2013
Co-Creation:
Implementation
Strategies and
Success Factors
In fulfillment of qualifications for the Masters of Arts in
Marketing
SYLVAIN NAJJAR, MATRIKEL-NR. 299002
HWR BERLIN | Advisors: Carl-Heinz Moritz & Martin Dastig
I
Table of contents
1. Introduction ....................................................................................... 1
2. Contextual background ..................................................................... 4
2.1. Literature contributions and adjacent notions .............................................. 4
2.1.1. Literature review .................................................................................... 4
2.1.2. Neighboring concepts ............................................................................ 6
2.2. Competitive landscape.................................................................................. 8
2.3. Ideological change ........................................................................................ 9
2.2.1. Traditional view of value creation ......................................................... 9
2.2.2. Co-creation approach to value creation ............................................... 11
2.4. Inherent advantages .................................................................................... 12
3. A customer-centric concept ............................................................ 16
3.1. Participant's motivation .............................................................................. 16
3.2. Co-creation implementation ....................................................................... 18
3.2.1. Before launch ....................................................................................... 19
3.2.2. After launch ......................................................................................... 25
3.3. Customer loyalty ........................................................................................ 32
3.3.1. Customer experience as the focus of co-creation ................................ 32
3.3.2. Empirical data ...................................................................................... 34
4. Success factors ................................................................................ 36
4.1. Prior conditions .......................................................................................... 36
4.2. Challenges and risks ................................................................................... 38
4.3. Guidelines for the implementation ............................................................. 41
4.3.1. Project-related considerations .............................................................. 42
4.3.2. The bigger picture ................................................................................ 44
5. Conclusion....................................................................................... 50
References ........................................................................................... 53
I
Table of figures
Figure 1 Customer database information categories ............................................. 15
Figure 2 The four dimensions of participant motives ........................................... 17
Figure 3 Stages of interactive value creation ........................................................ 19
Figure 4 Weight-loss drugs sales during their first quarter (USA) ....................... 35
II
1. Introduction
In this day and age, expectations of people have changed. Smart, connected and
more careful potential customers not only make more informed and researched
purchasing decisions, but are no longer satisfied by conventional approaches most
firms are following. People are aware of the current techniques of brand
communication and see through the sneaky tendencies of marketing, which leads
to the dismissal of commercial messages. They wish the companies acknowledge
their existence as intelligent and mature consumers who appreciate being listened
to and given the opportunity to express their creativity. Being involved in what is
created for them would cater to these aspirations. Meanwhile, firms are always
looking for new strategies that could be a source of sustainable growth, but they
struggle to connect with what their customers value. Client’s needs and desires
should lead the way of the market launches, not technology (Bhalla 2010, p.84).
Enterprises that no longer see their customers as passive recipients of internally
developed offerings have understood the importance of engaging the clients in
activities that create additional value for both parties. This emergence of cocreation as a business practice leads to blurred limits between production and
consumption as people have the opportunity to participate in the development of
future offerings.
Co-creation has been discussed in the literature, but scholars don’t agree on a
clear definition of the concept yet. Therefore, we will develop our own definition.
Co-creation is the creation of mutual value that results from the voluntary
interaction and cooperation with or between customers, employees, partners,
vendors, suppliers or other stakeholders of an organization that leads to
compelling experiences, in an environment orchestrated by the organization. Most
co-creation measures are implemented at one or several stages of the product
development cycle, that range from the idea generation phase to customer support
after the offering has been launched. The intentional use of the term organization
1
instead of firm intends to explain that co-creation measures can also be
implemented by NGO or government agencies. This definition also implies that
the organization initiates the co-creation, which is producer-led co-creation, as
opposed to consumer-led co-creation. In this paper, “co-creation” will always
refer to producer-led co-creation. The term collaboration will be used
interchangeably with co-creation. The research field of the paper is the co-creation
initiated by for-profit companies with end customers or potential customers in the
business-to-consumer market.
The following three research questions will guide the paper.
-
How can co-creation be implemented at the different stages of the value
creation chain ? Based on an adapted process of value creation, the
opportunities firms have to experiment with collaboration are going to be
identified and highlighted.
-
Why can this concept be used to increase customer loyalty ? The reasons
that make co-creation an opportunity to be a part of the marketing strategy
will be conveyed.
-
What are the success factors involved in notable implementations of cocreation ? Through the analysis of case studies, recurring factors that lead
to the success of collaborative measures have been observed.
Even though some short and basic tips are mentioned when the context is
appropriate, the paper does not intended to give organizational advice on how to
open internal processes and how to adapt the organizational structure. In this
regard, most research done on the topic of open innovation applies. The same is
true for the implementation of communication to convey a new philosophy
throughout the firm.
The next chapter will provide some background on the economy in which cocreation originated and on the concept itself. First, a literature review will show
what has already been established in relation to the co-creation principle.
Concepts that are close to co-creation, but differ in some ways, will also be
detailed. Next, an overview of the current competitive landscape will show in
2
which circumstances companies compete with each other and lead to why firms
should consider the implementation of collaborative measures. Because a cocreation approach to value creation considerably differs from the traditional view
of the enterprise and the client’s role on the market, both points of view are going
to be elaborated. The resulting contrast will provide a better understanding of the
collaborative ideology that will be referred to occasionally. The last part of
chapter 2 draws the main advantages that co-creation entails from a non-customer
centric perspective.
Chapter 3 focuses on the implementation of co-creation. After an overview of the
two different types of motives behind participant’s motivation for taking part in
collaborative measures, implementation examples for each of the identified stages
of the value creation process will be presented. The objective is to insist on the
fact that all these phases offer collaborative opportunities. As the amount of
information is considerable, this part has been divided in two. The separation is
based on when the involvement of the customers takes place; before or after the
release of the offering. How co-creation leads to customer loyalty and as a
consequence can be part of a marketing strategy, is detailed in the last part of the
chapter. Empirical data will follow to highlight the returns that can be expected if
co-creation measures are tactfully implemented.
The next chapter is about formulating recommendations for companies, which
resulted from the analysis of 35 case studies. Common design considerations for
projects, which tend to lead to the success of the collaboration were worked out. It
was found to be essential in the context of this paper to develop the prior
conditions to be fulfilled within the firm. Without them, co-creation doesn’t have
a solid foundation. Even if all detailed guidelines are respected, the project will
likely fail due to the oversight of these crucial prerequisites. Furthermore,
challenges and risks that enterprises can face with co-creation are mentioned and
illustrated with examples, in order to lay the ground for the guidelines.
3
2. Contextual background
An overview of the current literature regarding co-creation will show what has
been the focus of researches in the last years and how the concept has evolved.
The following part will describe the competitive landscape that urges enterprises
to find sustainable competitive advantages while looking for new ways for
differentiating themselves. A potential answer to these concerns that is hard to be
imitate, is co-creation. Thereafter, the core principle of co-creation will be
contrasted with the traditional view of value creation to underline how co-creative
firms have a different theoretical approach to value creation. In conclusion, some
of the main advantages of the implementation of collaborative measures from an
internal business perspective are going to be outlined in order to have an
understating of companies’ motivations.
2.1. Literature contributions and adjacent notions
2.1.1. Literature review
Co-creation was first mentioned in 1999 by Kambil and associates. Their
definition of the idea was follows: “engaging customers directly in the production
or distribution of value” (Kambil et al. 1999, p. 40). While this definition can be
seen as quite narrow because of the absence of other stakeholders like employees
and suppliers, it is nonetheless still relevant today. The theme was further
developed by Prahalad and Ramaswamy in 2004 in their book The Future of
Competition. Their main contribution is to have stressed the customer-centric
purpose of co-creation, namely the creation of “unique customer experiences”.
The authors observe that customer experience is central to value creation, strategy
and innovation. Interaction are defined as a prerequisite for co-creation to
occur. Co-creation is defined as “the practice of developing systems, products, or
4
services through collaboration with customers, managers, employees, and other
stakeholders”. This is applicable to the private and the public sector.
In 2007, the book Wikinomics by Tapscott and Williams underlines the crucial
role of the internet as an enabling tool for collaboration across networks of
stakeholders, especially since the web 2.0 era, with platforms like chat rooms,
wikis, blogs, peer-to-peer networks, forums, social networks and podcasts. The
terminologies peer production and mass collaboration are used to describe the
collaborations that take place. Other authors use the terminology interactive value
creation to describe this idea (Piller/Reichwald 2009, p. 107). However in the
book, some examples illustrate how the web enables new business opportunities,
without necessarily collaborating with customers. According to the authors’
implications, the firm’s perspective is to outsource labor globally and therefore
primarily use co-creative measures to cut costs, as in most cases participants will
not be compensated for their contributions.
Building on The Future of Competition by also insisting on the customer
experience, Ramaswamy and Gouillart publish The Power of Co-Creation in
2010. They analyze in what way mutual value is obtained by both the client and
the company at different points of interaction in various platforms designed
around the customer experience. This publication encourages firms to create entire
network of suppliers, partners, employees and customers for collaboration. The
authors also stress the importance of the interactions among people inside and
outside of the company, because they lead to the generation of insights, learning
and innovation. The publication mentions that co-creation has implications for
supply chain management and human resources management as well, and repeats
that it can be used by NGOs and governments too. The book explores how to
transform companies from inside in a managerial perspective.
These books have demonstrated that through better awareness, better information
and more creativity, customers are empowered. Communication technologies
enables them to not only consume, but co-create by interacting with companies.
The implications of this change will be further examined in this chapter (2.3).
5
However, the current literature fails to identify the different stages in the value
creation process that can be used to implement collaborative measures. We
elaborate what implementation strategies can be orchestrated at every phase.
Prerequisites and extended success factors have also yet to be thoroughly
identified.
2.1.2. Neighboring concepts
In the introduction, a definition of co-creation has been formulated. However, the
concept it often mixed up with neighboring terms and used as a synonym. The
purpose of this part is not to formulate comprehensive definitions or give credit to
the researches behind these other concepts but rather to explain the difference
between co-creation and these other ideas to ensure that the co-creation concept is
understood the way it has been intended to.
Companies using open innovation opened up their innovation process to
collaborators outside the company, like suppliers or customers, and work together
to find new applications. Co-creation is very similar in ideology and therefore,
some research done for open innovation applies to co-creation as well. However,
it differs in two major ways. First, co-created offerings don’t have to be
innovations. The collaborative way in which the offering is created might be
innovative, but the offering in itself does not have to be. Second, co-creation has a
focus on the experience of the participants and implementation measures are (or
should be) designed accordingly.
User innovation refers to people that modify current offerings or create new
products or substances to answer their particular need and do so without the
assistance of a firm (Financial Times Lexicon). Therefore, user innovations can be
created without any form of team effort. Their original intent is not to sell an idea
to a producer, but to create something that they need for themselves, because it
does not exist otherwise. The mountain biking industry originated this way in the
70s (Bhalla 2010, p. 7). Early users were the producers and the customers of their
own creation. Today, it has become a $100 billion global industry. A key
difference with co-creation, is that user innovation is user-driven while with cocreation, the firm is the one initiating the collaboration.
6
Crowdsourcing is an open call for solutions to a specific problem intended to
volunteers. The word is a combination of outsourcing and crowd. The tasks that
have once been executed by employees are being outsourced for financial or
creative reasons. Under certain conditions, crowdsourcing is an example of a cocreative measure. If the company uses it to engage its customers in order to create
a relationship and if the participants’ experience has been carefully considered,
then it is collaboration. However, in the majority of instances this is not the case.
The Amazon Mechanical Turk is a suiting example. It’s a platform where
enterprises can posts little jobs (HITs for Human Intelligence Tasks) that
computers can’t do, like transcoding audio into text, attribute keywords to
pictures, or fill out short descriptions for videos. On average, these tasks are
compensated less than half a dollar for an hour worth of work. No interactions
take place. There is an impersonal one-sided flow of information from the
participant to the firm. No offering is being created based on a firm-customer
collaboration. This extreme case illustrates the wide range of application scenarios
for crowdsourcing, not all of which are co-creation measures.
Large number of people working together, but independently, on a single project,
is called mass collaboration. The projects are divided into smaller tasks, so that
participants can work in parallel without having to wait for each other. Open
source initiatives fall under this category. The project can be outsourced to by a
private company. In co-creation measures, customers interact, but rarely work
with each other on ambitious projects. In addition, no actual content has to be
created with co-creation, as the concept focuses on perceived value.
Dialog marketing uses measures that try to make the prospect react to the ad he or
she sees, by including a means of contacting the company. This can be an internet
address, a flyer that encourages to share the home and Email address or a phone
number. The manifestation of the prospect is called direct response. In dialog
marketing, no actual conversation is taking place between the company and its
customers. The information the firm collects on its customers enables it to
concentrate on showing only ads, sending magazines or coupons that are relevant
7
to the customer, based on past purchases and geographical profiling data. This
individualized approach doesn’t offer the opportunity for an in depth exchange to
take place yet alone include the client in some operations. After having been
occupied with the subject of co-creation, seeing dialog marketing being defined as
an interactive communication with the target group surprises.
2.2. Competitive landscape
The gradual removal of trade barriers and the development of transport and
communication technologies has facilitated international trade which in turn led to
the economic globalization. A wider range of products are offered to better
educated and more resourceful consumers (Bhalla 2010, p. 4) that have the tools
to easily compare prices and inform themselves. They are also making purchasing
decisions in markets opened to all companies regardless of their location. This
increases the price awareness of clients. As a considerable number of offerings are
interchangeable today because of how standardized products have become on a
global scale, the competition is fierce. This trend is facilitated by, the development
of adapted shipping logistics and the reduction of customs barriers (Business
Dictionary). The abundance of consumer choice resulting from it is producing
stress and dissatisfaction, as it increases the effort that goes into making a decision
(Schwartz 2005, p. 44). Information overload due to constant advertisement
messages, which is caused by the fact that companies can reach their target
customers wherever they are, doesn’t help (Kreutzer 2009, p. 16).
However, globalization is still beneficial to both parties involved in exchanges,
consumers and companies. Nevertheless, within this competitive environment
companies are becoming more vulnerable. To increase profits and gain market
share, organizations strive to have a solid knowledge of the competitive landscape
in which they operate in. They have to identify the business and products of their
rivals, the way they are handling their industry challenges and how customers
perceive them. Understanding the competitors who are offering similar products
or services, having a knowledge about customer’s behavior and their own
knowledge about the offerings is important to gain a competitive edge (Koch
2009). This observation, as business intelligence, is a conventional tool to stay
8
updated on the market outlook and hopefully gain market share by leveraging the
observed trends.
Despite this knowledge, companies are always searching for sustainable
competitive advantages to assure their long term success and profitability, like
exclusive co-creation opportunities offered that are designed with the expectation
of the customers in mind and that contribute to their experience with the firm
(Ramaswamy/Gouillart 2010, p. 7). A differentiation based on a Unique Selling
Proposition (USP) is becoming obsolete, as the offerings in most product
categories are nearly, if not, identical (Kreutzer 2009, p. 158). This makes the
quest for a USP hard to achieve. A new concept has emerged to give companies
another way to be noticed and find new customers. The Unique Passion
Proposition (UPP) sees the employees as the major differentiation factor. They
become the agent in charge of deploying the company spirit and act according to
certain principles. Co-creation can be the idea that drives the firm’s passion. It is
not only a group of measures, but a philosophy. Employees can use every
interaction with customers, for instance call centers, to further develop co-creation
experiences and ideas that clients might have, in linking them with the product
development teams (Ramaswamy/Gouillart 2010, p. 57). Clients will notice how
serious and determined the organization and its employees are in offering them an
exclusive and integrated experience. Any doubts that tend to appear in the buying
process are likely to be reduced after observing that they are dealing with a
passion-driven firm (Kreutzer 2008, p.51). Facts and figures about the offering, as
often seen in USPs, don’t have the same reassuring effect. Non-monetary benefits,
like the relationship a company and its employees have with their customers
through co-creation measures, cannot be easily imitated by the competition. As a
consequence, they are a more sustainable differentiation.
2.3. Ideological change
2.2.1. Traditional view of value creation
For a lot of companies, value creation takes place inside the firm. Companies’ inhouse R&D departments work exclusively internally on a concept, based on their
9
own talents, knowledge, capabilities and on input obtained through conventional
market research. The producer produces the offering and the clients buy and
consume it. Clients and producers are different economic entities. These
customers are to be found on the marketplace, therefore outside the firm, where
the offering is delivered in its final form. Clients have little choice but to accept it.
The firm decides which product or service to launch and thereafter design what
they think is of value to the customer, presumably with thoughts like “Nobody
knows more about our business than we do” and “What can our customers tell us
that we don’t already know” (Bhalla 2010, p. 117). In consequence, the value
creation process is closed. For instance, potential customers don’t get to
participate in the promotion of the offering. Rather, they only get to see the oneway advertisement aimed at them.
In other words, from a traditional firm-centric mind-set, customers are mostly
passive in the process of value creation. Firms spend time and money researching,
observing and segmenting the market, in order to target people with their offering.
The resulting product is what drives the firm’s business, not the customer. The
interaction is limited to focus groups or surveys, which isn’t meaningful to the
customer and doesn’t contribute to enhance his experience with the firm. Another
common interaction scenario are the customer touch points that companies
establish. These have been created from an organizational perspective and are
often
insufficient
at
providing
long
term
relevance
for
clients
(Ramaswamy/Gouillart 2010, p. 6).
The striving for operative efficiency inside a network, which is part of the
traditional view of value creation, isn’t a sustainable competitive advantage
(Piller/Reichwald 2009, p.108). Companies have been starting to realize that they
no longer have the monopoly on resources or ideas (Bhalla 2010, p. 10), as well as
the potential advantages to no longer view clients and other stakeholders as
passive receivers of their products or services. One of these advantages is to know
the customer’s exceptions, an area in which managers have struggled with in the
past (Kreutzer/Merkle 2008, p. 57).
10
2.2.2. Co-creation approach to value creation
Co-creation is a customer-centric approach to value creation. From a co-creation
perspective, the value becomes based on human experiences rather than features.
This leads to the decentralization of value creation, because clients play a role in
defining and delivering this value instead of just receiving the offering. As a
consequence, the value proposition is no longer unilaterally defined by the firm
(Ramaswamy/Gouillart 2010, p. 5). The clients’ interactions with the company go
beyond the conventional exchange of goods and services on a market connecting
buyers and sellers, as they become involved in the design and delivery of their
experience. Markets become ecosystems where clients and enterprises interact and
connect with each other in order to co-create value. A new role of companies is to
set up infrastructures and environments where the producer and the customer meet
to collaborate. The barrier between production and consumption gets less obvious,
as clients can become both the producer and the consumer of the offering. So the
value is partly generated by the participants, now seen as partners
(Schildhauer/Voss 2009, p. 261), which leads to offerings that emphasizes on their
actual needs.
Furthermore, the interaction itself that aims at creating value, is of additional
value because the interaction process and platform can provide a pleasant
experience (Prahalad/Ramaswamy 2004a, p. 10). The value is not a function of
product attributes and features (Vargo/Lusch 2004, p. 1). It rather focuses on the
co-creation of value through deeper relationships. People are no longer seen as
buying either goods or services, but products that provide value that depends on
their customer experience, which can be enhanced with co-creation (Roser T. et
al. 2009). The value cannot independently be created by the firm, as it markets the
offering with customers and not to them, in order to cater to their “dynamic needs”
(Vargo/Lusch 2004, p. 6). Clients become a valuable resource in this marketdriven approach.
The focus is on co-creating value by listening and engaging customers.
Considering this approach requires a change in the way enterprises think and
11
behave and a transformation of the culture within the company in regard to
conceiving, designing and executing value (Ramaswamy/Gouillart 2010, p. 21).
Without the entire firm, preferably starting with the CEO, supporting the
transformation necessitated for the implementation of a co-creation spirit, returns
on collaborative measures are likely to be poor (Bhalla 2010, p. 117), for reasons
detailed in chapter 4.
2.4. Inherent advantages
Before analyzing the advantages of co-creation on a customer level, let’s highlight
the main perks of this philosophy from a business perspective. One benefit of cocreation which is the competitive advantage, which is by definition hard to
imitate, has been discussed in the competitive landscape earlier in this chapter
(2.2).
The most apparent reason is the new access to an inestimable innovation potential
due to the increased number of sources that are able to participate in this process.
Furthermore, the collaboration enables synergy effects like the cross-fertilization
of generated ideas through shared knowledge (Roser T. et al. 2009, p.13). The
finding of an innovative idea has a higher chance of occurring with more regular
and deeper conversations between co-creators from diverse backgrounds. As
Ramaswamy and Gouillart put it, “engaging minds in collaboration generate
creative
solutions
even
the
smartest
minds
alone
may
not
find”
(Ramaswamy/Gouillart 2010, p. 30). The collective intelligence (Roschek 2009,
p. 382) of participants should be viewed as a key asset. Rich qualitative insights
may lead to opportunities they might not have been identified without listening to
customers discussing with the firm and among themselves. Improving the quality
of customer insights is a top priority for CEOs and CMOs (Deloitte 2010). Of
course, this information needs to be transferred to the relevant departments to act
upon it. In this aspect, co-creation measures that involve clients giving an opinion
and participating in the development of the offering, can be a complement to
classic market research. The identification of these yet unanswered needs and the
12
fact that the organization is looking at hundreds of ideas instead of several,
accelerates innovation.
Another considerable advantage is the reduction of the business risk. The success
of a product or service considerably depends on its ability to fulfill client’s wishes
and needs (Steinhoff 2009, p. 345). When using co-creation methods, the firm
knows what customers will think of the product that is in development. Ideally,
they have at least been involved in the idea selection phase or in the testing phase.
Thanks to their different perspective and experiences, their feedback and opinions
help to eliminate projects that wouldn’t have been relevant to them. The company
avoids making poor decisions based on their idea of the market rather than reality
(Steinhoff 2009, p. 352). The resulting product incorporates the tweaks that have
been implanted thanks to the insights and concerns that have been detected by
customers before the final completion of the project. The offering has a higher
chance of being accepted on the market by the target group, because participants
from this target group addressed the main potential issues before the launch
(Walcher 2009, p. 141, Brecht 2009 p. 314, Ramaswamy/Gouillart 2010, p. 173).
Co-creation can lead enterprises to collect valuable data and have a deep
knowledge of their clients and by extension of their target group, including
preferences and needs (Helfrich 2009, p. 370). Firms should strive to construct a
detailed and up to date customer database for customer service, market research
and dialog marketing reasons. It should at least contain the address, the reaction
data and marketing measures information (Kreutzer 2009, p.64). The content of
these categories can be seen in figure 1. This database is ideally available and
editable at every customer touch point, to ensure good relationship tracking and
active requests monitoring. This enables the development of more relevant dialog
marketing campaigns and targeted new co-creation incentives, on the basis of the
client’s data. Exploiting this database leads to be selective as all clients are not
being treated equally. Clients, analyzed as being of great value for the firm,
should be considered more carefully and paid more attention to. This translates
into individually targeted highly relevant material and a higher willingness to
compromise. Treating customers differently is recommended (Kreutzer 2009, p.
13
46), as it enables the company to select the most loyal and involved clients for
activities like exclusive meetings or testing of an offering not yet available on the
market. It can in turn mobilize the attention of all customers, as the attendees
share their experience on social media platforms or blogs.
14
F IGURE 1 CUSTOMER DATABASE INFORMATION CATEGORIES 1
1
Based on Kreutzer 2009, p. 64
15
3. A customer-centric concept
Reviewing the different factors that motivate customers to collaborate with firms
will lead to better understand them when designing co-creation measures. In the
following part, implementation concepts based on case studies will provide some
application possibilities of co-creative initiatives at different stages of the value
creation process and beyond. Finally, the influence of co-creation on customer
loyalty will make clear that it can be used as part of a marketing strategy.
3.1. Participant's motivation
The motivation of participants is an important aspect of co-creation
(Piller/Reichwald 2009, p.112). Why do people take part in co-creation measures?
After all, they are giving away potentially valuable information often without any
compensation. Customers will only participate in the process if they gain
something from it. Let’s go through the factors that lead clients to be part of
collaborative measures. This will lay the ground to understand what has to be
considered in the design of co-creation concepts.
Studies undertaken in the field of Web 2.0 show that customers are interested in
being asked about their opinion (Kreutzer 2009, p. 215). They have often an
unfulfilled desire of being heard and to collaborate (Ramaswamy/Gouillart 2010,
p. 30, Bhalla 2010, p. 5). This feeling is accentuated when they don’t find the
company’s offering convincing. Clients are even generally willing to engage with
the firms or brands that matter to them and are glad when they are offered the
opportunity
to
participate
by
using
their
knowledge
and
creativity
(Piller/Reichwald 2009, p.107, Schildhauer/Voss 2009, p. 261, Bhalla 2010, p.
10). Understanding the client at both rational and emotional levels is key to the
design of co-creation measures (Bhalla 2010, p. 43). If they are treated with
regards to certain conditions (detailed in chapter 4), participants will not feel
exploited. The will to participate has different roots, which are not exclusive from
one to another. The motivation of participants can have an extrinsic or intrinsic
origin. The consultancy company Promise, based in London, further identifies two
16
sub-segments, which leads to four categories. The table below (figure 2)
summarizes them.
FIGURE 2 T HE FOUR DIMENSIONS OF PARTICIPANT MOTIVES2
Self-orientation
Other orientation
Extrinsic
Material rewards
Recognition
Intrinsic
Enjoyment
Altruism
Customers who are motivated extrinsically will participate in co-creative
measures to have a chance of winning a material reward, such as goods or money.
Their relationship to the company can be influenced with prizes, which makes
their loyalty volatile. To sustain their interest, periods without the opportunity to
co-create with the organization and obtain rewards should be limited. If we take
into consideration the relation that the extrinsically motivated customer has to
other clients, his contributions can also be originated in the desire to enhance his
reputation and his status, by letting people see that he is the author of several ideas
that have been selected for implementation. American apparel company
Threadless’ co-creation implementation illustrates both the “self-orientation” and
the “other orientation” of extrinsic motivation (Piller/Reichwald 2009, p.112). The
firm produces T-shirts designed by end-users. Every week, a design contests takes
place on its website. Out of 900 weekly submissions, the three designs that have
the most visitor’s votes are selected and produced by the company. On the online
platform, clients have the possibility to leave comments in order to give feedback
like improvement suggestions to the submitter, to allow for tweaks before the end
of the week. The prize for having its design produced is 3 000$. Besides this
material reward, the intangible benefit (“other orientation” category) is the
identity construction within a community. Artists for instance, that have designed
several successful T-shirts can show their acclaim when, for instance, looking for
a position in a creative agency. Another application could include the picture,
name, screen name and a short biography of a customer whose idea gave birth to a
new product on the packaging of a co-created product. Yet another way to
2
Based on Roser et al. 2009, p. 17
17
facilitate personal recognition is by having the recently evaluated and accepted
ideas and their authors on the home page of the engagement platform.
Intrinsically motivated participants are favorable for long-term interest and
creativity as they tend to perform better and are less opportunist (Schattke/Kehr
2009, p. 132, Walcher 2009, p. 152). Their participation in collaborative projects
is to be associated with their genuine interest in the product category or industry
and its development, as well as their enjoyment of learning and sharing their
knowledge through co-creation experiences. They spend time participating,
because they value interacting with the firm and meeting other customers that like
the same products or services that matter to them and not because of possible
material rewards. Having the opportunity to be heard, to exercise their creativity
and to have fun in the completion of a task is fulfilling and satisfying to them
(Schattke/Kehr 2009, p. 124). The execution of a task itself is rewarding. In some
cases, even the opportunity in itself to co-create is enough of an incentive for the
customer to participate (Bhalla 2010, p. 95). This enthusiastic behavior can be
traced back to the client’s identification with the brand (Walcher 2009, p. 153).
Brands possess material and intangible assets. The material aspect are the
products, and intangible assets are values associated to it. The higher the
customer’s identification with the brand and its values is, the higher the chance he
will participate. In regard of the orientation to others, these participants like to be
helpful to others and to feel they belong to a group that share common interests.
Intrinsically motivated participation is more sustainable (Zerfaß/Möslein 2009, p.
420).
3.2. Co-creation implementation
An early question enterprises must think about is at what stage of the value
creation process (figure 3) they would like to implement collaborative measures.
To illustrate in what way co-creation measures can be implemented in each and
every one of these stages, case studies are presented. Some companies will appear
in two different stager or more, because they implemented collaborative measures
at more than one phase of the process, which is exemplary, as co-creation isn’t an
18
isolated measure. Dialog with potential consumers all along the value creation
process is a key to success (Brecht 2009, p. 315).
FIGURE 3 STAGES OF INTERACTIVE VALUE CREATION 3
3.2.1. Before launch
Idea generation: In order to improve the existing offering or find ideas for new
products or services, the mind of the customers can be tapped. They are offered
the opportunity to formulate ideas for the business and, in case of idea
competitions, win praises if their input is selected to be implemented. Whether the
registered ideas are open for other clients to see and evaluate or whether they go
directly to an internal team to judge on pre-established criteria is up to the
company. The open approach is favorable in the context of co-creation, because
customers not only interact with the company, but also between themselves,
which leads to the fine tuning of ideas based on peer feedback and to the creation
of a community around the brand. Furthermore, popular ideas quickly emerge and
their feasibility can be analyzed in priority. Communities are groups who are likeminded, share common interests and come together around ideas (Lithium 2012).
In today’s technology-enabled world, thousands of people meet in virtual spaces
and have conversation about what they are passionate about. If they work together
to achieve an objective, they can been referred to as collaborative communities.
Based on numerous case studies, this stage of the value creation process seems to
be the most used by companies starting to open up their processes to outside
contributors, possibly because its implementation requires limited efforts in
comparison to involving customer at later stages of the process as well. However,
3
Based on Roser et al. 2009, p. 16
19
only a limited number of idea generation projects go beyond the sourcing of ideas.
Idea generation measures like creative workshops or feedback sessions with
experts, lead users or customers (Steinhoff 2009, p. 349), and online platforms,
must be part of a bigger plan for collaborative interactions in order to provide
customers with meaningful interactions.
German coffee retailer Tchibo is an example of the implementation of co-creation
in the idea generation stage of the value creation process. Through a dedicated
website (Tchibo-ideas.de), customers can formulate ideas about anything that
would make life easier and better (Helfrich 2009, p. 372). The company and other
customers talk together about a possible solution, which can involve the creation
of a new product or service, by any inspired designer, that solves the debated issue
or need. If Tchibo sees potential in the solution, the firm cooperates with the
designer to produce the offering. In addition to a compensation of the designers’
whose ideas have been implemented (based on the number of products produced),
financial prizes are given to the ideas and solutions with the highest ratings. The
two most popular calls for a solution of all time are one about the wish that cell
phones would be more customizable before purchase on a hardware and software
level and one about the desire to be able to buy automated backscratcher. Tchibo
doesn’t only provide the platform. The company co-creates with customers when
it develops the new offering with the original designers, instead of simply taking
the idea and producing the offering internally.
American coffeehouse chain Starbucks decided to take a co-creative approach in
2008, when facing intense competition and the partial loss of its Starbucks
Experience culture due to too rapid expansion (Ramaswamy/Gouillart 2010, p.
20). This lead to the loss of some of its loyal customer base. The measure consists
in a web based platform, Mystarbucksidea.com, which enables visitors to express
their desires and remarks concerning the experience in the shops, underlining
what was currently missing in their opinion. The CEO wants customers to help the
management redefine the Starbuck Experience. Like most comparable
engagement platforms, users can see other people’s ideas, comment and vote if
they too find the idea relevant. To insist on the variety of areas in which
20
comments were welcome, said areas were listed on the website: ordering,
payment, pick-up, atmosphere, locations, social responsibility, community,
products, merchandising and loyalty program.
Several weeks after its launch, many constructive ideas were posted. Customers
suggested a new feature that the Starbucks Card should have, which would allow
it to store the client’s regular order to make the process of ordering faster. It’s
beneficial to Starbucks as well, as it means serving more customers faster.
Another request that emerged was the opportunity to send in orders by phone or
via the internet. Healthy food options was a popular idea as well, and so was
having ice cubes made out of coffee to avoid diluting the cold drinks when
melting. A team of employees, called Idea Partners, are trained to be the hosts of
the discussion, taking part of the conversations, reporting popular wishes to the
relevant departments and indicating on the platform how the customer-initiated
projects were doing, in the case they were selected for implementation. Twenty
months after the launch of this platform, 50 different ideas had been approved.
This continuous dialog enables the brand and the values associated to it to be cocreated. Customers enjoy the experience of interacting and being listened to by the
firm’s employees, and benefit from an improved experience in the store, thanks to
the implementation of client’s suggestions.
When a system to report ideas from clients to the company is in place, the
employees in charge of answering customers’ phone calls through hotlines could
be trained to do the following: When customers call to make a complaint, they
could be informed that they can use the established platform to formulate an
improvement idea based on their negative experience and thereby enter the
competition (Walcher 2009, p. 150). To further encourage them to do so, the
potential prizes can be highlighted as well.
Idea selection: In this phase, all the ideas collected are processed in order to find
the ones that have the most potential and are realizable. The firm can chose an
internal jury or a few customers for the evaluation. However, giving to everyone
the opportunity to vote through an open platform is a more common practice. In
21
2006, a special unit of the firm Vodafone chose the first option (Brecht 2009, p.
314). In order to evaluate ideas, about 300 customers were selected, based on
socio-demographic factors and consumption habits, like text messaging and
roaming. These criteria are representative of the target group that the new product
or service was aiming. The resulting data is processed to determine if the
evaluated product or service is likely to be accepted and bought. If the feedback
was more mixed than the company had hoped, improvement suggestions are
analyzed. In the case none of them solves the main worries of the clients, the idea
is abandoned and the team moves on to another one. A more open practice in this
phase would be to let customers evaluate each other’s ideas by providing them
with several criteria, for example usefulness, novelty or willingness to buy
(Steinhoff 2009, p. 349). The obtained results reflect customer preference and will
identify unanswered needs or wishes that multiple clients have. In addition, cocreation considerably accelerates the decision-making process companies would
normally go through if online collaboration with customers didn’t take place
(Stumpp 2013).
Product development: Traditionally, customer input at American sportswear and
equipment company Nike Inc. during the processes of designing the product
would be limited to traditional market research and focus groups. In 2006,
wishing to give the opportunity to clients to co-create their products, Nike has
developed an online tool to enable customers to design their own sneakers
(Ramaswamy/Gouillart 2010, p. 18). NikeID allows them to define the size, the
style, the color of eight components of the shoe as well as to inscribe a word of
choice on the tongue of the shoe. The designs can be ordered and shared in order
to be evaluated by peers. This implementation of co-creation is called mass
customization. In addition to this online platform providing customization
options, NikeID Studio corners were established in selected Niketown retail
stores, where customers were engaged face-to-face. Clients can tell the firm what
shapes, colors and materials they value and would like to be incorporated in future
offerings. This way, Nike learns what personalization options are important to its
customers and why, while creating unique experiences for customers. Computers
logged in to the Nike ID website are also available in these corners. The
22
advantage of creating ones design at the shop is that the different materials can be
felt before making a decision. The same year, the company invited shoe designers
to create mock ups of soccer shoes and compete with each other. The customers
were the ones voting for their favorite designs. The winning mock-ups were then
produced and offered to the clients. These measures, combined with the Joga.com
platform, a social networking website created by Nike on which users can spend
time speaking about soccer, upload videos to show off their soccer skills and can
comment and rate other contributions, allowed the company to cultivate customer
relationships at multiple levels and in a way that emphasizes on their experience.
Danish toy manufacturer Lego also employs co-creation at the product
development phase. The Lego Factory (later renamed Design byMe) project in
2005 was the first co-creative measure implemented by the company
(Ramaswamy/Gouillart 2010, p. 51). It consisted of a software available free of
charge, that enabled the creative user to design a virtual Lego construction to
create the perfect product for himself. The customer could upload his design to a
dedicated gallery in order to share with other designers. For some, the virtual
conception of their ultimate toy is all the fun. For others, actually possessing what
they designed matters more. For a fee, the company offers the possibility to
produce the virtual mock-up. The designer’s picture will appeared on the
packaging. The most popular designs were being mass-produced, with credit
given to the original conceiver.
Lego’s Mindstorms robotics product line is their third co-creation implementation.
This toolkit consists of a microcomputer and snap-on bricks like accelerometer,
light, gyroscopic, infrared, ultrasonic and sound sensors. It permits customers to
build an automated and completely customized Lego robot. The robot’s function
and capabilities depends on the code that the user wrote. Concrete real-world
applications ranged from sorting machines to land rovers, or even intruder alarms.
The second generation, Lego took the co-creating approach further by opening up
its design. The firm invited enthusiasts to participate in the programming of the
new user interface (UI) of the software. The new kit included capabilities for
motion and touch and gyroscopes and accelerometers. The innovative tools
23
provided allow clients to articulate and discover what is of value to them. The
most precious experience enabled by the kit is the ability for customers to channel
their creative tendencies and become designers.
Testing & refinement: At this stage, the new offering has been created, it is usable
and but not quite ready to be implemented. Before the launch, the organization
wishes to test its product or service first, in order to be able to fine-tune it before it
is made widely available. Customers should be included in this phase, as they are
the target group and are likely to have remarks about usage scenarios that might
have been overlooked internally. This is what Vodafone did, in the same program
as their evaluation implementation (Brecht 2009, p. 314). Here too, participants
had been selected by the company, instead of asking for volunteers. A new service
was offered for a two months testing period, to stage a real-world usage. This
allowed the gathering of consumption data to assess the service’s penetration and
usage intensity, as well as the influence that it is has on the use of other already
established services. At the end of the testing period, a selection of participants
were asked for in-depth feedback and for their willingness to buy the service via
phone interviews. So the findings were based on real world usage context of
current customers. This method lead to more insights than results based on tests in
a lab or input by participants in a quantitative survey, which are examples of
conventional testing would have.
In 2007 in India, Finnish phone manufacturer company Nokia started to invite
heavy
users
and
hackers
to
test
upcoming
mobile
phone
software
(Ramaswamy/Gouillart 2010, p. 60). The idea originated from the fact that
developers, no matter how thorough they are, have not the ability to predict all the
circumstances in which the device will be used. This leads to bugs that only occur
in a specific environments that cannot be reproduced when this stage happens
internally, especially considering the high number of products getting launched
every year. The selected customers were asked to make bug reports to allow the
company to identify and correct the issue. Some users ended up changing the code
of the software to repair the issue they faced themselves. After meeting with
Nokia in the firm headquarters to show their tweaking, their update of the
24
software was implemented in the final version. The users co-created value with
the company which led to a more stable software that benefits both parties.
3.2.2. After launch
Commercialization: When co-creation is used in the commercialization phase of
the value creation process, customers are given the opportunity to advertise the
offering while having fun. In a lot of cases, consumer-generated advertising is a
substitute for a more traditional full-scale marketing campaign that would cost a
lot more while being less effective at differentiating itself from other
advertisement content. So called participative marketing campaigns are the middle
ground, where customers can take part in an agency orchestrated campaign.
Besides the cost factor, another reason to use co-creation at this stage of the value
creation process is that people trust peers more than they do companies. A survey
conducted in 2007 by Hitwise, an online competitive intelligence firm, shows that
MySpace, a social network that by definition is based around content generated by
users, sends more users to retail websites than MSN and Yahoo do together
(Bhalla 2010, p. 21). Getting information from actual users with actual
experiences to share is more relevant and believable for potential customers. In
the case of Threadless, the customers were not only in charge of creating and
voting on the design of the t-shirts. They were also encouraged to participate in
the promotion of the platform by taking pictures of themselves or friends wearing
Threadless T-shirts to make for an illustration in the catalog (Piller/Reichwald
2009, p. 106). This enables people with a different kind of creativity like staging a
scene for photographic purposes or editing a picture on specialized software, to
co-create just as much as the designers did.
The product Alli, launched in 2007 by the firm GlaxoSmithKline (GSK), is a
weight-loss pill that “promotes weight loss by decreasing the abortion of fat in the
intestines” (Ramaswamy/Gouillart 2010, p. 60). Before its launch, 400 overweight
people were given access to the drug for purposes detailed in the next part of this
chapter (the usage stage). Several months later, GSK launched an advertising
campaign for this product. 90 participants among the 400 early testers were
25
offered the opportunity to create YouTube-style videos of their story, talking
about their experience in adopting a new lifestyle, a change that is mandatory for
the product to work. Seven of them were flown over to New York for filming with
professionals4 (Johnsen 2007, p. 46). Segments of the seven recorded videos were
used to create 30 second television commercials. The stories could be watched in
their entirety on the Alli website. Hearing about other people’s struggles with the
same problem and seeing them talk about overcoming their difficulties is more
relevant to potential clients than any other type of the firm’s advertisement can be.
In 2006, for the second generation of the Lego Mindstorms product line, the 2.0
NXT, the firm gave selected customers, from a large pool of applicants, early
access to the next generation product (Ramaswamy/Gouillart 2010, p. 54).
Mindstorms 2.0 NXT is based on new software. Its user interface was jointly
programmed with enthusiasts. It provides a new range of sensors and motion
capabilities. Selected participants were encouraged to report their first impressions
on a message board by mentioning their experience and by uploading pictures of
their smart invention. Potential customers could see all the different applications
the kit could be used for and obtain a precise idea of the product’s true
capabilities. Conventional marketing techniques would not have made the wide
variety of possibilities offered by the offering clear, because a single team could
not have thought about so many different concepts.
Usage: In 2006, Nike introduced Nike Plus in association with Apple
(Ramaswamy/Gouillart 2010, p.8). It consists of an offering of chips containing a
wireless transmitter that communicates with the Apple device. The information
being transferred is the time, distance and average speed of customer’s run, as
well as the calories burned. If a record is broken on the usual run, a
congratulations message is played on the device. Once the exercise is finished, the
client can go online to a dedicated platform and upload the data to his account in
order to analyze it through automated and colorful charts to see how he or she is
doing in comparison to the pre-established goal, or track the progress they have
made in comparison to any previous time period (for example last month). Thanks
4
The criteria that helped make this selection have not been disclaimed
26
to a partnership between Nike and Google, the customer can save individual
trajectories and link them to the data.
All this data can be shared at will to obtain comments on your performance from
peers, show others how close to the self-imposed goal one is or suggest some
pleasant running trajectories with annotations like lighting conditions in the
evening and nature of the road terrain. This information tends to lead to
interactions like discussions on a special section with other passionate runners on
broader topics related to running. It’s a good place to ask for personal advice from
experienced users, simply tell stories, give tips or talk about sportswear. This way,
when being in a different city for a few days, the user can check out what are most
popular running places in the neighborhood and quickly start exercising. The
website also offers the possibility to challenge other users on the number of miles
run in a month for instance. The music that clients listen to while running can also
be shared with other users. Nike also engages the users in offering them the
possibility to take part of events that the company sponsors, like a five km run in
the streets of New York on Valentine’s Day.
In all the options involving interactions with other peers, additional value is cocreated in the usage phase through the interactions and this makes running an even
more enjoyable experience for customers. In this case, Nike’s role after the sale is
to provide the tools, the platform and coaches to give professional advice to
customers in need of it. The enterprise recognized, that researching gear, buying
shoes and sometimes contacting customer service are not the only factors that
define the running experience (Ramaswamy/Gouillart 2010, p.14). Not only has
Nike changed how it interacts with buyers, it has also enabled a comprehensive
system of interactions. This system allows the firm to collect deep qualitative
insights into the difficulties that can be faced by users, their running habits, allows
them to quickly identify new trends and build a solid relationship with its
customers. The gathered data will be taken into consideration during the
development of future products and the tweaking of the platform’s features.
27
The second example of co-creation in the usage stage of the value creation process
is the product Alli, the weight-loss pill. The drug is meant to be a complement to a
low-fat, low-calorie diet and regular exercise, not a substitution of those things.
Therefore, behavioral change is an integral part of consuming the product. If the
drug is taken when the user eats more than the recommended 15 grams of fat in a
meal, unpleasant treatment effects will be experienced that will have a negative
impact on the customer’s experience. GSK wanted to build a client base for whom
the offering had worked in order to invite them to share their experience of the
product and help others determine if the drug was the appropriate solution for
them.
To start the project, 400 overweight women and men were selected to form a
group of early users called the Alli First Team. They obtained the drug before its
public release. The intent was for them to share their personal experiences and
have a discussion on how best to support other customers to help them succeed, so
that they become part of a group that go through the same struggle. An online
platform was created for this purpose. This implementation would help GSK to
promote new behavioral models and at the same time manage consumer
expectations, as potential customers would quickly be informed by users that Alli
is not a magic pill and must be consumed in conjunction with healthier habits.
Upon learning this fact, people that are not highly motivated to lose weight would
understand that this offering is not suited for them. Based on the insights provided
by the First Team, another, more educational website, was created prior to the
product launch. It contains clear information on how the drug works in the body,
advice for healthy eating (such as recipes), exercise, tips about managing hunger
and upon registration with a key provided with the product, an individually
tailored online action plan (Myalliplan). Developed by nutrition and weight
management experts, it enables the user to record food, lifestyle information and
connection to a social network of other users. The sum of this information and
interactions aims at helping customers develop skills to lose weight and keep it
off. Without the informational website, the action plan and the customer platform,
Alli would be a far less valuable offering.
28
The usage stage of the value creation process can also be enriched with user
generated content (UGC). However, most instances of user generated content on
their own, like blogs, wikis and YouTube, don’t have anything to do with cocreation, as the concept can be defined as all content that hasn’t been added by a
platforms’ creators. French video game developer Nadeo uses UGC as a cocreation measure for its Trackmania series, which are racing games where players
from around the world can race against each other. Online multiplayer
possibilities is nothing new however. Where Nadeo stands out, is that since the
original title in 2003, a big focus of the games has been to let users create their
own racing tracks through elaborate map editor tools. Once finished, the map can
be uploaded for anyone to see. Players can try it out alone seeking to break world
records regarding to the time it took to cross the finish line, or drive with players
independently from their real world location. Because the game has been designed
to receive content by the users from the start, the firm’s strategy to involve
customers at the usage stage was based on co-creation principles.
Customer support: The amount of firms having created a forum for users to help
and support each other in order to control the costs of the traditional customer
support department is countless, especially with technological products, may they
be hardware or software-related. Interacting with other users that bought the same
product to solve issues leads to a better experience and avoids hassles like long
waiting times on hotlines. However, in some cases like serious hardware
dysfunction, these interactions can’t help the customer at solving the issue,
because the product has to be repaired. In 2007, Nokia found a way to involve
their clients in the customer support stage of the value creation process in India
(Ramaswamy/Gouillart 2010, p. 59). The firm realized that best way to make sure
that the problem description was accurate in their database was to let customers
access the repair request file in order to edit it by providing additional information
on the issue. Such information could be what they were doing when the problem
first occurred, or that this issue has surfaced for the third time in six months. This
implementation avoided several calls to ensure the information was correct,
thereby reducing costs while improving the repair time and the experience of the
customer. In the process the repair stages have been made more transparent.
29
However, some implementations of co-creation go beyond these seven stages of
value creation and aim at simply engaging the customer. This is the case with the
firm Caja Navarra (CAN), a Spanish savings bank designed to support local
communities through social contribution. The civic bank’s board used to decide
where the money should go (Ramaswamy/Gouillart 2010, p. 224). Over the
course of three years starting in 2004, CAN progressively gave their customers
more and more control over the firm’s relationship with the NGOs. The first
measure was to let customers decide which social initiative they wanted the bank
to support, from a selection of seven that have been traditionally supported by
CAN. The firm personalized their client’s credit cards to reflect their choices,
reinforcing their identification with the project and generating an emotional
connection. Observations showed that customers chose to direct the profits to
projects like disability and care as well as cooperation, rather than initiative that
CAN had supported in the past, such as sports and leisure. One year later, the firm
increased the customers’ options and allowed them to not only select a category,
but a specific organization and project as well. The most chosen one the first year
of the implementation of this opportunity was emergency aid in natural disasters
and crises.
Before the next step, that took place one year later, the firm had already 88% of its
client base selecting a specific project by an organization. To be as transparent as
they could, CAN wanted to give customers a higher degree of insight into its
social investment. So the company send letters to the customers having chosen a
project to support, to inform them on the amount of profit the firm had made with
their money and how much as a consequence the customers had contributed to the
cause they selected, in cash figures. This level of transparency is unusual in this
industry. An online tool was implemented to provide potential customers with
estimated amount of money the bank would make from them, based on their funds
and the chosen product, and therefore how much they could contribute to a
project.
30
In the search of yet more transparency, CAN asks organizations receiving funding
to explain in person to its clients how they have invested the money, what results
have been obtained and what challenges are they currently facing. For this
purpose and after some adjustments, the firm’s branches were used as engagement
platforms for the live meetings. In the first year alone (2007), 200 social
organizations went to CAN branches to inform customers of the status of different
projects financed by the contributions the bank made thanks to the profit
accomplished with the clients. The projects are located both inside and outside
Spain. The clients’ attendance strengthens the commitment of the customers to
“their” project, because they learn about it, see it progress, and interact with the
organization itself and consequently make more informed choices.
Finally CAN made it possible for its customers to visit the projects or work as
volunteers in the organization of their choice by putting them in touch. In the first
year, 2 750 volunteers accounted for 22 000 hours, fostering collective action as
people can meet around a common cause. CAN’s desire is to link their
engagement platforms and the initiatives. This is how CAN engages its customers.
This example illustrates that what is at the core of the co-creation measures
doesn’t have to be the offering itself. CAN’s customers work as partners. The firm
isn’t limited by its traditional role. The resulting unique customer experience is a
sustainable competitive advantage.
The selected instruments must be integrated in the overall marketing strategy for
coherence purposes. Firms sometimes outsource different communication
activities to different creative agencies, which may lead to shortcomings in the
execution of the new measures, as not all departments and customer touch points
are aware of the new approach to customer involvement and prepared to answer to
the generated interest (Kreutzer 2009, p. 19). Therefore, marketing managers need
to ensure, that all parties involved are on the same page and have been properly
briefed.
31
3.3. Customer loyalty
3.3.1. Customer experience as the focus of co-creation
Firms know that keeping current customers is just as important as finding new
prospects. Customer satisfaction is often a Key Performance Indicator (KPI) that
firms tend to calculate to evaluate their achievement. Nonetheless, it has been
pointed out that satisfied customers are not necessarily loyal, only very satisfied
clients are (Kreutzer 2009, p. 167). This is why it is recommended to work on
making customers loyal, rather than spend time and money on measures to ensure
they are satisfied. Customer loyalty has been declining across many industries in
the last few years (Ramaswamy/Gouillart 2010, p. 3). Co-creation can be applied
as a retention strategy that aims at increasing customer loyalty. Customer
retention can be defined as all measures employed by a company to have a lasting
relationship with the client and ideally increase its share of wallet (Kreutzer 2009,
p. 175). It tries to achieve this goal through pleasant experiences. It is important to
keep in mind, that customer satisfaction isn’t only the result of the purchase and
use of a product or service. It is rather the sum of all experiences that have been
had around the offering, including prior interactions and expectations (Kreutzer
2009,
p.
167).
Early
involvement
increases
chances
of
purchase
(Ramaswamy/Gouillart 2010, p. 77). Therefore, to have loyal customers, the
emotional and creative link to the product or brand in general is as important as
the offering itself.
During the prospect acquisition, firms rely too much on the factual level of their
offering (Kreutzer 2009, p. 154). Features, numbers and various facts are
underlined. However, potential customers will most likely not be excited about
the product or service, as they often have a considerable amount of alternatives to
choose from. This is why the sometimes forgotten relationship level is decisive. A
positive and meaningful relationship is hard to imitate and becomes a
differentiation factor that customers notice, as they are always looking for
pleasant feelings (Kreutzer 2009, p. 155). The more effective way to accomplish
that is to create unique customer experiences. The customer experience can be
32
seen as the result of all the interactions that a customer has with the firm
(Ramaswamy/Gouillart 2010, p. 248).
Clients are not only searching to have an enjoyable time once they are in
possession of a good, but also like to live a special experience during the buying
process (Walcher 2009, p. 153), like the opportunity to alter the design and the
consumption of their purchases. The participation to co-creation can provide an
emotional, creative and social experience, which positively influence the
participant’s attitude towards the brand. Other intangible benefits are the clients
attachment to the product or service because they developed a relationship with it
before its availability and the reduction of perceived complexity of the offering, as
they co-created it themselves (Kreutzer 2009, p. 267). This shows how crucial an
orchestrated experience is. Under the consideration of several conditions
discussed in the next chapter, co-creation can result in a deep relationship and
profound knowledge of customers that benefit both parties. The resulting trust and
loyalty goes beyond the reach of conventional marketing. It becomes clear in this
context, that the role of marketing should include the encouragement and support
of creative exchanges with clients (Zerfaß 2009, p. VI), by encouraging the
enterprise to listen and cultivate relationships.
To foster customer retention, the intentional creation of switching costs is helpful
(Kreutzer 2009, p. 177). The customers should feel that by deciding to buy the
offering of a competing firm, they will lose something valuable, like their close
relationship with the brand. Through meaningful and memorable co-creation
experiences, these switching costs appear. The clients who enjoy enterprises’ new
approach to customer involvement, will find it harder to switch to another firm
that offers comparable products, as the collaborative experience they enjoyed has
become part of the value proposition and is likely to be missing from the
alternative offering. The more solid the relation to the customer is, the more
difficult it will be for competitors to break (Kreutzer 2009, p.55).
33
3.3.2. Empirical data
Evaluating concrete results of co-creation activities on sales is challenging. It is
not possible to dissociate the factors that lead to an offering’s success, such as
links between a firm’s individual activities and the performance of a product line.
Nonetheless, if the sales of a company are higher in the time period after the
implementation of co-creation measures in comparison to previous years and that
the market growth has been stable, we assume the observed growth to be a direct
result of the collaboration. Three of the case studies analyzed in the previous part
will be overviewed in regard to their contribution to the firms’ performance.
By the end of 2007, Nike’s market share of running shoe in the USA was 57%, as
opposed to 47% one year earlier and 40 million miles were uploaded by 600 000
runners (Ramaswamy/Gouillart 2010, p. 10). At the same time, conventional
advertising expenditures fell by 55%. Instead, the company kept investing in the
development of the Nike Plus online platform. In mid-2009 the same market share
reached 61% and 150 million miles had been uploaded by 1.3 million runners.
Further collected data showed that customers connected to the platform three
times a week on average. The platform Nike Plus had over 2 million registered
users in 2009 and is the largest community of runners ever created. All the
enterprise’s co-creation measures have been undeniably been well received.
GSK sold 156 million Alli packages in the first six weeks of market availability in
the USA and two million in the first four months (figure 4), making it the most
successful launch of any weight loss drug in terms of units and sales (Johnsen
2007, p. 46). Regarding the two dedicated websites, five million unique visitors
were welcomed and generated 125 000 posts. Early 2009 the product was
introduced in Europe and it was the most successful launch for GSK on that
territory, with revenues of $92 million in one quarter. The supportive approach the
company decided to take was an excellent strategy.
34
FIGURE 4 WEIGHT -LOSS
DRUGS SALES DURING THEIR FIRST QUARTER
(USA)5
Let’s see how CAN’s financial performance increased after it progressively rolled
out several collaborative ideas. Between 2001 and 2007, profits went up 2.8 times,
from 64€ million to 182€ million (Ramaswamy/Gouillart 2010, p. 231).
Resources managed increased 1.8 times, from 6.5€ billion to 11.86€ billion. In
2006 the bank’s ranking went from 16th to 5th in margin per employee in Spain.
An impressive observation is that the activity didn’t go decrease nor stagnate in
2008 and 2009 during economic downturn, which allowed the firm to give a total
of 3.3€ billions in loans. The attachment customers developed towards CAN
thanks to all its effort to collaborate with them and social organizations led to their
indisputable loyalty.
5
Johnsen 2007, p. 46
35
4. Success factors
The purpose of this chapter is to draw a picture of the aspects that help co-creation
projects succeed. The first part deals with decisive prerequisites to the launch of
any co-creation effort. These points have to be thoroughly examined in a
company, before time and resources are spent thinking about the possible
implementation of collaborative measures. Without such initial verification, the
co-creation project is off to a bad start because of enterprise related affaires. Then,
examples of rather unsuccessful co-creation measures, missteps and other
potential challenges will lay the ground for the final part that is about developing
guidelines to increase chances of positive co-creation experiences.
4.1. Prior conditions
The classical Marketing-mix based on 4 “p”s, namely product, price, place and
promotion can arguably be perceived as being outdated, as not enough importance
is accorded to employees, which play an often underrated role in the success of a
company. Therefore, a fifth “p”, for people, could be added to the equation
(Kreutzer 2009, p. 4).
Before thinking about co-creating measures with
customers, employees must be given the same opportunity. A company that starts
to listen to the voices of its customers without enabling employees to express their
own ideas and recommendations first, is likely to go through difficulties when
trying to implement the co-creative measures (Ramaswamy/Gouillart 2010, p. 84,
Bhalla 2010, p. 117). People inside the organization will find it unfair and their
attitude towards participants won’t be encouraging. Bhalla formulates it the
following way: “It is impossible to be open externally without first collaborating
internally” (Bhalla 2010, p. 126). Let the employees help shape and tune the co36
creation measures. This way, the change to co-creation itself will have been cocreated (Stern 2011) and they will be motivated by it and open up to the change
that the involvement of customers during various stages of product development
brings with it. This idea is not to be mixed up with a permanent internal employee
suggestion system.
As already discussed, in co-creation, the interaction with the firm creates value.
These interactions can be anywhere in the value creation process, not just at
conventional points of sale or customer service. To ensure employees at customer
touch points have a co-creative approach while interacting with customers, a
specific training session or meeting should be implemented. A memo cannot
possibly explain clearly the whole concept, the objectives, the strategy and the
measures. Employees are the host of the discussion. Their role in the success of
co-creation initiatives is crucial. Managers must make sure that the support which
customer-facing employees will need actually exists and is at their disposal
(Ramaswamy/Gouillart 2010, p. 33). Managers also have the responsibility to
ensure that all personnel is on board with the opening of specific processes to the
public. In some cases, departments that lose their autonomy might prevent the
smooth progress of co-creation (Füller 2012). This can be the case of the qualified
artist in charge of ad or packaging design. Suddenly, he or she has to learn to
work with hundreds of outsiders to create materials that were his or her
responsibility. The artist’s mission transforms to one of compromise and
supervision.
Product managers and engineers may also have a hard time accepting that users
can contribute to the development of the offering in order to improve it in ways
which the company didn’t think of prior to the opening of the value creation
process. Even suggestions from the own marketing department sometimes are not
given proper consideration in the R&D department. On a corporate level, the “Not
Invented Here” (NIH) phenomenon can come in the way of co-creation. This idea
describes the unwillingness of employees to consider innovations that originated
outside the company. The origin of this mentality is the belief that ideas that
didn’t come from own departments are needless, inferior and impossible to
implement (Walcher 2009, p. 150). These limits are a major obstacle to the
implementation of co-creative measures (Piller/Reichwald 2009, p. 118). The
37
necessity to have all departments and managers briefed and on board with the
philosophy thus becomes evident.
The ability to integrate and apply the external knowledge shouldn’t be taken for
granted (Enkel 2009, p. 186). Firms that are thinking about using co-creation
measures and don’t already use open innovation to work on new products or
services will not have the necessary internal organization in place to transfer the
feedback and the ideas to the relevant team or orchestrate the collaboration. As the
lack of follow-through is one of the most negative outcomes a failed co-creation
measure can have (Bhalla 2010, p. 23), this potential issue should not be ignored.
It requires skill to absorb new knowledge, combine it with existing one, and
process it for business applications. In addition, it is important to carefully
allocate complementary responsibilities to different teams. Upper management
has to take into consideration the new responsibilities that the employees in these
teams will have and balance their workload accordingly (Enkel 2009, p. 190).
Furthermore, willingness to learn and flexibility is needed to regularly adapt the
organization, as the implementation of co-creation evolves and is applied at
different stages of the value creation process. When the co-created offering is a
new product or service, particular care should be taken to coordinate the R&D and
marketing departments at the earliest stages to ensure they are on the same track
and don’t make decisions without consulting other involved departments first.
4.2. Challenges and risks
Ramaswamy and Gouillart identify two areas that often cause the failure of
attempts at co-creation (Ramaswamy/Gouillart 2010 p. 82). The first one is not
having the right platform. Some critical design flaws can make the platform itself
a barrier to the involvement of the customer. The second most common reason
behind disappointing co-creation results is the absence of a compelling
engagement experience for the participants. As discussed in chapter 3, this should
be at the center of the design of any co-creation project. Merely providing an open
platform doesn’t guarantee that customers’ experiences in using it will be good.
However, there are other just as important reasons behind the failure of
38
collaboration projects. Through the analysis of the following examples of
missteps, some preliminary guidelines should become evident.
In 2006, American retail chain giant Wal-Mart attempted to engage teenagers
(Rosmarin R. 2006). They were invited to create their own page on a new “social”
network called The Hub. Other available features were the upload of photos and
videos and the creation of shopping lists. The platform closed after only 10 weeks
of existence. Two factors contributed to this failed attempt at co-creating value.
First, the usability of the platform was intentionally very limited. Users simply did
not have the possibility to contact with each other via E-mail. The giving out of
other personal information like phone numbers and last names was also
prohibited. Trying to build a network that doesn’t allow interactivity between
users outside of the platform has a low chance of acceptance. The companies’ role
in such platforms is to facilitate the engagement, not to control it. The second
considerable flaw was that members were flooded with advertisement and
promotional offers (Bhalla 2010, p. 28). The firm used this platform to post
conventional promotion programs and merchandising, rather than gaining
valuable insight in the aspirations and desires of this target group by starting a
conversation with the teens. Clear separation of content and advertising is
necessary to foster credibility (Kreutzer 2009, p. 302).
In addition, user comments that promoted the website’s and retail store’s products
were suspected to be written by employees who created fake member profiles (PC
Mag 2006), which in turn led the users to question their authenticity. As no way to
contact the other members existed, any chance for transparency was impossible.
Finally, parental approval was mandatory for the creation of an account and they
were sent notifications in relation to their kid’s activity on the platform. These
fundamental mistakes show that Wal-Mart’s philosophy didn’t change in the
slightest, as their motives were purely short term financial ones, as opposed to
long term customer engagement. They likely created the social network to imitate
observed practices in other industries, rather than the realization of the importance
of listening and interacting with clients (Bhalla 2010, p. 28).
Again in 2006, American automotive manufacturer General Motors (GM) used
consumer
generated
advertising
for
its
upcoming
new
Tahoe
SUV
39
(Schildhauer/Voss 2009, p. 267). People were asked to produce 30 seconds TV
ads. Facilitating materials like sound clips and high resolution images of the
vehicle and brand logo were provided. Out of the 30 000 submitted entries, that
were available for anyone to watch, a few had a negative tone and were mocking
the environmental impact of the car, as well as its quality (Sandoval 2006). Even
though the number of criticizing videos was by far lower than the number of clips
that showed which spirit the firm was aiming for (20% versus 80% respectively),
they spread a lot faster. GM chose not to remove these contributions. As a
response, the company commented on some of the points that were criticized by
underlining their efforts in these particular areas. Nonetheless, the press described
this attempt at co-creation as catastrophic. This misadventure can be led back to
ague rules of participation. If the company had clearly stated that negative and
ironic videos would not be admitted, it would have discouraged some potentially
critical participants, because the firm would have had the legitimacy to screen the
uploaded files to block those particular ads before they went public.
Dutch retail chain and franchise Spar wanted to reinforce its presence online. For
this purpose, a contest to design the shopping bags was launched. Approximately
5 382 entries were submitted and 56 873 evaluations took place (Schwab 2010).
Some of them were, not surprisingly, very sophisticated. A surprising fact was
that the entries originated from nearly 100 countries. However, the retail chain
only operates in 30 countries. This figure confirms the impressive reach of such
contests and the willingness to participate of not only customers, but users of the
web in general. The winning design was selected by a jury made of Spar
employees, therefore without any involvement of the participants. They ended up
very surprised and disappointed with the choice of the committee and shared their
dissatisfaction on the platform. This incident created frustration and irritation on
the newly developed online platform and consequently led to the loss of trust. In
this case the problem was not the Terms & Conditions of the contest. Users knew
that a jury would have the final say. The lack of transparency of the selection was
the real issue: On which criteria was the committee going to evaluate the designs?
An information containing the justification and explaining the process of selection
would have helped the participants understand the choice.
40
When products are developed in collaboration with players outside of the
organization, the cost of coordinating and integrating of all the value creation
input of co-creation process increases significantly. In addition, having multiple
external contributors at various stages of the value creation process makes the
management of the whole chain challenging. Another challenge is the question of
the intellectual property regarding customer generated ideas. American greeting
cards manufacturer Hallmark Cards has been using co-creation measures to
generate deep insights, develop new products, extend the existing product line and
encourage creativity of its customers. The firm requires that all clients
participating in these measures sign a document which states that all ideas
resulting from the customer’s participation are Hallmark’s property (Bhalla 2010,
p. 169). In the case of Tchibo (see part 3.2), the firm shared the revenue stream
from produced offerings based on an idea that originated on the platform with the
participant. As long as they are stated from the start, both approaches can work.
Once these challenges are acknowledged, firms can implement preemptive
countermeasures to minimize the risks. The following part covers the
considerations that enterprises interested in the concept should know before
implementing any measures.
4.3. Guidelines for the implementation
In successful examples of co-creation, companies have respected several attributes
to create the best customer experience possible. To find those attributes, 35 case
studies6, were analyzed to seek out what the successful implementations had in
common. Together with the fulfillment of the prior conditions detailed previously
in this chapter, this paper provides the necessary considerations when designing a
co-creation measure. First, elements that are directly linked to specific projects
will be clarified. Second, aspects in relation to the firm’s general approach
towards co-creation are revealed.
6
Provided in the books by Bhalla, Ramaswamy/Gouillart and Zerfaß/Möselein
41
4.3.1. Project-related considerations
The first crucial consideration is to test the idea on a small scale before its full
deployment. This enlightened experimentation can take place with the employees
and later on include a few top customers before rolling it out more widely over
time. This concept is already being extensively used in software development,
where during a program’s alpha stage, people involved with its creation test it.
After taking care of observed unwanted occurrences, the beta stage typically
opens up to a selection of volunteers that were not involved in the development of
the software. In the context of experimenting with the future implementation of a
customer-firm collaboration, the co-creation measure itself is co-created. This will
lead to the early detection of issues that hinder the experience or the ability to
comfortably participate to the project. If these problems occur later on, customers
may not give the firm a chance to rectify some aspects of the measure before
giving up on participating. Even after the public availability of the measure, the
participation experiences should be monitored through ongoing customer
feedback at various touch points. This applies to every new co-creation project as
it allows for continuous improvement.
The next project-dependent element that needs thought is the reward system. It
should be carefully planned, as it has a direct influence on the customer’s
participation. There are several things to consider. Companies can offer material
and immaterial rewards. In both cases, the organization must know its customers
to understand what is relevant to them. In the case of non-financial material
rewards, it is preferable that the items have a link to the brand, its values and the
domain in which the client has been involved. However, high material gain
doesn’t necessarily lead to high customer engagement (Walcher, 2009, p. 151), as
participants often value receiving credit for ideas and enjoy seeing their
contribution being used. Also, if a previously intrinsically rewarded task becomes
the object of a material prize once, studies show that participants are unlikely to
perform the same task if not rewarded with prizes again (Schattke/Kehr 2009,
131). Immaterial rewards can consist of the participant being listed on the
company website to create personal recognition, being invited to headquarters to
further discuss his input and being congratulated by company officials, being
offered the opportunity of an exclusive factory visit or seeing a preview of an
42
unreleased offering. These firm-centric options would not have been otherwise
accessible to the customer. These are most suitable for the purpose of the creation
of a lasting relationship with the customer, because the interaction conveys
partnership and creates emotions.
Once co-creation is in place, a fundamental point to keep the customers interest in
participating and engaging is to provide transparency (Füller 2012). This
transparency has to be respected at multiple levels. In an idea or design contest for
instance, the organization should have clear information on the intellectual
property of generated ideas. The enterprise should also announce their internal
process of selection that will decide the winners, unless the ideas are peer
evaluated. If an idea isn’t selected, the firm should take time provide feedback to
the participants, naming the reasons for their decision. Customers will see that
their efforts were taken seriously (Walcher 2009, p. 152) and feel respected
(Bhalla 2010, p. 14). If the selection is done by peers, the firm may for
understandable reasons choose to not implement popular options, despite their
high rating by the community. In this case it is imperative that the company
publicly justifies in detail the choice they made and explains why the idea or
design wasn’t feasible or appropriate. Otherwise, the participants will be
frustrated to observe that ultimately, despite the company appearing to care about
their input, actually didn’t change their way of thinking and never planned to let
the customers have any say (Füller 2012). If the firm is not genuinely interested in
their feedback and is only implementing a platform for conversation in order to
imitate companies that successfully co-created insights with their customers, its
clients’ engagement will be very brief and unsustainable. While short term sales
may not be affected right away, as not all clients are disappointed participants, the
image of the company will suffer and negative word of mouth related to
participants’ negative experience is likely to spread.
On the contrary, if a suggestion is chosen to be implemented, regular updates on
the status of the project should be made to keep the participants informed on the
status quo of their idea (Bhalla 2010, p. 28). Transparency should be respected in
each co-creation activity related choice that the company makes. A remarkable
example to illustrate how far a firm can go to be transparent is the Starbucks
Shared Planet initiative. It originated with the realization that a lot of customers
43
wished to see the company’s commitment to environmental issues and social
responsibility increase. A website was created where clients could see what
commitments Starbucks intended to keep, ranging from the way it obtains coffee
to minimizing the environmental impact of its activity. The involvement of the
enterprise with local communities was also reported. The online platform offers
numerous possibilities of interaction with customers. The goals and related KPIs
are
publicly
stated
and
progress
in
each
objective
is
reported
(Ramaswamy/Gouillart 2010, p. 25). Customers can track them and even discuss
about possible additional goals they wish to see. Another example of this idea is
the display of a progress bar for the implementation status of accepted ideas with
a deadline the company is aiming at. Such transparent behavior during co-creation
measures can in the long term lead to increased customer retention, which can be
translated into more Re-, Up- and Cross-Selling as well as recommendations to
others (Walcher 2009, p. 152).
4.3.2. The bigger picture
Online engagement platforms are a requirement in most co-creative efforts. Some
authors
argue,
that
co-creation
cannot
be
sustained
without
them
(Ramaswamy/Gouillart 2010, p. 20). Such platforms usually enable customers to
discuss about topics vaguely linked to the firm’s offering or philosophy amongst
themselves and with the company, as well as to take part in co-creative measures.
It’s imperative that the platform provides a satisfying experience and has
specifically created for this purpose. But building the perfect co-creative platform
right out of the gate is nearly impossible. The design should be loose enough to
allow appropriate modification and extension. As the project grows and by
observing the type of interactions that take place, additional functionality and
features may be needed. Therefore, creating an engagement platform involves
experimentation and learning, as the role of the co-creators often evolve over
time, depending on how quickly the company introduces new opportunities for
collaboration. Freedom and space are also essential for online engagement
platforms (Bhalla 2010, p. 28). In this context, freedom refers to the ability for
users to take advantage of the website to do more than what has been created for
or is expected from them, such as contacting other members via personal means or
44
contribute to it in a way that wasn’t planned initially. Space is related to the
presence of the company in the platform and its degree of control over it. The firm
should avoid wanting to be in the center of all discussions and control it too
closely. However, moderators are necessary to supervise that the atmosphere
remains polite and positive. Let the users decide what industry related topics
matter most to them and how they would like to talk about it with peers. As
engagement platforms can be as versatile as the product itself, a website, the retail
stores, the call center or the mobile phone (Ramaswamy/Gouillart 2010, p. 247), it
is important to link them and allow design interaction possibilities between them
in order to create an integrated front. Physical engagement platforms for cocreation exist, but they are too project-specific and industry-dependent to be
compared for similarities that tend to make them successful.
A noteworthy observation that resulted from various case studies was the idea of
selflessness that some co-creating firms have. They spend money and time on
projects, features or platforms, without closing access to them to people who
aren’t financially contributing in any way. They seem to care about helping the
community, beyond the absence of short-term return on investment. Take for
instance Tchibo ideas. Even posts that were asking for a product that could not be
fulfilled by the company’s portfolio were welcome. The firm had no issue with
other interested companies going on the platform to check if there were ideas that
might be turned into a project for them (Helfrich 2009, p. 372) and is not asking
for a finder’s or enabler’s fee. In the case of CAN, the Spanish civic bank, when
the branches’ interior was partly reorganized to accommodate for the welcoming
of supported NGOs, the premises were not only laid out in a way to facilitate
these presentations. In fact, community spaces were established in the branches.
In these spaces, customers and non-customers alike can have coffee, read the
newspaper, form book clubs and meet with them, connect to the internet via free
Wi-Fi and enjoy occasional shows and concerts for kids and grown-ups. Finally,
Starbucks allows its advertisement and informative videos to be embedded
anywhere on the web, in contrast to many firms that fear that their content might
be
added
on
websites
they
don’t
wish
to
be
associated
with
(Ramaswamy/Gouillart 2010, p. 24). Having an open approach to companygenerated content or locations and share knowledge is what we call selflessness, it
45
can in the long term benefit the community and the environment in which the
enterprise operates.
When possible, seeking out relevant partners can add more substance to some cocreation measures. Partners can be retailers, other firms, or experts in the
company’s industry. Originally, Nike partnered up with Apple because the firm
realized that a large number of runners were listening to music while jogging.
Nike got Apple to co-finance the whole project (Ramaswamy/Gouillart 2010,
p.13). A very different partnership took place on the forum category of its Nike
Plus platform. Nike invited famous professional soccer players to answer user’s
questions. Illustrating a partnership with specialized dealers is Japanese
electronics maker Brother with its sewing machine business on the American
market. Typically, these stores were a place where offerings were on display.
Brother wanted the shops to become locations for learning and exchange
(Ramaswamy/Gouillart 2010, p. 98). This desire was based on insight which
suggested that young homemakers often wanted to learn about sewing but didn’t
know where to begin. The firm sent educators to dealers to teach them how to
undertake projects with the shop’s customers, may they be beginners, enthusiasts
or friends. The customers are also offered the opportunity to take classes in the
shop, no matter what brand of product they own (selflessness). This enables them
to engage with experienced and skillful dealer-salespeople. Enterprises can work
with partners, from distributors to firms in other industries to enlarge the scope of
their co-creation efforts.
It is important not to impose participation to co-creative measures, be it the
creation of products or the dialog with the community. It is up to them to decide
when they feel like submitting suggestions, joining a project or evaluating their
peers’ ideas. Participation must remain voluntary and shouldn’t be a condition to
get access to specific products or services. In the case where several measures are
in place, clients should be able to select if and at what stage they want to
collaborate (Walcher 2009, p. 148). In the variety of options offered in the Nike
Plus program, the user has the choice to share his running data, his playlists and
46
his city of residence with peers, but it is not mandatory to use the product. The
best case study that illustrates this idea perfectly is Crushpad7.
“Crushpad is a custom winemaking company founded in 2004 in San
Francisco. The company’s business architecture consists of several linked
engagement platforms through which individuals or businesses can work with
Crushpad staff and affiliated businesses to make their own wine. The
company’s customers include wine enthusiasts and amateur wine-makers,
professional winemakers, wine retailers, wine bars, and restaurateurs.
From the start, Crushpad had two incarnations: a physical facility in San
Francisco were the grapes are processed and fermented, and a community
website where people make decisions about the winemaking and track
progress. Customers are encouraged to visit Crushpad both in person and
online as frequently as they can, in order to participate actively in the full
experience of wine-making and understand all aspects of it. To facilitate this
participation the company has broken down the process of winemaking into
five steps – creating a plan, growing and monitoring the grapes, picking and
processing the grapes, aging the wine, and labeling the bottles – with more than
thirty specifications.
There are six major engagement platforms in Crushpad’s co-creative
ecosystem:
1.
A wine-definition platform engages individuals around two key questions:
What varietal do I want to make ? and What style of wine do I want to make ?
(A big, fruit-forward wine or a more reserved, subtle wine.) Crushpad suggests
that one of the easiest ways to start as a customer is to say, “I’d like to make a
wine like X, but different in the following ways.” Crushpad’s Winemaker’s
Minute video podcasts demystify winemaking and explain its arts and science
in a straightforward way.
2.
A vineyard-selection platform involves people in two key questions: What
location is conductive to growing the preferred varietal ? And which vineyard
7
In agreement with the first supervisor, the complete case study is inserted. Provided by
Ramaswamy/Gouillart 2010, p. 107
47
should I choose ? Video podcasts provide behind-the-scenes looks at prominent
West Coast vineyards and in-the-field tutorials from top vineyard managers.
Customers can buy small lots of grapes from high-end vineyards through
Crushpad or they can purchase their grapes on their own.
3.
A wine-harvest-platform then engages individuals and small businesses
around the critical question of when to pick. The key issue is ripeness, and
Crushpad provides analytical tools and methods to determine ripeness (e.g.,
measuring the sugars, acidity, and pH) and physiological maturity (e.g., visible
characteristics such as skin and stem color, skin and pulp texture, seed color,
berry flavor, and the ease with which the berry can be pulled off the stem).
Crushpad experts give advice on climate considerations (in cooler climates
pick grapes when sugars reach an acceptable weight, and in warmer climates
before acidity falls too low) and hang time (longer hang time will usually drive
more physiological ripeness, but in warmer climates this comes at the risk of
higher alcohol and lower acidity).
Crushpad engages customers to help determine their wine style and manage
risk, and then collaborates with the growers to determine how to select a
picking day together. The company provides a high level of transparency
throughout, with winery webcams called the Crushpad Cam and instant
messaging with knowledgeable employees, as well as facilitating social
interactions with fellow customers.
Through Crushpad’s online social network, Crushnet.com, and the Crushpad
Cam, customers can monitor the activities at the vineyard. Videos capture the
picking and sorting process, which are streamed live to the web. And after the
fruit is delivered to the winery, customers can come in the winery and help
destem, crush, ferment, and press the grapes. Video also monitors the activity
in the winery, allowing customers to chat live with those working the crush.
4.
A wine-aging platform engages customers in decisions about the type of
cask to age the wine in and how long to age it, as well as whether to allow,
encourage, or block malolactic fermentation (a secondary fermentation that
happens naturally), and when to remove the lees, which are the solids left after
fermentation that fall to the bottom of the barrel during aging. As this process
48
proceeds, Crushpad encourages customers to take part in tastings and in
making blending decisions, and to participate in racking wines from barrel to
barrel.
5.
A bottling, packaging, and labeling platform allows customers to choose
the type of bottle and bottle closure, and to design the label. Most people have
a more difficult time making packaging decisions than the actual winemaking
decisions, so Crushpad provides access to a packaging team that helps
customers work through their ideas.
6.
Crushnet offers an ongoing social community platform for individuals and
winemaking groups wanting to share their experiences of winemaking and
exchange tips. Vineyards are also part of this engagement platform, so
customers can have conversation with growers. The platform features usergenerated videos, allows photo posts, and hosts many forums.”
One the most admirable accomplishment of Crushpad is that all the platforms are
designed in such a way that its customers can engage as often or rarely as they
want at any given stage of the development process. The amount of flexibility and
the degree of freedom offered is astonishing, because the choice of the extent to
which they want to participate is true for the online spaces as well as the physical
facility of the firm. Clients can even buy their own grapes and come to pick up the
finished goods. The offering couldn’t have been more co-created. To sum up, the
central idea is that individuals should be allowed to choose the interactions they
want to have. This requires different options to be available to them.
The engagement platform and other communication channels should be built in
such a way, that participants can reach out to the company, rather than passively
wait for the firm to contact them (Ramaswamy/Gouillart 2010, p. 10). This means
that the possibility to initiate contact needs to be reciprocal. It is the baseline for
an ongoing conversation. Even if a co-creation initiative focuses on the experience
of the co-creators, there are always insights to be made through dialog about these
experiences. In addition, the dialog should continue after the completion of
specific projects like a contest. Their ending is not a reason to close down the
communication with customers, as co-creation is about more than the
implementation of isolated measures. The philosophy transcends individual
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products or services. The means of communication must continue to exist and for
continuous customer engagement and market research reasons firms should pay
attention to it.
5. Conclusion
Customer centricity still hasn’t made it to the top of strategic agendas in most
companies (Bhalla 2010, p. 165). The focus is on brand equity and shareholder
value. The paper clearly shows how value is increasingly co-created by the firm
and the client and what factors lead to successful implementations. In parallel to
the creative participation of customers, meaningful and ongoing conversations
take place with the enterprise. The core change in ideology is how the customers
are perceived. Co-creation is an attitude that strongly believes that clients are
knowledgeable and can be active. Regarding them as a key asset has the
consequence that they are approached as potential partners. Even some firms that
try to implement collaborative measures are having difficulties to adopt this point
of view, so it must be harder for enterprises that have yet to start thinking about
this concept. A change in the management’s mindset is necessary. Usually
customers appreciate to finally have the opportunity to contribute and companies
can gain access to dormant potential in order to gain valuable insights.
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The answers to the original research questions are as follows. Co-creation can be
implemented at various stages of the value creation process by designing
platforms that enable interactions between the company and the customers, as
well as between the users themselves. The application of collaborative measures
can go beyond the simple sourcing and selection of ideas. Customers can be
invited to help the product development, refine the offering, participate in the
commercialization, contribute to the usage scenarios or even assume some
responsibilities of customer support. An interesting finding is that firms can and
should use co-creation measures at several stages of the process simultaneously or
offer more than only one possibility to participate in a given phase. As the
Crushpad case study shows, a single phase in the value creation process (here:
product development) can be divided into six different and interesting
collaboration opportunities.
This concept can be used to increase customer loyalty because early involvement
in the creation of a product or service increases chances of purchase by allowing
clients to have an emotional and creative attachment to the offering or the brand.
The deep relationship with the enterprises becomes valuable to customers that
notice the firm’s effort and authenticity. Therefore, loyalty is further increased
when: a) co-creation is used as a differentiation factor to stage a more interactive
buying process and b) competitors don’t offer comparable experiences. This is
one reason why the customer experience should be the starting point in designing
co-creation implementations. Enjoyable and rewarding experiences improves
customer retention. The more customers identify with a brand, the higher their
willingness to participate becomes. Implications for the marketing department
often working to gain trust and loyalty are considerable, as co-creation can be
seen and implemented as a new technique that fosters ongoing dialog and long
lasting relationships that benefits both.
To succeed, co-creation must be a company-wide strategy. Unfortunately, even if
it is, employees may not accept it and prevent the smooth implementation of
collaborative measures. Two reasons can lead to this reaction. First, employees
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may feel dispossessed by relying on external contribution to improve the
company’s offering, sometimes even delegating tasks they were responsible for.
Second, passionate employees will have a hard time accepting the idea that
customers do now have a say in the offering and its commercialization if they
were not given the opportunity to express their own wishes and suggestions first.
This issue can be addressed in two ways. By collaborating with employees on the
design of co-creation project itself, they will have an opportunity to be part of it.
In addition, as co-creation measures need testing and fine-tuning before their
launch, employees can test the platform and the adapted process structures.
Starting a collaborative project with the wrong intentions has little chance of
success. If the company doesn’t have a genuine interest in listening to customers
and engaging them to have deep conversations, the participation of clients will not
be sustainable. They notice if the firm really cares about their input or just asks for
it to give them the impression that they listen. This illustrates how communication
is two way street. Opening a channel for customer to send in suggestions is not
enough. The company must be transparent by providing updates on the status of
projects like accepted ideas, give feedback on rejected suggestions, announce
winners and justify contest outcomes if the selection happened internally. It is
important to keep in mind that the implementation of collaborative measures can
very well happen progressively. In the case studies where company had
established two, three or four different ways for their clients to co-create, these
opportunities have never be rolled simultaneously. In most cases, one year
occurred between each addition of a new collaborative measure. Other success
factors include selflessness, optional participation, and a carefully planned reward
system.
This topic is limited in that is focuses on the customer side of co-creation. An
equally challenging task is the in-house promotion of the ideology and the
restructuration of parts of the organization so that external input can be processed
efficiently. Furthermore, involving clients in the value-chain leads to a blurring of
boundaries between R&D, marketing and market research (Roser et al. 2009, p.
4), so obstacles have considerable opportunities to arise. Concerning our paper,
52
the empirical overview is too limited to draw useful conclusions on the tangible
impact of collaboration on customer retention. There are too many variables to
undeniably demonstrate what specific activities lead to increased performance.
For further research, we identified a need to diagnose different kinds of customer
experiences and to find a way to measure them. This would permit the observation
of their individual influence on motivation, brand identification and word-ofmouth recommendations. The results would help the design of collaborative
measures further by making it more efficient, because less time would be spend
experimenting and adapting.
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