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Now more than ever, consumers are looking to interact with companies that value their opinions and the quality of their experiences. Product co-creation via live streaming video offers an efficient and highly engaging answer to this expectation.
For young companies, the prospect of entering the product development stage can be daunting: after all, the costs associated with this labor- and time-intensive process have the potential to make or break a fledgling business model. Traditional focus groups can run businesses up to $5,000 per session, while the cost of an unsuccessful launch and roll-back could literally sink a young company in one fell swoop.
The increasingly common practice of product co-creation presents a more sensible alternative to a “fingers crossed” development and production model. By actively engaging consumers in the development process, companies of all shapes and sizes can cut costs while simultaneously strengthening brand visibility and loyalty.
The Nuts and Bolts of Co-Creation
Co-creation involves having an ongoing dialogue with your actual target customers during the development process in order to end up with a product that’s more directly aligned with their actual needs and expectations. In turn, consumers not only get a better product experience down the road — they now have a personal stake in the company, which ultimately fosters brand evangelism, peer referrals, and positive perceptions in general.
Perhaps the most obvious advantage of co-creation is its efficiency, both in the reduced cost of product development and the shortened time-to-market. According to a report by Pivot International, a 12-month reduction in time-to-market can increase the internal rate of return (IRR) by a whopping 92%. Even if the product development budget runs over capacity by 40%, that same 12-month speed boost can still yield an IRR of 48%.
Peer-to-peer ecommerce giant Etsy has taken advantage of this IRR boost with its consciously designed, two-week-sprint development cycles. According to Etsy Product Manager Nickey Skarstad, much of the site’s success can be attributed to the dev team’s early and consistent engagement with its user base during periods of testing for new UI concepts. Since Etsy allows its sellers to interact with features that are still in development, its engagement feedback loop is highly efficient — no update is included in the final release until users have had the chance to try it out and provide feedback.
This type of product co-creation also disproves a common myth among project managers: that it’s more cost-efficient to “get it right the first time.” On the contrary, a Harvard Business Review case study found that teams that conducted frequent tests of their product using an iterative development approach outperformed teams that attempted to perfect designs before soliciting feedback from consumers. The study also discovered that decreasing the number of development iterations led to a delay in the discovery of critical errors, and that the higher prototyping expenses reduced the overall cost-effectiveness of this approach.
Feedback Loops as Crucial Consumer Engagement
In the age of the social media “empowered consumer,” people are more keen than ever to share their opinions with the world. Co-creation is an opportunity for brands to foster personal connections and credibility by catering to the increasing expectation that our opinions will be heard, valued, and implemented by others. Companies that are able to recognize the importance of this trend and adopt it into their marketing strategies accordingly have already seen what kind of impact this approach can have.
For instance, in 2015, computer manufacturer Lenovo opted for an unusual route towards developing their next-gen YOGA product: they challenged consumers to submit their own designs, ultimately selecting five winning entries. These designs were then put into actual production, with each finalist awarded a physical prototype of his or her design. Lenovo also uses text analytics to index common customer complaints with their hardware, aiming to streamline product design decisions and revisions based on concrete insights.
Consumers aren’t just interested in free products and recognition of their talent, however — as it turns out, consumers enjoy the co-creation process because of its intrinsic merits. Research from McKinsey shows that a plurality of participants (28%) reported “curiosity and a desire to learn” as their biggest motivator for participating in product co-development, followed by “entertainment and social play” (26%) and “an interest in building skills” (26%). Therefore, any product co-creation initiative will benefit from a sincere attempt to engage participants and show them that their input is valuable.
The Next Generation of Product Co-Creation
If your business makes the shift toward product co-creation, it’s worth considering steps you can take to differentiate yourself from the competition. The proliferation of live streaming technologies, for example, provides businesses with the opportunity to expand participant samples beyond their home cities, providing a level of direct access that no technology has yielded before. Live streaming may help to encourage participation in co-creation initiatives as well — what better way to engage with consumers than to speak with them directly about their concerns?
While product co-creation certainly comes with its initial costs, the valuable consumer feedback and decreased time-to-market it yields will prove well worth the investment. And it bears repeating: fixing a problem with a product in its early stages is significantly less expensive than rolling back a release — or rushing the release of an updated version — following negative consumer reviews or publicity.
The passive consumer is a thing of the past, giving way to a community of active co-creators and ideators. For businesses to thrive in this changing landscape, it is essential to elevate consumer desires and foster a spirit of open dialogue and collaborative innovation along every step of your product development journey.