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Customer Co-creation, the secret of Business Innovation

 

Have you ever heard of customer co-creation concept? Well, you should have because it’s revolutionizing marketing as we know it. If not, in this article you will learn how to bring it into your business!

Customer co-creation means literally what's written. The customers become a resource for companies’ product creation strategy. How is that possible and why is it so important?

With the rapid development of technology comes the need for companies to adapt and be innovative. For example, imagine customers as the sea life.  Now imagine how many different species there are, how many different behaviors and survival strategies they use. Now let’s go back to customers. Isn’t it obvious that they can be a fantastic source of knowledge and ideas? A crowd of people operates at a scale that exceeds even that of the biggest and most complex global corporation, bringing in many more individuals to focus on a given challenge.

And that’s what innovative companies are starting to realize. Customers can be an essential tool to enhance growth. The “internet generation” is stimulated by their main channels of interaction (e.g. Instagram, Facebook, LinkedIn, Twitter, etc.). Therefore, enhancing the flow of ideas through individuals, engaging and empowering them, will keep them more involved with your business purpose.

 

The problem is that, according to a Harvard Business Review by Kevin J. Boudreau and Karim R. Lakhani, most companies still see the participation of customers as a threat to them. “How, for example, can a company protect its intellectual property? Isn’t integrating a crowd sourced solution into corporate operations an administrative nightmare? What about the costs? And how can you be sure you’ll get an appropriate solution?

Of course it’s acceptable to feel concerned about some aspects. Furthermore, one of the main reasons for customer participation to fail is because companies fail to get costumers involved or when they do, their contributions are not useful. So you are probably wondering how can you overcome these obstacles and motivate people to contribute.

According to Aric Rindfleisch, professor at University of Illinois, the two main ways of doing so are:

  1. 1. Social recognition, such as having their name mentioned in the product.
  2. 2. Financial rewards, such as giving a part of the revenue to the idea creator.

And if you are wondering how a crowd can contribute to your business, an analysis conducted by the professors Aric Rindfleisch and Matthew S. O’Hern gives us important insights about it. The authors state that the customer participation significantly varies accordingly to the type of contribution and the type of selection the firm chooses to use. 

In the matrix below you can see how the types of co-creation are organized:


Matrix adapted from “customer co-creation: a typology and research agenda” 

by Aric Rindfleisch and Matthew S. O’Hern

Submitting: The firm is in control of both the contribution and the selection. It means that people can only contribute for a specific part of a product but not the whole.

Collaborating: The opposite of Submitting. The organization is very open to all types of contributions and it relies on the crowd to decide the winner submission (e.g. selection based on the number of Likes)

Co-designing: Customers have low control over the contribution but they are the ones that in the end select the best one.

Tinkering: In this type of co-creation, the customer can contribute in a very creative way to an idea but the contributions are selected by the company.

In addition, some companies have already proved that the outcomes of customer co-creation are greater than the risks. Lego, for instance, created a platform where users can design their own Lego ideas.  If one design is voted by more than 10,000 people and fulfils other internal criteria, Lego produces the product and shares 1% of the income with its inventor.  As mentioned in the article "Unleashing Customer Innovation with LEGO Ideas" the new products developed through LEGO Ideas have exceeded expectations in terms of sales, in large part due to the customer involvement up front in the innovation process.

So what are you waiting for to include customer co-creation in your company’s marketing strategy?


By:
Joana Correia


Rating: 4/5

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