Major consumer companies are still searching for the winning formula to maximize the use of Internet in gathering insights and understanding behavior of their target customers.

An emerging answer lies on online communities just like “I Love My Dog”, a private network for dog owners created by Del Monte, Inc.

According to a WSJ, corporate spending on this proprietary method is projected to grow from $40 million in 2007 to $69 million in 2008.

Aside from its proven effectiveness, cost is another inherent advantage of online networks. No need to spend ridiculous amount of money for focus group discussions (FGD) and telephone surveys. With little financial capital, it is very easy to create a private network or even use existing social networks such as MySpace to communicate with customers.

Aside from that, it speeds up the product development cycle because of the interactive communication and quick responses between the company and members of the community. Unlike in an FGD, companies have to wait a few months to generate and analyze insights badly needed to develop a product.

On the other hand, the biggest challenge to date is how to counter member boredom which might lead to massive withdrawal. This is where coupons, discounts, giveaways, games and other enticing offerings must be used wisely.

Originally posted on January 14, 2008 @ 9:37 am