Innovation

How to Profit From a Better ‘Virtual Customer Environment’

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Many companies have established technology-based platforms or virtual customer environments to partner with their customers in innovation and value creation. In pursuing such initiatives, most companies seem to focus primarily on customers’ innovative contributions, paying limited attention to customers’ interaction experiences in the VCE. But the VCE experience has broader and more profound implications — particularly for customer relationship management. In this article, the authors offer a framework to help companies understand and evaluate customers’ VCE experience profile.

The authors describe five customer roles in innovation and value cocreation: product conceptualizer, product designer, product tester, product support specialist and product marketer. Each role has something to offer. However, depending on the customer innovation role, the nature of the customer interactions and the technologies used in the VCE will vary. The VCE customer experience is made up of four components: the pragmatic experience (its ability to provide information), the sociability experience (how it promotes group discussion), the usability experience (defined by the quality of the human-computer interactions) and the hedonic experience (relating to mental stimulation and entertainment). Drawing on examples from companies including Microsoft, SAP, Samsung, BMW, Volvo and Ducati, the authors suggest strategies and practices to enhance customer experiences in VCEs and ensure favorable outcomes in terms of both innovation management and customer relationship management.

Designing and implementing the right system can help companies improve innovation and customer relationship management. Therefore, managers should view their VCE initiatives as an integral part of their overall innovation and customer strategies.

What’s more, the costs of implementation can vary widely. Therefore, companies need to be careful about selecting and implementing a portfolio of strategies and practices that meets the needs of the types of customers they want to engage in value cocreation.

Satish Nambisan is an associate professor of technology management and strategy at the Lally School of Management, Rensselaer Polytechnic Institute, in Troy, New York, and the author of The Global Brain: Your Roadmap for Innovating Faster and Smarter in a Networked World (Wharton School Publishing, 2007). Priya Nambisan is an assistant professor of health policy and management at the School of Public Health, University at Albany, State University of New York. Comment on this article or contact the authors through smrfeedback@mit.edu.

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