MIT Sloan Management Review

Management of Technology and Innovation, Marketing

How to Profit From a Better Virtual Customer Environment

By Satish Nambisan and Priya Nambisan

April 1, 2008

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The benefits of engaging customers in product development, product support and related activities are increasingly visible. Having the right technology-based system can enhance the customer experience and help companies improve both their innovation and customer relationship management capabilities.

Usability Experience

In a VCE, information technology mediates customer interactions. The quality of the human-computer interactions defines the usability experience.12 Regardless of whether the technologies used are simple (for example, online discussion boards) or more complex (for example, 3-D product simulation tools), the ease with which customers can interact and perform tasks shapes their overall experience. Thus, it is important to consider the learning curve for customers.

Hedonic Experience

Customers’ interactions in the virtual environment can also be mentally stimulating or entertaining, a source of pleasure and enjoyment. The hedonic component captures this dimension. It can encompass both the interaction with other customers and with tools and technologies. Consider the following comment from a customer: “I have always enjoyed solving technical puzzles and my interactions [in the VCE] have given me numerous opportunities to indulge in such pursuits that are very satisfying.”13

Together, the four components provide a comprehensive view of the experience a customer participating in a VCE can have. However, based on the nature of the customer’s interactions and value cocreation activities, some components are likely to be more important than others.

In one of our studies, we examined the virtual customer environments at four companies: a software company, a consumer electronics company, a high-technology company and a technology services company. The VCEs in the software company and the consumer electronics company encouraged customers to be product support specialists, while those in the high-technology company and the technology services company encouraged customers to conceptualize new products and services. Based on a survey of customers who visited these virtual environments, we evaluated the average customer experience profiles of the four companies and found some interesting results.14 In the first two companies, the customer experience profiles were skewed toward pragmatic and sociability experience components, while in the latter cases the emphasis was on pragmatic and hedonic components. These differences underline the different types of customer interactions. VCEs oriented toward product support activities tend to feature lively discussions and debates that leverage the expertise of the entire community and make them better able to address individual customers’ product-related problems. By contrast, virtual environments that focus on helping customers become product conceptualizers tend to be more stimulating for participants as product improvement ideas are developed, shared and improved.

We can identify “typical” customer experience profiles for five different types of VCEs based on the kind of participation and value cocreation they encourage. (See “Typical Customer Experience Profiles of Different Types of VCEs.”) We found that the pragmatic component is important in most situations, since product-related knowledge and learning are fundamental in all roles. The sociability component becomes more important in roles that depend more on community involvement (for example, in product support and product marketing) than in contexts that emphasize customer-tool interactions (for example, in product design and product concept testing). Similarly, as technological sophistication of the VCE facilities increases, the importance of usability increases as well (for example, in product design and testing, virtual reality and simulation tools are central).

Thus far, we have highlighted “typical” experience profiles. Each company will need to examine its own circumstances and weigh the unique product and customer context in order to decide which customer experience profile is most appropriate. A clear understanding of this — specifically, the relative importance of the different experience components — will help companies tailor their VCE strategies and practices. However, first we will consider the impact of customer experience.

The Effect of Customers’ VCE Experience

The customer interaction experience has two types of effects. (See “Antecedents and Consequences of Customer Experiences in VCEs,” p. 58.) The first relates to the immediate context of the experience and is succinctly captured in this comment by a customer: “I have been a visitor [to the VCE] for the last two years or so and I have generally enjoyed coming here and using my expertise to help others. … As long as it is enjoyable, I plan to continue doing this.”15 Indeed, our studies indicate that customers who express positive experiences are twice as likely to remain involved and increase both the intensity and the quality of their contributions in the VCE.

The second effect has a much broader scope, relating to relationships customers have with both the product and the company. We found that most customers attribute their VCE experience (good or bad) directly to the company connected with that initiative. Indeed, it shapes their perceptions about both the company and the product. Interestingly, we also found that customers’ experiences had a greater effect on their views toward the company than it did on their future participation in innovation activities in the VCE. The effect of the customer experience also shaped purchase intentions and decisions. For example, one customer noted that the primary reason he decided to buy Palm Inc.’s Treo 650 smart phone over another product “was the active customer forum associated with it and the good experience I had while I visited them during my initial exploration.”

In general, we found that positive (negative) customer experiences led to positive (negative) outcomes with regard to both innovation (intensity of customer value cocreation) and customer-company relationships. However, more significantly, we found that the difference between customer expectations and the actual experience on the four components was what really mattered. Further, there were threshold levels for each of the components beyond which a more positive experience did not necessarily translate into more positive outcomes. For example, if customers considered something especially important (for instance, sociability), a slight dip in that component had a magnified effect on customer attitudes. However, if something was considered relatively minor (say, usability), even a highly positive rating did not translate into a more favorable view of the product or company.

Thus, the goal is not to maximize all four components of the customers’ VCE experience — this may be too costly and may not even be effective. Instead, it is to create positive experiences beyond what is expected, particularly in those areas that are important within the given customer innovation context.

Strategies and Practices to Enhance the Customer Experience

Based on our research, we developed four sets of strategies and practices that companies can adopt to enhance customer experiences in VCEs. Different companies will choose different approaches depending on their circumstances and what they are trying to accomplish. (See “Mapping VCE Strategies to Customer Profiles,” p. 59.)

Design to Encourage Customer Innovation

Companies can create richer innovating environments by incorporating key design features into their VCEs. We identified several features that can improve customer experiences, including content rating systems, product knowledge centers, social translucence, customer recognition programs, exclusive customer forums, clean technical designs and flow technologies.

Rating systems.

Having enough product-related content in the VCE is important not only to advance customer innovation capabilities but also to enhance learning. Companies such as Microsoft are experimenting with product content rating systems — for example, peer ratings and other social metrics that help customers gauge the depth and accuracy of product-related knowledge in the interactions.16 Similarly, new semantic visualization tools have been created that allow customers to identify patterns in customer conversations and navigate toward the content-rich part of those conversations.17

Product knowledge centers.

Companies can also create product knowledge centers that can feed customers the right knowledge at the right time. Such centers can offer virtual product simulation tools that allow customers to acquire deeper product knowledge. Samsung, for example, lets customers do a virtual test-drive of its products.

Social translucence.

Design features that provide customers with better social cues — that is, add to the social translucence — offer richer social experiences and permit richer customer discussions. Both International Business Machines Corp.’s Social Computing Group and the MIT Media Lab’s Sociable Media Group have developed tools in this area.18 The tools help customers follow social conventions and participate more effectively in group interactions. For example, in discussions of product improvement ideas, they identify the active and passive participants, identify the opinion leaders, and show how the ideas evolve, thereby helping customers make social inferences that facilitate coherent interactions and progress toward common goals.

Customer recognition programs.

Companies including IBM, HP and Microsoft have instituted programs that confer titles and awards upon customers taking part in VCEs. For example, every year Microsoft selects Most Valuable Professionals from customers who contribute to the product support activities through its VCE. Customers value these titles because they come from a customer community they identify with. Our research shows that such programs make positive differences in customers’ sociability experience. For example, Microsoft MVPs say that while the recognition is personally satisfying, it also brings them closer to the customer community in the VCE and deepens their sense of belonging and responsibility.

Exclusive customer forums.

Companies can also create elite customer forums within their VCE that give members a sense of exclusiveness and add to their sociability experience. Hallmark divides customer contributors based on their demographic profiles and assigns them to different forums. Similarly, Microsoft has created forums specifically for customers who have been awarded the MVP title; in contrast to other customer forums, these forums are involved in a wider range of collaborative innovation activities. Such gated forums not only permit companies to have deeper customer engagement but also provide customers with a stronger sense of social identity, which in turn leads to more positive experiences.

Clean technical designs.

Having a simple, easy-to-use customer interface combined with fast and highly intuitive navigation features can be a significant asset in a VCE. We found that a clean technical design has positive implications for the usability experience as well as for the pragmatic and hedonic components.

Flow technologies.

Yet another design element involves the incorporation of so-called flow technologies: virtual reality and simulation tools that combine technological and human interactivity to produce stimulating experiences for customers.19 Volvo’s Concept Lab combines clean design and flow technologies to give customers a unique interactive experience. The success of this design is evident in the quantity and quality of ideas and suggestions the company has received from customers worldwide, many of which have found their way into the product development pipeline.20

(Reprint #:49313)

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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.

REFERENCES

1. For a more in-depth discussion of virtual customer environments, see S. Nambisan, “Designing Virtual Customer Environments for New Product Development: Toward a Theory,”

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