Crowdsourcing techniques in Customer Engagement MK612-200

Armen Chakmakjian 10/24/11

Executive Summary Consumers comfortable with online tools look for opportunities to learn more about products and share their experiences. Companies are always looking for ways to engage their customers and to enhance brand loyalty. Social media provides a tool that allows these two groups to attempt to get both their agendas. From a companys point of view ceding some of the control of the messaging, especially in the area of customer support has been called crowdsourcing a mashup (or to some a portmanteau) of the words crowd and outsourcing. Essentially outsourcing the information exchange and support to an online community. In this paper we will survey the history of social customers and the tools as they have evolved during the Internet era (including the years before the world wide web). Then we will look to the practical advice of experts in the area. Once we have established those intentions, we will then study some notable examples from high profile companies that have actively crowdsourced support and engagement and their opinions of the results. These are Intuit TurboTax Live community, American Expresss Open Forum, and Sears community. We will also look at one example, Nintendo, where the company explicitly discourages their online community as it might compete with the built in social nature of the product. We will close the paper with a series of recommendations that come in the form of warnings. Companies must fully engage their online community and be seen as part of that community if they want brand loyalty to accompany affiliation. They must use their community in ways to not only get the message out but also have a robust plan to get input from the community in both the form of analytics as well as content. The final warning is to make sure that if a company wants to dive into crowdsourcing, they should heed Nintendos example. It might be better to avoid tapping into communities rather than have a bad community reflect on your brand.

Crowdsourcing techniques in Customer Engagement MK612-200

Armen Chakmakjian 10/24/11

Introduction One side effect of peoples recent comfort with social media is that when they, as a customer and user, have a product that they are passionate about, they will provide free consultation on company and product web forums. This form of community interaction is often called crowdsourcing. As Jeff Howe of Wired Magazine points out: Hobbyists, part-timers, and dabblers suddenly have a market for their efforts, as smart companies in industries as disparate as pharmaceuticals and television discover ways to tap the latent talent of the crowd. In this paper, we will look at some cases of companies adding crowdsourcing to their customer engagement strategy. We will do this by examining the history of social customers, the current advice from experts, and examples and results from the field. Finally we will delve into recommendations based on the available literature.

History of Social Customers Bulletin Board Services (Gaved & Mulholland, 2010), Unix News Groups (Bonnett, 2010), and examples of internal venues such as Vax/VMS Notes (Authors personal experience) were created almost coincidently with the birth of the Internet. In all of these media, users shared information on a variety of topics but very often they provided a forum to compare and complain about products. As the user base of the Internet increased from college and corporate users, forums became an important of any social website offering. Some notable examples have been product-rating forums such as CNET (which was not associated with a product marketplace website) or Amazon, where a community grew alongside the sale of products. Companies also saw the value of engaging their customers directly, so customer forums began to appear on company websites. These forums were intended to be a source of information for the company and a place to gather feedback. Often on these sites, expert users began to offer help and advice, often achieving local fame on the site. Companies often monitored these sites or had support personnel 1

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Armen Chakmakjian 10/24/11

active on the site to clarify issues or to make the users feel like they have been heard.

Current Advice The recent advice is that companies must actively engage their customers online. Steve Kraus, Senior of Product Marketing at Pegasystems opines By drawing people to internal community sites, organizations have a much better ability to recommend additional information and products. (Read, 2011) If a company can entice users onto their internal product sites for community and support, they may build brand loyalty through social sharing and create a community of users who resonate messaging. Another benefit that R. Randall Riebe proposes is that in the process of online, back-and-forth communications, ideas may be generated that provide you with information on how to improve an existing product, service, or process within you company. (Riebe, 2009) Within the community of customers using and supporting each other will be a subgroup that experiments with product offerings and takes the product to places that were neither intended nor predicted. Harnessing the information in this community, as one source point out, is a form of outsourcing whereby the process of new product development is informally contracted out to the market. (Berthon, Pitt, McCarthy, & Kates, 2007) From a more scientific viewpoint, getting consumers to interact with your company and other consumers has affiliative qualities. In recent years, consumers' interactions with companies have evolved from impersonal economic exchanges to participation in long-term relationships with both key internal stakeholders (e.g., senior management) and other consumers. (Bhattacharya & Sen, 2003) The consumers within the community identify with the community, which has both insiders and customers, and begin to act as if they are insiders themselves.

Examples and Results One notable example of using customers to help customers find information is Intuits TurboTax Online community. According to Dan Bishop, social and emerging platform leader at Intuit, Because taxes can be difficult and intimidating, people are looking for help...We look to our content as closing the knowledge gap. The company 2

Crowdsourcing techniques in Customer Engagement MK612-200

Armen Chakmakjian 10/24/11

also hosts a Q&A forum called TurboTax Live Community, a robust user-generated platform with more than 700,000 tax-related question and answer pairings. (Crain Communications Inc., 2011) In this case content is both Intuit generated content in the form of help documentation paired with users answering each others questions about those same topics. The combination allows the users to feel free to ask any question and get answers both from the community as well as Intuits branded advice. Sears has also gotten the social media bug with crowdsourcing. According to Rob Harles, VP of social media at Sears Holdings, Sears also leverages social media for influencer engagement...We know not everyone who comes to our community sites will be totally passionate about it but we hope to be successful with a core group who generate a lot of our content online and help other customers." (Daniels, 2010) American Express launched its Open Forum site in 2007. Their hope was to drive customer loyalty with its small business customers. The site ... really took off during the downturn with traffic now between 500,000 and 1.5 million unique visits daily, says Scott Roen, VP of the Open Forum at American Express. He adds that they also measure the success of the program by looking at brand and loyalty metrics. (Daniels, 2011) Not all companies agree with opening up to the community. Nintendo gagged its users on its Bebo forum, choosing to have them interact within the game rather that on an online forum. (New Media Age, 2008) To some extent even from my own observation sites like Second Life (which are communities in themselves) combine in-product communication while hosting a somewhat separate forum to support their platform customers as developers (people trying to create value by scripting things and selling them within the game). A big challenge for companies is to figure out how to measure the effectiveness of social media crowdsourcing techniques. Companies take advantage of web analytics tools as well as human oversight but still run into challenges tying that information to marketing strategy. Once recent study sites statistics that are somewhat ominous: For measurement, respondents say the biggest challenge is the inability to link social media activity to sales/revenue (45%), followed by the inability to isolate the impact of social media from other activities (41%), and the lack of appropriate tools (39%). A quarter of 3

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Armen Chakmakjian 10/24/11

respondents don't even have a system to measure social media tactics. (Daniels, 2010) In essence this article points out that while most companies understand traditional Customer Relationship Management (CRM), the concept of Social CRM is still viewed as a wild-west scenario for many of them.

Recommendations Many customers look for opportunities to find out more about products and the brands that they consume. In the past, a response to a simple email to customer support in a timely fashion or an immediate response to phone support is enough to engender loyalty. However, neither of these solutions creates a sense of community in conjunction with brand loyalty. The best model seems to be having a product forum where customers freely exchange their problems and questions and is monitored and is actively engaged by insiders. Simply outsourcing to the crowd with no oversight is insufficient. As the case of TurboTax Online shows, having the forum intelligently suggest information from formal documentation is even better. From the sources available there seem to be two best practices regarding measurement of effectiveness of these methods. The first is that if a company is going to have a forum, it should have a web analytics and data warehouse that can it can use to see customer trends. The second practice is combining these analytics with the more traditional customer satisfaction index and net promoter scores to see changes over time while using these techniques. Ultimately the customer isnt a standalone entity. It is a part of the product set offered by the company that requires that the company to nurture and sustain. Having a very restricted forum (like Nintendo) is probably better than creating a forum with no strategy or purpose. The lack of coherence with the rest of a companys marketing strategy will do little and possibly detract from brand loyalty.

Crowdsourcing techniques in Customer Engagement MK612-200

Armen Chakmakjian 10/24/11

Works Cited Berthon, P. R., Pitt, L. F., McCarthy, I., & Kates, S. M. (2007). When customers get clever: Managerial approaches to dealing with creative consumers. Business Horizons , 50, pp. 39-47. Bhattacharya, C. B., & Sen, S. (2003). Consumer--Company Identification: A Framework for Understanding Consumers' Relationships with Companies. . Journal of Marketing , 67 (2), 76-88. Bonnett, C. (2010, May 17). A Piece of Internet History. Retrieved October 22, 2011, from Duke Today: http://today.duke.edu/2010/05/usenet.html Crain Communications Inc. (2011). Through social, Intuit enjoys post-season TurboTax branding: Company keeps product affinity alive past April 15 with the savvy use of blogging, Facebook sharing, two Twitter accounts . Advertising Age , 82 (33), C003. Daniels, C. (2011, Mar). Financial industry focuses on customer engagement in retention programs. Direct Marketing News , 37-38. Daniels, C. (2010). The Social Connection. PRweek , 13 (9), 30-35. Gaved, M. B., & Mulholland, P. (2010). Networking communities from the bottom up: grassroots approaches to overcoming the digital divide. AI & Society , 25 (3), 345-357. New Media Age. (2008, Nov 4). Nintendo's gag on Bebo users may come back to haunt it. 2, p. 2. Read, B. (2011, February). Social CRM Insights. Customer Inter@ction Solutions , 29 (9), p. 6. Riebe, R. R. (2009, June). What Is Hip? Systems Contractor News , p. 98.