In today’s marketplace, customers are more educated and empowered than ever before. They’re also the most “marketed to” generation, making it increasingly hard for companies to connect with their target audiences. Customer alignment is one of the key focus areas for brands and this “secret sauce” is what leads to transformation in industries and companies.

When your customers know that you are committed to listening to them and delivering according to their needs, they become more involved – not only in your business, but also in your products. This has led to “customer co-creation”, which has been defined by Professor CK Prahalad and Venkat Ramaswamy as:

The Joint creation of value by the company and the customer; allowing the customer to co-construct the service experience to suit their context.

President of New Business Strategies, Christine Crandell, defines co-creation as follows:

The purposeful action of partnering with strategic customers, partners or employees to ideate, problem solve, improve performance, or create a new product, service or business.

How companies are co-creating
Global logistics company, DHL, discovered that their customers want to help the company rethink and improve their supply chains. DHL chief commercial officer, Bill Meahl, said that this would be quite a challenge as the company typically deals with very complex global supply chains, but it fuelled the company to embark on the journey of customer co-creation.

DHL had to deepen their employees’ capabilities to better understand how they impact customer business and customer perception. Staff had to intimately understand the dynamics of working with customers, to meet their needs and to show them why DHL is valuable business partner. Bill admits that their co-creation idea was initially met with scepticism by both employees and customers. Customers thought it was a smart sales tactic and internally, they had to identify the right leaders to align and coordinate multiple teams.

The company chose customers to attend workshops at their innovation centres so that the new supply chain technologies that they develop are customer focused. The workshop sessions kicked off with scenario planning to imagine what the business could look like in 2050. From there, they moved backwards to 2020 and determine which challenges need to be solved.

Some of the innovations that were launched as a result of these sessions include:
• A drone delivery research project called Parcelcopter
• “Smart glasses” and augmented reality, which improves inventory and warehouse picking efficiency by 25%
• Robotics applications such as self-driving trolleys and robots that help with co-packing. These are currently being tested by customers
• Maintenance on Demand, which uses sensors to send back vehicles if it is picked up that maintenance is required
Other leaders who have successfully launched co-creation initiatives include Nike, Adidas and iconic British luxury label Burberry. At the core of Nike’s “NIKEiD” customisable shoe service is a user-friendly software interface that lets customers choose colours, materials and labelling to create their own personalised footwear. Adidas’ “Miadidas” is a web portal where customers can design their own sportswear. Burberry has in-store “Scarf Bars” where customers can select their own materials, patterns and colours to create cashmere scarves.

Co-creation in the design industry
Domotex, the leading trade fair for floorcovering, has also picked up on the trend of customers aspiring to greater involvement in the creation and design process. It is for this reason that the event organisers have chosen “UNIQUE YOUNIVERSE” as the keynote theme for the 2018 showcase.

“With many products, consumers are now able to exert considerable influence over the creation and production process. Thanks to digitalisation, consumers can now design their own personalised items with just a few clicks of the mouse and then have them made. The consumer’s emotional journey is a key part of this trend because the emotional buy-in is what gives individualised products their unique value,” explain event organisers.

How to make co-creation pay off
According to McKinsey.com, studies have shown that the impact of co-creation on innovation is neither statistically significant nor economically relevant and that although attempts to jointly create products and services may have desirable effects – such as increased customer loyalty and reduced market research costs – the ultimate goal of bringing outstanding products to the market remains elusive.

Co-creation requires agile processes, a deep understanding of customers and quick test-and-learn cycles. After studying more than 300 companies, McKinsey.com found that those best at co-creation excelled in three areas:

1. Target your co-creators
Companies need to proactively target their customers and educate them on how to use their co-creation platforms. Use games, money and peer recognition, for example, to tailor marketing promotions that will appeal to them.

2. Find the motivation
Clear communication is vital to ensure that potential co-creators know what kind of help you’re looking for. Understanding and tapping into what will motivate your co-creators is the key factor in getting them to submit good ideas for your business.

3. Focus on sustainable payoff
Stay focused on creative products and services that will give your business a sustainable competitive advantage. The innovations that you create should help you be a product innovator, price leader or superior service provider in your industry.

Full thanks and acknowledgement are given to www.forbes.com, www.domotex.de and www.mckinsey.com for the information contained in this article.