Written by Tatjana Stanke
The first part of this article clarified what co-creation is and what online co-creation communities are. The following part will explore the benefits and risks of co-creation in online communities for companies. Due to the variety of different communities, the focus will lie solely on company created online communities.
How Companies Can Benefit From Co-Creation in Online Communities
The main benefit of co-creation, as also stated in the definition, is the creation of value. Through co-creation companies can generate new ideas and enhance their innovative potential (Gebauer, Füller and Pezzei 2013, Füller et al. 2006), but they can also gain insights about marketing related topics like product branding, develop new, or improve current products. BMW, for instance, has set up a Co-Creation Lab where consumers are asked for their opinion on certain topics. The site also features different challenges where consumers can participate and win money. A current challenge, for instance, includes the generation of new ideas and designs to improve luggage compartments (BMW Group 2015).
Another example would be LEGO, who has created a web community called “LEGO Ideas” were people can virtually create their own LEGO sets. Others users can than vote for their favorites and the most popular sets will have a chance to be produced and become a part of LEGO´s official portfolio. The benefit for LEGO is that they get creative designs for new sets and the user gets 1% of net sales, should his set be chosen (LEGO Ideas 2015).
The case of LEGO Ideas illustrates another benefit, namely that companies save time and money when they co-create with customers due to shorter innovation cycles (Pétavy et al. n.d.). Furthermore, the risk of product failure is reduced (Füller et al. 2006). In the case of LEGO, only those sets that gather more than 10.000 votes from other users have a chance of production. LEGO thereby knows that the product is accepted by and resonates well with customers which saves resources normally used for market research. Through co-creation projects companies can often simultaneously create value, do market research and test its product.
In addition, co-creation with online communities can also entail other side benefits for companies, apart from the creation of actual value. One main benefit is that they can build up an engaged community of people that can be used for future co-creation projects, marketing or other endeavors where good customer relations are needed (Füller et al. 2006, Gebauer, Füller and Pezzei 2013). Starbucks, for example, has been in contact with its customers for years on their co-creation web-site ‘MyStarbucksIdea’, where customer continuously submit suggestions how to improve Starbuck´s business. This sense of community and engagement also raises the willingness to pay for the co-created product and the overall commitment to it (Gebauer, Füller and Pezzei 2013).
Moreover, companies are able to gain valuable insights about markets and consumer behavior or preferences (Pétavy et al. n.d., Füller et al. 2006). These can often be deducted from submissions to challenges and identifying certain patterns in them, or just by observing the customers and their interactions within the community. LEGO, for example, might be able to find out which tiles are most often used or which categories of LEGO sets are more popular.
Lastly, the participation in successful online co-creation communities improves the overall customer experience of the brand or company (Pétavy et al. n.d.). In the best case scenario, all of these factors contribute to generate, what is for a lot of companies the second most important benefit, positive electronic word-of-mouth (EWOM) (Gebauer, Füller and Pezzei 2013, Füller et al. 2006) and increased brand awareness. A good example is McDonald`s ‘Make Your Own Burger’ campaign in Germany. Customers were asked to create their own burger with an online toolkit. The participants then had to collect votes to get their burger produced and sold by McDonald´s. Therefore the participants were provided with tools to make their own online marketing campaign to support their burger. In the end, 22.000 marketing campaigns were created and five million votes were counted, which equals 10% of Germany´s adult population (Razorfish 2014). Additionally, the sixth month long campaign gained a lot of press attention. The following video provides a great summary of the case and the overall outcomes and benefits an online co-creation project can have:
link: <iframe src="//player.vimeo.com/video/55641945" width="500" height="281" frameborder="0" webkitallowfullscreen mozallowfullscreen allowfullscreen></iframe>
Risks of Co-Creation With Company Created Online Communities
Collaborating with customers always comes with risks because the company is neither in total control of the value creation process anymore nor can it control customer behavior. The biggest risk companies face in co-creation with online communities is negative eWOM. This can range from negative comments on social media sites and abuse of the offered toolkit (e.g. disfigured logos) up to protests against the company (Gebauer, Füller and Pezzei 2013). This happened, for instance, to Henkel and its dishwasher detergent brand Pril. Henkel launched a competition to create a new label for the Pril bottle and provided a toolkit to make the designs. The designs with the most votes should go in production. Unfortunately for Henkel, customers started to use the toolkit to create labels with funny designs and slogans like “now, with fresh pretzel scent” which quickly got most of the votes. Henkel suddenly tightened the submission rules and even manipulated the votes, which caused an intense shitstorm on social media and a lot of bad press (Breithut 2011).
The consequences if members of online co-creation communities turn against a company can be particularly severe because they tend to be creative and well versed in the social media environment (Gebauer, Füller and Pezzei 2013). Negative eWOM often stems from “dissatisfaction and perceived unfairness” (Gebauer, Füller and Pezzei 2013, p. 1517) which, for example, can occur through wrong jury decisions or in the case of Henkel, miscommunication and a lack of transparency. The ultimate consequence of negative eWOM may be bad brand perceptions or even financial losses for the company. For Henkel, the co-creation project ended in a PR debacle.
Due to the previous mentioned possible repercussions, a company needs to invest additional resources in community management (Roser et al. 2009). It is not only enough to set up a webpage. One needs to interact with the community members, give them feedback and make all processes and communication transparent as possible (Pétavy et al. n.d., Füller et al. 2006). The company has to make sure that it possesses the required resources to run and maintain an online co-creation community, including finances and personnel.
Furthermore, companies need to moderate their expectations of co-creation outcomes (Pétavy et al. n.d.). Often companies expect, for example, ready to market ideas, advertisements of good enough quality to air, or groundbreaking innovations. However, outcomes of online co-creation projects should always be examined critically, refined and adapted to meet quality, market and other requirements.
The legal framework of online co-creation projects can also be a risk to companies. Especially the ownership of intellectual property rights has to be clearly defined (Pétavy et al. n.d., Füller et al. 2006). The company needs to make sure that it does own all rights in association with the created innovations, products or ideas and agree on adequate compensation with the participating customers. In the same context, companies must also be aware of how much information they want to disclose, especially when strategic issues are concerned or sensible internal information is needed to fulfill the project (Pétavy et al. n.d., Füller et al. 2006). This could be, for instance, the case if companies want to pretest new prototypes. Online co-creation communities are generally open for everyone to enter and it would be easy for competitors to get access. As a result, a lot of companies set up non-disclosure agreements with the participants, or like BMW´s Co-Creation Lab, create online communities that need user accounts and log-ins to see co-creation projects.
Conclusion
All in all co-creation in online communities is a useful tool for companies to create value and, especially, innovations. Co-created value and positive eWOM are the biggest benefits companies can gain from a co-creation project. At the same time, negative eWOM is the biggest risk companies have to face while co-creating. Hence the overall success of the co-creation project depends largely on how well it is managed and executed. Negative eWOM can be avoided when the company interacts with the community, communicates clearly and makes all processes transparent and fair (Gebauer, Füller and Pezzei 2013).
Furthermore, most of the benefits and risks also apply to other online co-creation communities than company created one´s, but the degree to which they occur may vary. Professional co-creation communities like eYeka, for instance, face less risks as the projects are carried out in a controlled environment and are supervised by professionals from the particular platform.
In order for a company to make the decision of engaging in co-creation with online communities or not, the benefits and risks have to be weighed against each other for every particular case, as almost no two co-creation projects are the same. Furthermore, one needs to differentiate between co-creation projects in online communities which are mostly done because of the resulting buzz around it and projects which main purpose is the generation of real value for the company and the customer. The former are, in reality, often crowdsourcing campaigns. That is why the differentiation between crowdsourcing and co-creation is especially in need of further definition and clarifying.
Given the prerequisite that it is done right, there are almost no limits to the co-creation between customers and companies and we will see a lot more of it in the future.
Sources
Adams, I. (2013). Crowdsourcing vs. co-creation: what’s the difference?. Optimization Group Blog (pdf). Available online: http://blog.optimizationgroup.com/crowdsourcing-vs-co-creation-whats-the-difference [Accessed: 08.02.2015]
BMW Group (2015). About Co-Creation Lab. Available online: https://www.bmwgroup-cocreationlab.com/home [Accessed: 11.02.2015]
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Sawhney, M., Verona, G. & Prandelli, E. (2005). Collaborating to create: the internet as a platform for customer engagement in product innovation. Journal of Interactive Marketing, vol. 19, no. 4, pp. 4 – 17. Available through: http://ludwig.lub.lu.se/login?url=http://search.ebscohost.com.ludwig.lub.lu.se/login.aspx?direct=true&db=bth&AN=18650246&site=eds-live&scope=site [Accessed: 13.02.2015]
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Picture sources
Figure 1 : BMW Group (2015). Screenshots from website. Available online: https://www.bmwgroup-cocreationlab.com/ [Accessed: 13.02.2015]
Figure 2: Kloisch, N. (2011). Available online: http://www.betatext.at/2011/06/pecha-kucha-co-creation/ [Accessed: 16.02.2015]
Video 1: Razorfish (2014). Available online: http://www.razorfish.com/work/2012/mcdonalds-of-germany.htm [Accessed: 16.02.2015]