Ideas

Ideas | Matthew Hutson

I’ll have what you’re inventing

Lego has sought consumer insight online.

Are you more likely to buy a T-shirt or a box of cereal from a big company if you know it was designed by a fellow customer? You might be, according to new research. And marketers should take note.

Companies have been tapping the power of crowdsourcing for years, but few take it as seriously as they should. Lay’s has conducted widely publicized “Do Us A Flavor” competitions for new potato chip flavors, and McDonald’s has had people configure burgers online for its “My Burger” contests.

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Such one-off contests are mostly an “interactive marketing gimmick,” says Frank Piller, the head of the Technology and Innovation Management Group at RWTH Aachen University. McDonald’s never expected the user-created “Pretzelnator” burger to become a bestseller; its online campaign was really designed to keep people on the company’s Facebook page. The tactic worked: A McDonald’s representative says that the company received more than 5 million votes on 330,000 user-designed burgers in 2012.

Other companies are taking crowdsourcing as a design approach more seriously. Lego, Starbucks, Dell, and Procter & Gamble have all tapped customers online for new ideas for products, services, and ways of doing business.

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Emerging research suggests that they’re right to do so — that crowdsourcing is a power to be harnessed. Martin Schreier, the head of the Institute for Marketing Management at Vienna University of Economics and Business, found that executives rated consumer-generated baby products as more novel and useful than those developed in-house. And consumers, Schreier found, regarded companies that rely on user designs as more innovative because they had a larger, more diverse pool of designers with fewer constraints.

Even better, crowing about a product’s crowdsourced origins could be a marketer’s best friend. It’s the entire business model for the T-shirt seller Threadless. Jake Nickell, the company’s founder and CEO, says, “I think it’s been an ongoing trend over the last decade for consumers to want to know more about the things they buy.”

To test the value of marketing crowdsourced origins, Schreier and his collaborators measured purchasing behavior on a wide scale. For a paper to be published in the Journal of Marketing Research, Schreier worked with Japanese retailer Muji to place a user-designed item in 46 stores across Japan. In half of those stores, the item was described in the display as an “idea developed by Muji customers,” and sold 17 percent better.

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Had the simple act of adding information made the products more appealing? In a second experiment, Schreier found that the “developed by customers” label boosted sales of user-conceived soybean-flavored pretzels by 20 percent, but a label that said “idea developed by Muji designers” did nothing to move jalapeno-flavored pretzels.

Follow-up experiments revealed that people believe their peers understand their needs better and, therefore, come up with better solutions. In an online survey, subjects were asked to compare two identical products — one described as a user-generated idea, the other a company idea. Consumers generally preferred user-generated, they said, because they felt that it was higher in quality, adding, “I can trust the voice of the customer more.”

Marketing crowdsourced products as such does have its limitations. Schreier and colleagues have found that the effect backfires with luxury fashion brands, whose consumers want to set themselves apart. Same with high-tech products, which require greater expertise. “I definitely don’t want to have a smoke detector designed by people like me,” Piller says.

And when marketing crowdsourced design, make sure that your consumers identify with their fellow user-designers. Another Schreier study revealed that women connected more with a cereal company when they were told that its products were crowdsourced, but only when the female consumers thought the user-designers were mostly women like themselves.

As a result of his experiments, Schreier urges companies to market their crowdsourcing judiciously: “We don’t really know what specific information we should reveal about the community or the winning user-designer to the broader masses.”

Piller, on the other hand, is surprised that more companies don’t crowdsource, given that it leads to more innovative products — and a great advertising opportunity. “The research by Martin is interesting,” he says. “I think companies really should give it a try.” If companies crowdsource but don’t follow through with the marketing, however, they’re leaving money on the table — or in the crowd.

Matthew Hutson is a science writer and the author of “The 7 Laws of Magical Thinking.”
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