Do’s and don’t's of co-creation and crowd-sourcing.
Some months ago, Lays asked the Dutch to help them find the next top-selling flavor. In just a few weeks, more than 325,000 ideas were submitted, and more than 4 million battles took place on Lays.nl. The astonishing results proved (once again) that consumers are more than willing to get involved with brands in their search for value. Is your company letting them participate? If the answer is no – you might just be missing on one of the most important trends of the past decade. Many firms have already realized the benefits of co-creating and crowd-sourcing and are actively interacting with their public. However, letting consumers take part is not as easy as it seems. Stoop&Simon intends to offer an understanding of the trend, its basics, and some tips that might come handy. Who knows – maybe your next great idea is bubbling in the brain of one of your customers, waiting for you get hold of it.
Index
1. What is co-creation and crowd-sourcing?
2. Where it all began.
3. Possible negative out-comes (and how to avoid them)
4. What stimulates consumer participation?
5. How do I do it?
6. Key Findings
1) What is co-creation and crowd-sourcing?
Co-creation and crowd-sourcing are similar concepts that are actively being used by many companies to describe a new way of tossing some creativity into the workplace. Both notions are the result of an evolution in the perception of consumers input in the business model. In the 1990′s, some articles referred to customer participation as a great way of achieving customer satisfaction. Others perceived it as a way of reducing costs or dealing with productivity. The evolution of the concepts forces us to clarify what they truly mean and how they differ amongst themselves.
Crowd-sourcing is a problem-solving process where the issue is outsourced to a network of outsiders (the crowd). The concept was first used in an article published in Wired Magazine by Jeff Howe, in 2006. He described crowd-sourcing as the act of taking a job traditionally performed by a designated employee and outsourcing it to an undefined, generally large group of people, in the form of an open call.
On the other hand, co-creation describes a strategy followed by businesses where customer and firm work together to deliver value. The term co-creation was introduced twelve years ago in the Harvard Business Review article “Co-Opting Customer Competence”, by C.K. Prahalad and Vekat Ramaswamy. Their arguments were further developed in the book “The Future of Competition”. They reasoned that in the future, value would be delivered through a collaboration between customer and company, due to the proliferating importance of the buying experience and the desire of consumers to get closer and interact with the brands.
Although the conceptual definitions are different, co-creation and crowd-sourcing are often confused. To put it simply, crowd-sourcing is an open call to the crowds to contribute, while co-creation invites the crowds to go further and innovate by mutually expanding value together. In any case, both concepts differ widely from the traditional model, where the active firm delivers value to a passive consumer, whose input is limited to the decision of whether to purchase the product or not. This has changed, as customers deliberately forge active opinions about the products and services they consume and the brands behind them.
2) Where it all began.
The growth and expansion of the internet as a communication channel has enabled consumers to communicate. What’s more: brands are now entering these conversations seeking insights that will help them improve and solve specific issues.
To understand the impact that online communication platforms have had on the increasing use of Co-Creation and Crowd-Sourcing, we ask: what are the spaces that, in the past, have lead to creativity and innovation? Steven B. Johnson, an American popular science author, analyzed the patterns that tend to appear when there has been a situation in which creativity has lead to a brilliant outcome. These type of thoughts are commonly generated from a more basic straightforward idea; what Johnson calls a “hunch”. History has taught us that ideas need time to gestate. Good ideas come from the collision of ‘pocket-sized hunches’. As ideas become more useful when swapped, systems need to be created to allow those hunches to come together. Nowadays, the world is experiencing a historic increase of ideas due to the connectivity that the internet has brought to our day-to-day lives. People are continuously sharing their thoughts, that then get connected to form unique innovative concepts. Although the multi-platform experience and the overload of information has led us to be one of the most distracted generations ever, the new possibilities of interaction are helping users in their search of the missing piece of a great idea.
The new situation has affected our lives in many ways. It involves a faster pace of life, accelerated by the constant development of thoughts, content and opinions. There is a permanent flow of information and innovations that are progressively changing the way in which we perceive our world. People are involved in the development of these ideas by creating and having an opinion in the numerous conversations that take place in the internet cloud. Brands have realized that consumers have the enthusiasm to participate in their conversations. Everything has become a media platform used by consumers and brands that are seeking to forge a mutually beneficial interaction.
All in all, we’ve rapidly shifted from a communication model where the active company transmitted a message to a passive consumer, to a model where consumers communicate amongst themselves and with the company at the same time in various levels and forms. This has disgorged into the present situation. Brands are now expected to evolve from an relatively active interaction with their customers, to an absolutely bustling one.
3) Possible negative out-comes (and how to avoid them)
There are three main hazardous side-effects that can result from co-creating and crowd-sourcing:
Innovation could be limited by the reliance of the brand on the consumer’s input.
Relying on consumers input can be dangerous. Consumers can help to perfect an existing product or service, but they rarely offer radical innovative solutions. To avoid the loss of know-how, companies should establish their direction. Consumer’s opinions can enhance the value offered, but companies still need to do their job. In other words, co-creating and crowd-sourcing implies forging an equally active interaction between the consumer and the brand. But the company still needs to offer its expertise and skills by deciding where to take the next turn.
The participating crowd only represents a small group of consumers.
It could happen that the selected crowd of customers only represent a small niche. Not the total aggregate of opinions. To assure representing generalized ideas, companies need to carefully select a representative mix of the consumers.
Partial involvement can lead to a depreciation of the brand’s image.
Either you co-create or you don’t. Don’t let customers only get partially involved. It is suggested that true co-creation is where companies are the ones voting for whatever consumers choose to submit, not the other way round. Co-creation can be a powerful marketing tool, but it can also devaluate the brand’s image if consumers feel they’re not being taken seriously. If your company doesn’t trust its consumer’s input, then don’t bother asking.
McDonald’s carried out a campaign in the Dutch market where consumers were limited to chose which classic McDonald’s burger would make a comeback. They didn’t have the chance to decide which classic burgers were open to voting, and couldn’t modify any of the ingredients.
How to avoid possible negative out-comes.
Overall, these negative outcomes can be overcome if companies acknowledge that everything shouldn’t be left to the customers decision. The term “co-creating” by itself implies there are two parties that offer their knowledge: customer and company. It’s the companies task to set the path for innovation. Consumers will help support decisions and will offer delightful insights – but don’t let them decide the direction your brand is taking. That’s your responsibility.
4) What stimulates consumer participation?
Stoop&Simon’s latest brainstorming session with international students enabled us to isolate the main incentives that motivate consumers to get involved with a brand when an open call to co-creating or crowd-sourcing is made.
“That was my idea!”:
Pride and status are the ever present incentives in every co-creation or crowd-sourcing event. Even if it’s not actively suggested, customers always bear in mind that if they win, they’ll have the chance to claim the idea as theirs.
Recently, McDonald’s launched a co-creation campaign where German consumers had the chance to design their ideal burger and submit their suggestion on the brand’s website. (This is the way to do it!) Through a voting system, the winner burger (Just Stevinho) was chosen, and is now available in several McDonald’s all over Germany. The main incentive advertised to motivate customers to participate was the mere chance of being able to claim the burger as theirs. Even the name of the campaign, “Mein Burger”, emphasized this idea.
$25.000 VS. an instant discount in your next latte:
Physical rewards need to be in pair with the amount of hours that the customer is going to invest in developing value for your brand. The interviewed students at Stoop&Simon suggested that in many cases, smaller instant prizes are preferred to greater unachievable ones. Many times their first thought will be; “why bother – I’m not going to win”.
The Netflix Prize is a perfect example of efficient crowd-sourcing. The firm sought to improve the accuracy of movie recommendations based on previous preferences. The challenge managed to involve several groups of people that worked gratuitous for months trying to decode the algorithm that would give them the first position in the ranking. Netflix awarded the grand prize of $1M to the winning team “BellKor’s Pragmatic Chaos”.
“I worked with Heineken!”:
Employment is an especially relevant incentive for the youngest of customers. To reach them, companies have to accentuate that the co-creating or crowd-sourcing experience will have the customer working with the company. To put it simply, the customer will co-create as an employee, and not a consumer.
The Heineken Open Design Explorations (First Edition) has the will of designing “the club of the future”. 19 innovative designers from Milan, New York, Sao Paulo and Tokyo have been chosen by experts to participate in this crowd-sourcing event. Their futuristic vision on design will conclude after almost a year of work. The club will be the perfect combination between emerging designers vision, Heineken, and various clubbers input.
5) How do I do it?
Listen, it’s the first step.
Companies often focus on their speaking ability. Listening also plays a decisive role in the communication act. By itself, good speaking doesn’t necessarily imply good communication. To communicate a message that appeals effectively to the target audience, firms have to be able to hear what the consumer is saying. However, listening shouldn’t just be a consequence of the public screaming. Companies should listen to what the public has to say by dynamically taking the time to do so. This can be done by entering social networks and scanning what customers are saying about the brand. There are already many intermediaries that can help you manage conversations, such as Nielsen’s BuzzMetrics. Listening takes work. However, if a company understands what is important to its public, then they’ll know how to reach them. Good listeners are the best speakers.
Starbuck’s actively listens to their consumers’ opinions and ideas using as a platform; www.mystarbucksidea.com. Here, consumers are encouraged to post any suggestions that could help the brand improve its products and services. They can also feel free to comment and vote other ideas. Currently, the page holds 28,291 ideas regarding coffee and espresso drinks; 13,294 about food; 12,572 dealing with the atmosphere and location of stores… and many more. Some of the most voted plausible ideas are later put into action. For example, the Starbucks Tribute Blend was brought back thanks to customer’s feedback.
Communicating adequately implies doing more than just talking or listening: Ask!
Due to the excess of information, companies need to process and organize what they receive from the public. Consumers will offer thousands of different opinions, critiques and ideas. This can easily lead to miscommunication. To understand what customers are trying to say, companies need to filter the information. This can be done by asking specific questions. They will help clarify the public’s opinions and discard any incorrect assumptions, enabling the company to respond better.
Albert Heijn realized suggestion boxes weren’t an effective way of collecting customer feedback. To overcome this problem, they decided to ask directly customers for their suggestions on how to improve their stores. The brand used websites, leaflets and billboards. More than 50,000 consumers took the time to offer their feedback. The Dutch company selected 700 winner suggestions that were rewarded with one-minute shopping sprees. Stores assured their commitment to implement improvements as soon as possible.
The crowd is dispersed: Manage it
Not every consumer delivers advantageous insights. In fact, it has been proved that most consumers are victims of strong cognitive dissonances. Some don’t know what they want. They make petitions but then don’t act accordingly. There is an extremely limited amount of consumers that bring a worthy input. These uncommon kind of customers have been given different names; leading consumers, top customers, key users… They all have one thing in common: they refer to those active users of the product or service a specific company delivers. They have reached such levels of adulation towards the brand that in some cases they have gathered more knowledge than the company’s employees themselves. They are creative, intelligent and full of ideas.
Take the debut of “Red Shirt Guy”, the star of a viral video where a teenager in a red shirt asks a peculiar question regarding World of Warcraft lore during Blizzard Entertainment’s BlizzCon, in 2010. The boy managed to stump Blizzard designers Alex Afrasiabi and Christ Metzen with an enquiry concerning an incoherence with a seemingly minor character in the World of Warcraft universe. Blizzard responded to the incident by fixing the issue and added a non-player character named “Wildhammer Fact Checker,” dressed in a red tunic. The young boy proved to know certain aspects of the game even better than those who created it. He offered a valuable insight, and the company was smart enough to appreciate his passion.
There are Red Shirt Consumers all over the Internet. They manage blogs, they are active in social networks, and what is most important: they know a lot about your product. The companies job is to skim the internet in their search and listen to everything they have to say, taking their opinion into consideration. Probably not an easy task, as it turns out that consumers not only are a rich source of information, but they are also extremely creative. (The astonishing 60 hours of video that are uploaded every minute on YouTube are proof.) Focusing customers can be done by creating communities and engaging fan-base. In some cases, it is convenient to select ambassadors that will act as intermediaries between the customers and the brand.
Lego has built a strong brand community over the past years consisting of people who form relationships over time around the brand. Lego is of interest to all of them for different reasons. What all of them have in common, is that they want to get closer to the brand. Lego has co-creating so deep in its DNA, they predict most of their products will be consumer-made. They’ve already taken the first step by opening the website www.lego.cuusoo.com, where different designs are posted and those with more than 1,000 votes are later commercialized.
Act!
We emphasize the importance of acting on gathered information. Knowing what the public is saying about a brand is useless if the firm doesn’t respond consequently. It’s the companies task to carefully analyze what is being said and filter the information into those valuable insights. Once these are spotted and detached, further research has to be carried out to ensure a successful result.
The campaign “Domino’s Pizza Turn-Around” was held after two Domino’s employees posted a video on YouTube of themselves handling food unprofessionally. Within a few days, the video hit over a million views. Domino’s proved they are actively listening by instantly posting a video in which Domino’s President apologized. They didn’t stop there. Domino’s asked its consumers exactly what was wrong. The brand incorporated a survey on their website, along with a Pizza Tracker that acted as a dashboard for the pizza delivery. The packaging and boxes were redesigned to include feedback requests. A tally of feedback and public opinion was also held concerning social media channels. They even carried out focus groups. They managed to find that customer’s mostly had a negative feeling towards the brand and its products. Once all the information was gathered, Domino’s acted by launching its Pizza Turn-Around Campaign. They created awareness and forged a bond with customers regarding the new recipe. They tried to change attitude and behavior by getting new customers interested in trying the new pizza recipe and winning back old customers lost to their competition. The results? The campaign received thousands of dollars worth of earned media and generalized acceptance. Domino’s sales shot up 14% in the first quarter of the campaign and have risen steadily since. The company listened, asked and acted consequently.
Key Findings
Crowd-sourcing is an open call to the crowds to contribute, while co-creation invites the crowds to go further and innovate by mutually expanding value together.
Although the multi-platform experience and the overload of information has led us to be one of the most distracted societies ever, the new possibilities of online interaction are helping users in their search of the missing piece of a great idea.
Innovation within a company could be limited by the reliance of the brand on the consumer’s input.
Companies need to make sure the crowd that participates doesn’t only represent a small group of consumers.
Only partially involving customers can lead to a depreciation of the brand’s image.
The term “co-creating” by itself implies there are two parties that offer their knowledge: customer and company. In this interaction, it’s the companies task to set the path for innovation.
Pride and status are the ever present incentives in every co-creation or crowd-sourcing event.
Physical rewards need to correlate with the amount of hours that the customer is going to invest in developing value for your brand.
Employment is an especially relevant incentive for the youngest of customers.
Listening and asking are basic actions to forge a mutually beneficial interaction.
Crowds are dispersed and need to be managed. This way, the information they may provide can be filtered and organized.
Act accordingly!
