Crowd­sourc­ing: How companies tap into their target audience’s en­gage­ment

Is your product as good as you think it is? How can you improve your current offering? In the past, companies had to rely on expensive market research or their gut instinct to answer these questions, but now they can take advantage of the many facets of crowd­sourc­ing. In this guide, we will explain when it makes sense to use crowd­sourc­ing, discuss what the risks are, and provide some tips on how to implement it suc­cess­ful­ly.

“Crowd­sourc­ing” is a port­man­teau of the words “crowd” and “sourcing”. The term was first used in 2006 by the American jour­nal­ist Jeff Howe in his article titled “The Rise of Crowd­sourc­ing”. As a result, the term and then the concept began to spread.

Crowd­sourc­ing is an al­ter­na­tive to tra­di­tion­al out­sourc­ing. Instead of hiring a pro­fes­sion­al service provider, companies are turning to broad swaths of vol­un­teers. Crowd­sourc­ing’s added value lies in the col­lec­tive in­tel­li­gence and diverse per­spec­tives it draws from.

One strong argument for companies to try out digital col­lec­tive out­sourc­ing is the amount of money saved, since par­tic­i­pants are not paid for their time. So, why do they par­tic­i­pate in such large numbers despite this fact? They are driven by a desire to learn and share knowledge as well as by the joy of sup­port­ing a well-known brand or con­tribut­ing to finding a solution to a company’s challenge. Their search for a sense of community or status gain also plays a role here. These in­cen­tives also come into play with user-generated content.

One of the key features of crowd­sourc­ing is that it uses digital tech­nolo­gies and often social networks to enable a large number of people to help out with the company’s challenge.

There are a variety of tasks that are suitable to crowd­sourc­ing which can relate to current products or products under de­vel­op­ment:

• Strategic problem solving
• Product testing
• Product feedback
• Ideas and in­spi­ra­tion for product de­vel­op­ment
• Op­er­a­tional ac­tiv­i­ties

Crowd­sourc­ing is a general term used for all types of col­lec­tive par­tic­i­pa­tion. Examples of specific types include crowdtest­ing, crowd­fund­ing, and mobile crowd­sourc­ing.

In crowdtest­ing, companies outsource the task of looking for errors in digital ap­pli­ca­tions to users, who usually receive nothing more than early access to the new product in return.

In crowd­fund­ing, companies finance their growth or the de­vel­op­ment of new product ideas with the help of a large number of sup­port­ers who are reached via digital crowd­fund­ing platforms and donate small sums of money. In some cases, these sup­port­ers also receive some sort of symbolic com­pen­sa­tion in return.

Mobile crowd­sourc­ing has gained pop­u­lar­i­ty over the past decade as both the power and preva­lence of smart­phones have increased worldwide. The GPS function of mobile devices in par­tic­u­lar has paved the way for new crowd­sourc­ing models.

Crowd­sourc­ing is often used in relief op­er­a­tions for disasters so that helpers can get a thorough picture of the situation from the wealth of data available. Companies are also in­creas­ing­ly using crowd­sourc­ing for en­vi­ron­men­tal and health pro­tec­tion. Smart­phone users can share in­for­ma­tion on noise, air quality, radiation levels and traffic via an app, thus helping or­ga­ni­za­tions and companies to create a database that is as accurate as possible.

Crowd­sourc­ing offers companies many ad­van­tages and just a few dis­ad­van­tages. It is thus worth con­sid­er­ing in which areas of the company in­ter­est­ed parties and customers can get involved.

Crowd­sourc­ing par­tic­i­pants work at just a fraction of the cost of internal employees or service providers.

A typical use case for crowd­sourc­ing is product de­vel­op­ment. In the past, companies have had to spend a lot of money on market research or on hiring pro­fes­sion­als if they wanted to find out which products were well received by their customers. Using crowd­sourc­ing, they can now consult their target audience directly and obtain similarly reliable results – and at just a fraction of the usual cost. However, to ensure that the opinions of crowd­sourc­ing par­tic­i­pants reflect sub­se­quent pur­chas­ing behaviors as ac­cu­rate­ly as possible, it is necessary to survey a suf­fi­cient­ly large number of people.

It can take a long time to solve some business chal­lenges. Project teams have to be formed, new processes created, and external con­sul­tants brought in. Through crowd­sourc­ing, the task of problem solving can be cost-ef­fec­tive­ly out­sourced and more expertise brought in. Unilever, for example, has come to this re­al­iza­tion and now actively uses crowd­sourc­ing in its in­no­va­tion work.

Another example of how crowd­sourc­ing speeds up processes can be seen in how mobile crowd­sourc­ing is used during disasters. When users share their smart­phone’s GPS data or videos, helpers can get a com­pre­hen­sive picture of the situation much faster than if they had to send their own teams to the area to collect all the data them­selves.

The quality of a product is largely de­ter­mined by its customers. Crowd­sourc­ing is thus an easy way to ensure better product quality with high re­li­a­bil­i­ty. Feedback and ideas can easily be collected from the target audience and im­ple­ment­ed.

Smaller companies in par­tic­u­lar tend to benefit from using crowd­sourc­ing for their in­no­va­tion work, since they lack the human resources necessary to develop unique ideas without external support. Crowd­sourc­ing helps to broaden their horizons: the more people par­tic­i­pate, the more diverse per­spec­tives are brought in on a problem or product and the more creative and diverse the solutions become.

Crowd­sourc­ing is an ideal tool if you have a tight budget and want to draw attention to a new product or to your company at a low cost. Tra­di­tion­al media is happy to report on creative crowd­sourc­ing projects, and more im­por­tant­ly, many par­tic­i­pants them­selves will share the project via their profiles on social networks, thus creating a viral effect. Companies can only hope to achieve this kind of reach through tra­di­tion­al online marketing.

When eval­u­at­ing a product idea via crowd­sourc­ing, companies should carefully examine be­fore­hand whether the subject is ap­pro­pri­ate for this kind of eval­u­a­tion. A study from Paderborn Uni­ver­si­ty found that the quality of crowd­sourc­ing cannot compete with that of expert as­sess­ments for complex subjects. This likely also applies to crowd­sourc­ing in a number of business areas, not just in product de­vel­op­ment.

Crowd­sourc­ing is con­tro­ver­sial. Critics accuse companies, for example, of replacing paid jobs this way and thus lowering the market prices for pro­fes­sion­al service providers. One fre­quent­ly crit­i­cized use case is using crowd­sourc­ing projects for design and pho­tog­ra­phy. Companies should thus proac­tive­ly craft their online com­mu­ni­ca­tion to coun­ter­act the ac­cu­sa­tion that they are cleverly ex­ploit­ing what would otherwise be paid work for free.

Crowd­sourc­ing does not require a large budget and is thus just as feasible for startups as it is for large companies. Crowd­sourc­ing projects can come in any size, from long-term projects with their own websites to simple surveys posted to Facebook or Instagram.

The best-known example of crowd­sourc­ing is probably Wikipedia. Anyone can con­tribute to this online en­cy­clo­pe­dia. Orig­i­nal­ly, the average user was supposed to submit articles to a pro­fes­sion­al editorial team for review on Nupedia, Wikipedia’s pre­de­ces­sor, but this bot­tle­neck sig­nif­i­cant­ly slowed down the process. Wikipedia relies entirely on col­lec­tive in­tel­li­gence, the voluntary en­gage­ment of a large number of people and peer review and cor­rec­tion. This approach has resulted in high-quality con­tri­bu­tions without any financial incentive. Through crowd­sourc­ing, Wikipedia has become one of the most visited websites in the world.

The design platform 99designs makes pro­fes­sion­al designs ac­ces­si­ble to companies on a small budget via crowd­sourc­ing. If you have a design job to offer, you can post it in a contest on the platform. In­ter­est­ed web and graphic designers can then submit their designs. However, only the design chosen by the company is paid for. In addition to saving you money, this also allows you to choose from a larger number of diverse designs.

LEGO® has demon­strat­ed how companies can use crowd­sourc­ing in product de­vel­op­ment. On the Ideas website, users can submit sug­ges­tions for new LEGO® sets and vote on other users’ ideas. Sub­mis­sions that receive more than 10,000 votes within a specific timeframe will be evaluated by a LEGO® jury. If the idea is chosen to be turned into a product, the user who orig­i­nal­ly submitted it will share in the sales proceeds. Suc­cess­ful products developed via crowd­sourc­ing include the sets for Winnie the Pooh, Sesame Street, and the Central Perk café from the tele­vi­sion series Friends.

If you want to use crowd­sourc­ing in your company, you should heed a few basic rules to ensure your project’s success.

Determine be­fore­hand what the goals are you want to achieve through crowd­sourc­ing and what type of crowd­sourc­ing is best suited to your project. Make sure to com­mu­ni­cate the task in a clear and trans­par­ent manner and be explicit when defining the limits of par­tic­i­pa­tion. Here is a negative example of what could happen in product de­vel­op­ment if you fail to do so: If you promise in advance to use the product idea that receives the most votes, you might encounter a situation where you have to choose something that was submitted as a joke and that does not match your company’s vision of what a winner should be.

Educate yourself about the legal re­quire­ments for crowd­sourc­ing projects and draft the con­di­tions for par­tic­i­pa­tion ac­cord­ing­ly. This is par­tic­u­lar­ly important when dealing with copy­rights in creative com­pe­ti­tions. If you fail to do so, you will face more than just legal trouble later on. You will also receive negative press from dis­sat­is­fied par­tic­i­pants venting their dis­plea­sure online on social networks.

Consider who you want to par­tic­i­pate in your crowd­sourc­ing project and where they can be found online. Tailor your approach to your target audience through text, images, and videos in order to get input from par­tic­i­pants who are relevant to you.

Com­mu­ni­ca­tion is key to ensuring that your project receives wide­spread attention and that many people par­tic­i­pate in it. Com­mu­ni­cate directly with your par­tic­i­pants, respond promptly and actively engage in dis­cus­sions with them. Inform relevant media sources about your project to increase your reach through media coverage.

A suc­cess­ful crowd­sourc­ing project can quickly provide more feedback and ideas than you might expect. To make sense of the data, create internal processes in advance: How do you want to manage the ideas? Who is re­spon­si­ble for per­form­ing analyses? Es­tab­lish­ing clear re­spon­si­bil­i­ties will help you get the most out of your project.