Home > Magazine > Issue 2 >

Co-Creating Value with Customers

By Caroline Dangson
Consultant at Dachis Group

During Eric Ries' keynote speech at the Web 2.0 Expo in San Francisco, he talked about how many organizations (from Web startups to enterprise IT) design and build technologies based on the faith that the user will want them, rather than actual user needs. These "faith-based initiatives" produce products that "fundamentally nobody wants." Ries lamented, "this is preventable." He is right. How easy it is for brands to overlook new opportunities to reach out directly to customers and simply ask them what they want.

In today's environment of technology immediacy, social media provides a number of conversational tools where people's expressed interests, desires, and opinions on products and services are recorded and publicly available. This makes available an incredible opportunity for businesses to harness key insights just by listening to customer conversations on these channels. Businesses no longer have to guess what customers want; they can capture this information quickly, and at scale. Many consumers are saying exactly what they want on sites like Twitter. The trick is for the brand to be there listening for these opportunities.

According to a recent IDC survey of more than 700 U.S. workers using social media for business purposes, 36% of respondents said they used social media tools to gather ideas for new products and services. Given that the social media market has matured dramatically since this survey was fielded almost a year ago, I predict with confidence that this number has grown. I also predict that most of these survey respondents were using public social media to gather ideas.

While leveraging channels like Twitter and Facebook for ideas is relatively cheap and easy, I recommend brands make the investment in online community software and a community manager to develop deeper relationships with customers in an environment the brand owns and therefore has more control over. If these capabilities are not possible to bring in-house, companies like Communispace and Passenger have created successful models around outsourcing these customer insight communities.

IBM's WebSphere team, for example, experienced a tremendous return of value by creating its own online community named Project Zero for customers, business partners, and the larger Web developer audience. IBM used Project Zero to enable its constituents to collaborate in the commercial product development of sMash, IBM's software platform for enabling agile, Web 2.0-based application development and execution. According to IBM's WebSphere team, the community of developers identified bugs and defects and provided feedback on the source code as the software was being developed.

Project Zero proved to IBM that inviting customers, business partners, and other key constituents to provide feedback early in the development process helped the company launch more relevant products that met real-world needs. Here, the IBM WebShere team did not just ask constituents what they wanted but took it a step further by inviting them to contribute to the development process. This created tremendous value for IBM as well as end users of the sMash product. In fact, according to IBM, sMash emerged as the number one growth product by 2009, one year after it launched.

IBM sMash presents one of many great examples of how companies are leveraging social tools to co-create value with customers. This is especially important during a time when competition for market share is fierce and trust for corporations is low. Many businesses that have operated successfully for decades are now being forced to re-evaluate the value proposition of their products and services. Social technologies enable businesses to engage with customers in a way that promotes greater value exchange, which can lead to innovation.

Caroline Dangson

Caroline Dangson is a consultant with Dachis Group, where she works to make social business transformation a reality. She also has two years experience as a research analyst at IDC, covering online advertising, digital media, and social business software. Caroline is intrigued by human psychology and is constantly analyzing human behaviors, motivations, and relationships. She is also passionate about exploring the influence of mass media on human attitudes and behaviors, as well as the impact of organizational behavior and culture on social business transformation.