Understand the Perils of Co-Creation

The rise of social media has generated tremendous opportunities for companies to engage with customers. Many allow customers to participate in value-creating activities, such as brainstorming advertising taglines or product ideas—a process often referred to as co-creation. These activities not only help companies innovate at low cost but also engage customers—every marketer’s dream. In practice, however, these programs are hard to run. Some customers “hijack” them—instead of offering real ideas, they seize the chance to ridicule the company. Such hijacking is one of the biggest challenges companies face. Prior research suggests that about half of co-creation campaigns fail. Consider Henkel, a large German manufacturer of detergent and other products. It ran a contest in which customers could submit innovative packaging suggestions—and was deluged with negative ideas. (One was a label describing the detergent as “Yummi Chicken Flavor.”) General Motors invited customers to tweak its advertisements, resulting in a rash of ads criticizing its SUVs as gas-guzzlers that contribute to global warming. McDonald’s set up a Twitter campaign to promote positive word of mouth, but the effort became a platform for consumers looking to bash the chain (see examples below). When Tweets Attack McDonald’s introduced the hashtag #McDStories, hoping to attract heartwarming, upbeat posts. Oops… Managers considering co-creation initiatives should think carefully about the risks. Our research identifies three areas of particular concern: Strong brand reputation. Firms with strong brands need to protect them—they have a lot to lose. They must be aware that these initiatives give customers opportunities to tarnish the brand. Strong brand reputations are generally built through consistent, effective marketing, and companies should weigh the potential for misbehaving customers to undo their careful efforts. High demand uncertainty. Companies are more likely to ask for customer input when market conditions are shifting. But this frequently backfires when demand is highly uncertain, because customers in fast-changing markets often don’t know what they want or what they’ll like. Porsche got lots of negative feedback when it announced plans to release an SUV, but it proceeded anyway, and the Porsche Cayenne was a great success. Too many initiatives. Companies ordinarily benefit from working repeatedly with the same suppliers, but that doesn’t hold when the “suppliers” are customers. Experience shows that the quality, quantity, and variety of input decrease as the frequency of engagement increases. A study of the Dell IdeaStorm program (in which customers were invited to submit product or service ideas) found that people submitted ideas repeatedly—including many for things the company was already offering. And customers whose ideas were implemented tended to return with additional ones that were quite similar to their first suggestions. This isn’t to say that firms should never try to crowdsource value creation in an attempt to engage customers. It can be a viable strategy—but managers must understand the high probability of misbehavior. They need to monitor engagement activities continuously and intervene if customers begin offering too much comedy and too few genuine ideas.

Understand the Perils of Co-Creation

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