Many small businesses risk closures because of their dependence on a handful of clients. The goal, then, is to widen your customer base. Marketing experts believe that introducing new products and services helps brands and companies penetrate new markets. In this two-part series, I will discuss several ways of doing this on how you can innovate and create new products and services for your customers.
In the last video of this two-part series, I will discuss one more way to develop new products and services: by using what they call the wisdom of the crowd. That is, through crowdsourcing and crowdfunding.
In recent years, the popularity of crowdsourcing and crowdfunding have risen. Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. It is a form of crowdsourcing. Crowdsourcing, on the other hand, is a sourcing model in which individuals or organisations obtain goods or services, including ideas, voting, micro-tasks and finances, from a large, relatively open and often rapidly-evolving group of participants—or the “crowd.”
Many products and businesses have been successfully launched through crowdfunding platforms, such as Kickstarter and Indiegogo. Crowdfunding is not just a financial tool to raise money—it is, more importantly, a marketing tool that allows startups and companies to establish product awareness, generate market insight, gather feedback for product development, and validate the product. Some of the popular crowdfunded projects include the PopSocket, an expanding phone grip and stand, and the Fidget Cube, a hand-held device that supposedly keeps stress and anxiety at bay.
The appeal of crowdsourcing and crowdfunding is that it is a way to generate new product ideas from potential customers themselves. Big brands such as Lego, Coca-Cola, and Gillette have all turned to the crowd’s wisdom to test product ideas, generate feedback, and create new product awareness. Gillette, for example, turned to Indiegogo to test its innovation: the Heated Razor. On the other hand, Coca-Cola turned to Indiegogo as well when they launched a new bottled water brand, Valser.
Lego has successfully formulated a profitable crowdsourcing platform that serves not just the brand but its fans as well. It established a crowdsourcing project initially called Lego Cuuso, now called Lego Ideas, in 2008. It is a website that allows users to submit ideas for Lego products to be turned into sets that can be sold commercially, with each designer receiving 1% of royalties. To date, Lego Ideas have launched 35 sets that cater to different segments of the market, some of which do not associate as a Lego fan but purchased the niche Lego set. Some of the popular projects include pop culture-related sets such as Friends, The Beatles, and Sesame Street, while others are geared for specific collectors, such as the Grand Piano, the Typewriter, and the NASA Apollo Saturn V replicas.
Crowdfunding or crowdsourcing achieves is important for two reasons. First, it generates market intelligence—and if done well, it will generate market insight that will help you identify the needs and wants of the market you want to penetrate.
Second, both have a built-in product development process. In most cases, crowdsourcing and crowdfunding projects begin as ideas with early-stage prototypes. Because the products are not commercially available yet, there are no sunk costs or expensive inventory. The process allows potential buyers to discuss the product’s merits and provide immediate feedback, which creators use to further develop their products.
The campaign itself also generates interest from potential buyers, which makes it an effective marketing tool. It cuts a lot of the traditional product development cycle processes and focuses on what matters most: customer feedback.
The downside, however, is the risk of intellectual property rights infringement. Many of the crowdfunded projects have been knocked off, particularly those that have been manufactured in China. Therefore, protecting your idea is an important step in the product development process.
Small businesses put themselves at risk when they depend on only one or a handful of clients. To minimise this risk, the goal is to increase the customer base. You can do this by introducing new products and services in the market.
There are many ways to go about this. Crowdsourcing and crowdfunding can help you develop products and services that your potential customers will need and want because of the built-in feedback system.
The bottom line is to offer more products and solutions to attract and cater to a wider customer base.