“Customers have taken control. Their rampant comparison shopping is eroding your margins. Their renegade behavior is challenging your business models and endangering your intellectual property. Their demanding expectations for customized products, wonderful experiences, and high service levels are draining your resources. Customers’ insistence on open access is exposing your industry’s policies and challenging your inflexible business processes.

This customer-led outside innovation movement is inevitable. It’s scary. It’s exciting. And it’s dangerous to your business if you’re not prepared.

What can you do to channel this customer energy into a positive direction--one that will power your business rather than sink it? Here’s the answer: Engage your customers in more ways to help you redesign your business, your products, your processes, and your business models.”

~ Excerpt from the Introduction to " Outside Innovation ," by Patricia B. Seybold

As I completed the manuscript for my new book and sat back to think about what I had learned in the process, I was embarrassed to discover that almost all of the two dozen best practice business cases I had chronicled had one technology platform in common: they all take advantage of vibrant online customer communities!

Why hadn’t I noticed this sooner? How did this creep up on me? Like you, I participate in a variety of online forums and discussion groups. I certainly take advantage of my peers’ insights and answers to the questions we all share. I avail myself of customers’ submissions to self-service knowledgebases. I review customers’ recommendations before I purchase a new product or service, and so on. But what hadn’t occurred to me before is the simple fact that the businesses that lead the pack in product and service innovation all have vibrant online customer communities.

Different Types of Customer Communities

Many companies’ customers interact with one another in several different types of online communities.

PRIVATE LEAD-CUSTOMER COMMUNITIES. Some of these are private, by-invitation-only communities, like the ones that product designers and marketers at Hallmark, Unilever, Kraft, Charles Schwab and Co., Staples, and RC2 have used to get insightful and passionate customers and early adopters talking about their lives, their needs, and the solutions they would value.

EXTERNAL COMMUNITIES. Some are external communities that customers launched themselves, like the LEGO users’ group (LUGNET™), or BOB, the Business Objects’ users’ Board. The members of these communities often design and extend products and even design new solutions.

COMPANY-SPONSORED COMMUNITIES. Others are public user forums that are hosted, moderated and supported by the organizations themselves, like National Instruments Corp.’s discussion forums, Cisco System’s online discussion forums and Amazon’s new product-centric discussion forums. These community members answer each others’ questions, provide fixes, suggest improvements, and share innovations.

OPEN PEER-PRODUCTION COMMUNITIES. Others are “open to the public” product development forums, like the ones hosted by Mozilla, Digium (for its open source Asterisk PBX software), and BioForge.net (for open source contributions to biotech). These community members co-develop products by contributing their own talent and time to add the capabilities and tools they need, and by testing and using each others’ contributions.

User Forums Surround Mozilla
PLEASE DOWNLOAD THE PDF FOR THE ULLUSTRATION.
Illustration 1. The user forums at Mozilla.org and Mozilla.com provide great examples of customers’ involvement in online communities in all of the roles. Lead users are the actual developers, promoters do the marketing, consultants handle the testing and debugging, guides handle tech support and documentation, and contributors contribute everything from code to marketing logos.

FAN COMMUNITIES. Still others are fan forums in which customers promote, sell, and hasten adoption of the company’s products, like Karmaloop’s Street Team, and the Spread Firefox community. These fans typically engage in guerilla marketing to spread the word and speed adoption.

COLLABORATIVE DESIGN COMMUNITIES. And finally, there are a raft of forums that encourage customers to customize and extend products, to comment and vote on each others’ creations, and to create derivative works, like Flickr, the BBC’s Backstage, Threadless, and Muji (a Japanese retailer whose customers design and vote on new products).

Support Online Communities for Multiple Customer Roles

The most innovative companies actually support multiple, intersecting customer communities--one for each role that customers choose to play. For example, Mozilla has intersecting customer communities for developers (lead customers), debuggers (contributors), documentation/technical support (guides), and promoters (the Spread Firefox community).

Customers will often gravitate to the role(s) they prefer:

Roles Customers Play in Outside Innovation

Lead Customers invent new products and processes to meet their outcomes. Kraft’s private lead customer community specified the “100-Calorie Snack Packs” which have become blockbuster successes. This closed community of women didn’t want “diet and deprivation.” They wanted rewards with portion control––100-calorie portions, to be precise.

Contributors donate their time and their own intellectual property. Flickr is now the world’s largest repository of professional quality photos, thanks to the largesse of its community members, who not only store their own photos online, but make them available to others to admire, comment upon, and often, re-use.

Consultants have important insights about products, business processes, and strategy directions. The online community of scientists and engineers who use National Instruments’ LabVIEW software in their very diverse jobs make hundreds of recommendations each week. Fifty percent of the functionality in each new product “rev” comes from those customers’ recommendations.

Guides help other customers solve problems and navigate the solution space. Professional physicists categorize scientific journal articles at the American Institute of Physics; automotive technicians write diagnostics for Snap-on; Cisco’s customers help others diagnose and solve problems; National Instruments’ customers submit their application notes.

Promoters help market and even sell your products. Karmaloop, the edgy retailer of “urban streetwear,” relies on its online community to both spot new products and sell its wares.

Promote Involvement by Different Groups of Execs for Each Type of Community

In the innovative companies I’ve studied, each type of customer community tends to have an internal champion and a group of key employees/stakeholders who participate (without injecting their agendas) in the customer community. Customers like to know that they are being listened to and heard by the company executives. For example...

***ENDNOTE***
1) Alison Zelen, Presentation to the American Marketing Association, September 27, 2005.