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Crowdsourcing is catching fire as a tool for generating innovative ideas. But it's also a great way to interact with customers and bolster a brand's image.
"You can turn people into loyalists by incorporating their ideas and rewarding them for those ideas," said Donna Fluss, an analyst and president at DMG Consulting LLC, which specializes in customer service management.
Crowdsourcing opens up initiatives to the public or to groups who may have innovative ideas or subject matter expertise to contribute. Crowdsourcing ideas encourage the best-qualified and most creative participants to offer their ideas and, thus, to improve products or projects.
Crowdsourcing requires manpower to evaluate ideas.
Kimberly-Clark Corp.'s Huggies invites parents to submit ideas for baby products and offers help developing them, such as guidance on writing a business plan, as well as cash grants to develop prototypes. If Kimberly-Clark doesn't want to acquire the product, it will help the inventor find another partner.
David Bratvold, a crowdsourcing consultant, founder of theDaily Crowdsource and producer of the Crowdopolis industry show said that Kimberly-Clark's MomInspired crowdsourcing program is unique and great for the company's corporate image: "They're saying to moms, 'We want to help you improve your lives and develop your business.'"
Crowdsourcing ideas are commonly used as R&D tools; Gartner Inc. estimates that by 2017, more than half of consumer goods manufacturers will get 75% of product development capabilities from crowdsourced methods by 2017. But it's also a powerful tool for boosting customer loyalty and brand image, said experts. Madison Electric Products, a manufacturing firm in Ohio began crowdsourcing in 2010 as part of a rebranding effort. It has helped the company gain insight into its market, which is composed mainly of electricians, who are encouraged to submit plans for new products. Madison develops the most promising into products.
"We have a strong sales team, strong manufacturing partners and strong marketing, but we didn't have great ideas for products," explained Rob Fisher, president of marketing for Madison Electric. "So as part of our rebranding effort, we created this online portal for end users to develop their ideas into successful products and established ourselves as thought leaders in the process."
The inventors can either sell their ideas to Madison for cash or royalties, or license the technology. The program has produced 10 products so far -- 100% of Madison's new product launches. Madison leverages that to promote itself as a company that knows what electricians need.
"We involve them, we use them in marketing materials, so people understand these are relevant tools designed by electricians for electricians," Fisher said.
Crowdsourcing requires manpower
However, crowd sourcing requires manpower to evaluate ideas and respond to contributors, and companies that can't invest the time shouldn't attempt it, advised Fluss.
"If you solicit ideas, and you don't get back to people on what you're doing with them, it's worse than not having asked," she says.
That need for manpower may be why crowdsourcing hasn't been as popular among small firms as it has with the Fortune 1,000. "It's still a small niche crowd, but it's increasing in popularity," says Bratvold, who advised companies to organize well and start with small test pilots, to avoid becoming overwhelmed.
One such Fortune 1,000 company, AT&T, has invested a lot of time and money in crowdsourcing and has developed programs for customers and employees. The Innovation Pipeline (TIP) is an online portal and community where employees submit concepts and assemble teams to develop them. The ideas move through ratings and review, and they acquire more value as they move up the ladder. The virtual stock price of the project thus increases, and employees who work on it are paid in shares, while other employees can "vote" in favor of the project by investing their own allotment of stock options.
The AT&T Foundry, with six prototyping centers around the world, focuses on collaborating with large customers, and AT&T's yearly Hackathons invite programmers to experiment with bleeding-edge technologies. These initiatives help to promote AT&T as an innovative company, as well as generate cool new product ideas, said Clint Cetti, AT&T director of strategy and innovation.
"A common quote we hear is 'I didn't know AT&T did that.' A lot of people don't know we have some of the technologies we do -- like our speech recognition engine or cloud services," said Cetti. He credits these programs with boosting AT&T's Net Promoter Score, or NPS, which measures how willing customers are to refer a company to others and is AT&T's principle metric for evaluating the success of its customer service and innovation programs.
It hasn't gone without notice that AT&T invests a lot of its time in improving its products and services, Cetti said. "They think, 'Wow, you guys are thinking about us when we're not right in front of you. That's fantastic.'"