The Impact of Social Engagement on Customer Profitability - Insights from a Direct Banking Institution's Online Customer Network

The digital transformation leads to an enormous change in the customer-firm relationship. Recently launched firm-sponsored online customer networks enable customers to actively interact with the company and other customers in form of social engagement activities like asking and answering questions or receiving feedback. Despite the increasing importance of online customer networks, existing literature still lacks an in-depth understanding of the impact of social engagement on customer profitability based on real-world data regarding both customers’ social engagement activities and customers’ profitability. Our paper therefore aims at providing insights about the relationship between different forms of customers’ social engagement and customers’ profitability based on an extensive dataset of a German direct banking institution’s online customer network. We found, for example, that – in contrast to posting answers – raising questions in the online customer network is associated with significantly higher profitability of the respective customers. Our study leads to interesting results exceeding existing research and helping practitioners to manage online customer networks more effectively and to focus on and foster particularly promising forms of customers’ social engagement.