Increasing margins by joining your customers Available to Purchase

Just as in real estate, the key success factors for business in cyberspace are location, location, and location. Potential customers on the Internet tend not to be widely dispersed but are found to clog together at virtual water‐holes, known as communities and defined by common interest. In response, every respectable company established its own virtual landmark, i.e. portal, during the (short) era of Internet hype in an attempt to attract customers. Often enough with little success. We propose a different way of thinking. The key to improving profits and margins is in understanding the Internet as a tool rather than a place to be. Companies do not have to build their own Internet water‐hole. Instead, they have to leverage existing online and offline communities. Companies have to access these communities and serve their customers at their place of convenience. This article illustrates how the application of this idea results directly in increased margins and lower customer servicing costs. It explains the drivers of potential gains from understanding virtual communities.