NETTING IT OUT

What comes next? After social media, mobile apps, Web 2.0, and Cloud computing? What will be the next major shift in how we harness information technology to do something we’ve never been able to do before? We predict that well-designed Customer Ecosystems will turn out to be one of the most successful win/win business models in this decade.

Customer ecosystems self-organize around things that customers care about and need to get done, like manage their money, manage their health, or complete successful projects at work or in their communities. They are customer-driven in that customers get to decide what activities and resources they need, who they’d like to have as suppliers, and what constitutes success.

They can be brand-centric, but not brand-unique. In fact, if yours is the main brand “inside” a customer-centric ecosystem, you want potential customers to stumble upon your ecosystem in their path to reach their goals. In truth, this is the Holy Grail. Ideally, you want your brand and your “secret sauce” to deliver the hallmark experience and the perceived value as the ecosystem grows and evolves.

We’ve identified six secrets to success in designing or refining a vibrant, sustainable customer ecosystem.

What Is a Customer Ecosystem?

© 2012 PATRICIA SEYBOLD GROUP INC.

WHAT’S A CUSTOMER ECOSYSTEM AND WHY IS IT EXCITING?

What’s a Customer Ecosystem?

A customer ecosystem is a business network that’s aligned to help customers get things done—both the things they want to accomplish and the things they want to manage.

What makes a customer ecosystem valuable to customers is that:

• It contains everything that customers need to be successful in a particular endeavor.

• Customers can add new activities as they discover new ways to simplify, streamline, and transform how they reach their goals.

• The ecosystem attracts new suppliers and partners to the network to support customers’ changing activities and needs.

• It’s driven by customers’ needs and goals and optimized to achieve customers’ success metrics, for example: to meet targets and deadlines, save time, reduce the number of steps, save money, have the peace of mind that everything is on track, recover from the unexpected within acceptable thresholds, build trust.

Why Are Customer Ecosystems “The Next Big Thing”?

Today, investors and business execs are breathlessly excited about social media platforms like Facebook. Every investor wants to be in on the next Facebook. But not every company is going to be lucky enough to build a brand and a franchise like Facebook, or Google, or Amazon. Yet, most really visionary companies could create an attractive customer ecosystem that increases the value of their brand and the loyalty of their customers and partners.

Customers Need and Value Them. Once you succeed in developing and delivering a set of truly useful tools that help customers do something they care a lot about, they’ll prefer your approach to getting things done. They’ll tell their friends, family, and colleagues. You’ll gain customers’ loyalty as you deepen your brand experience and the importance of your brand to their lives.

They Are Viral, Sustainable, and Mutually Profitable. Customer ecosystems act as magnets. The easier it is for customers to do things in and around your brand, the more they also value tools and resources from others that play well together and that help them do everything they care about, including the things that aren’t in your sweet spot. As you co-evolve your branded tools to address more and more of your customers’ changing needs, you’ll find more and more kinds of players, experts, stakeholders, and partners whose help customers value. These partner relationships are often more than marketing partnerships; there’s usually a win/win sharing of information around the customer’s context, what they’re doing, and what they need along the way. Often the partners in the ecosystem use the tools you’ve developed to help customers manage their stuff and get things done. Everyone benefits as customers achieve their goals, partners make money by providing what customers need at just the right time, and you all gain a much clearer picture of what’s going on and what new patterns and needs are emerging.

But Investment Is High and Failure Is Easy

It’s easy to come close to having a customer ecosystem but to miss by a mile if you don’t understand what makes them successful and sustainable. Building the framework for a successful customer ecosystem can be a costly and time-consuming undertaking. Don’t expect to be able to do this in a year or two. It takes vision, patience, and persistence.

WHAT ARE THE CHARACTERISTICS OF A SUCCESSFUL CUSTOMER ECOSYSTEM?

Six Secrets to Success

Whenever you design a product or service to satisfy customers’ important unmet needs, you’re likely to hit a home run. Designing the framework and business model for a customer ecosystem is no different. As long as you’re addressing critical unmet needs for a target group of customers that is large enough and where the total opportunity (for the customers, for you, and for partners) is large enough, it’s probably worth the investment.

Having watched a number of visionary leaders design and evolve their own customer ecosystems, we’ve identified six critical things that are common to each of these successful initiatives.

What Are the Six Critical Success Factors for a Viable Customer Ecosystem?

1. Help customers achieve and/or manage something they care about.

2. Design for specific target audiences.

3. Provide a “secret sauce” that transforms customers’ ability to get things done.

4. Attract partners & suppliers who can contribute to these customers’ success.

5. Align the entire ecosystem to meet customers’ success metrics.

6. Embed, co-brand, and be ubiquitous so customers will encounter and use your secret sauce no matter what their starting point is.

Let’s take a closer look at each one...