Web panels build customer loyalty

In "The Economic Benefits to Retailers from Customer Participation in Proprietary Web Panels," Professors B.J. Allen and Suman Basuroy of the University of Texas (San Antonio) College of Business and Utpal Dholakia of Rice University's Jesse H. Jones Graduate School of Business analyzed data from 18 months of panel participation from more than 1,600 customers of a large online retailer. They found that there were "significant economic benefits" to the retailer beyond generation of useful customer information.

Specifically, the data showed that panel participants made 17 percent more purchases and increased their cross-buying -- that is, buying from different product categories -- by 14 percent. In addition, the profit per customer increased by 36 percent.

One important implication of this research, according to the authors, is in its contribution to the literature that uses behavioral data to quantify the possible economic benefits to firms that set up these communities. "Our results strongly suggest the possibility that customers who engage with the retailer by participating in the panel are more likely to have top-of-mind awareness and require fewer marketing initiatives to continue their relationship," they conclude. "These findings underscore the need for retailers to view online marketing research activities beyond a traditional 'cost center' to gain customer insights, to a customer relationship strengthening activity that can yield a positive economic impact for the retailer."