a Radical Price , 2009 .

[33]  N. Nohria,et al.  Are leaders portable? , 2006, Harvard business review.

[34]  J. M. Villas-Boas,et al.  The Targeting of Advertising , 2005 .

[35]  Richard E. Boyatzis,et al.  Transforming Qualitative Information: Thematic Analysis and Code Development , 1998 .

[36]  Veda C. Storey,et al.  Business Intelligence and Analytics: From Big Data to Big Impact , 2012, MIS Q..

[37]  Mike Chiasson,et al.  The Ends of Information Systems Research: A Pragmatic Framework , 2012, MIS Q..

[38]  Tammo H. A. Bijmolt,et al.  Analytics for Customer Engagement , 2010 .

[39]  U. Dholakia,et al.  Communal Service Delivery , 2009 .

[40]  Thomas R. Eisenmann,et al.  Strategies for Two Sided Markets , 2006 .

[41]  Carl F. Mela,et al.  What is a free customer worth? Armchair calculations of nonpaying customers' value can lead to flawed strategies. , 2008, Harvard business review.

[42]  R. Rust,et al.  Reliability Measures for Qualitative Data: Theory and Implications , 1994 .

[43]  M. Sarvary,et al.  Network Effects and Personal Influences: The Diffusion of an Online Social Network , 2011 .

[44]  T. Ambler,et al.  How Advertising Works: What Do We Really Know? , 1999 .

[45]  Stephen L. Vargo,et al.  Service-dominant logic: continuing the evolution , 2008 .

[46]  J. Andrew Petersen,et al.  Driving Profitability by Encouraging Customer Referrals: Who, When, and How , 2010 .

[47]  F. Stahl,et al.  Choosing a Digital Content Strategy: How Much Should be Free? , 2013 .

[48]  John F. Sherry,et al.  Teaching Old Brands New Tricks: Retro Branding and the Revival of Brand Meaning , 2003 .

[49]  R. Westbrook Product/Consumption-Based Affective Responses and Postpurchase Processes , 1987 .

[50]  K. Sudhir,et al.  Optimal Marketing Strategies for a Customer Data Intermediary , 2007 .

[51]  Pamela Jordan Basics of qualitative research: Grounded theory procedures and techniques , 1994 .

[52]  R. Rust,et al.  Return on Quality (ROQ): Making Service Quality Financially Accountable , 1995 .

[53]  Rajkumar Venkatesan,et al.  A Customer Lifetime Value Framework for Customer Selection and Resource Allocation Strategy , 2004 .

[54]  Jeffrey H. Dyer,et al.  Competir contra lo gratis , 2011 .

[55]  Gianfranco Walsh,et al.  Electronic Word-of-Mouth: Motives for and Consequences of Reading Customer Articulations on the Internet , 2003, Int. J. Electron. Commer..

[56]  Hans Jarle Kind,et al.  Business Models for Media Firms: Does Competition Matter for How They Raise Revenue? , 2009, Mark. Sci..

[57]  Laura Johnson,et al.  How Many Interviews Are Enough? , 2006 .

[58]  E. Jaakkola,et al.  The Role of Customer Engagement Behavior in Value Co-Creation , 2014 .

[59]  V. Kuppelwieser,et al.  1 + 1 does not always equal value creation: The case of YouTube , 2013 .

[60]  Susan R. Koff,et al.  Free , 2017 .

[61]  V. Braun,et al.  Using thematic analysis in psychology , 2006 .

[62]  Allen M. Weiss,et al.  Moving from Free to Fee: How Online Firms Market to Change Their business Model Successfully. , 2008 .

[63]  W. D. Perreault,et al.  Reliability of Nominal Data Based on Qualitative Judgments , 1989 .

[64]  Lynette Ryals,et al.  Are your customers worth more than money , 2002 .