Pros and Cons of Crowdsourcing as a Market Research Methodology

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    RMSresults.com defines crowdsourcing as, ‘the act of outsourcing tasks, traditionally performed by staff or contractors, to a large group of people or crowd’. Businesses use it for a variety of reasons; Innocentive.com lists PepsiCo as an example company who use crowdsourcing to help them with product development. In their ‘Do Us a Flavour’ campaigns they ask the public for new flavour suggestions for their crisps brand – Walkers. After 14 million submissions to one such campaign, they chose and launched a new flavour – Cheesy Garlic Bread. Their sales rose by 8%.

    Sounds great right? But will every business/brand reap the same rewards? Let’s have a look at the few pros and cons of crowdsourding as a universal market research methodology.

    Crowdsourcing Debate 1 – Scale Vs Feasibility

    Further to their definition above, RMS goes on to explain that crowdsourcing benefits from the volume of people contributing to the task. The assumption is that if you have enough ideas sent your way, you will find something worth pursuing. This is probably one of the biggest benefits of crowdsourcing. But with this very benefit comes the drawback. For crowdsourcing to be effective, a brand needs to have enough exposure to attract the necessary audience participation to succeed.

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    Crowdsourcing benefits from the volume of people contributing to the task - The assumption is that if you have enough ideas sent your way. you will find something worth pursuing

    A large organisation with a well-established brand (like PepsiCo) should have no problem with this approach. A small business on the other hand is unlikely to attract the hundreds of thousands of people required to share their ideas.

    Crowdsourcing Debate 2 – Cost Vs Quality

    Crowdsourcing is attractive because it comes with cost saving – using a designer, engineer or product developer will cost more than posting a question ‘out there’. There is of course the cost of generating publicity and management of all the submissions, but overall it’s perceived that these are cheaper!

    So what is the downside? In my opinion, quality – using crowdsourcing requires a bit of luck that the ideas (or at least one of the ideas) received will be a) relevant and b) good enough to meet internal and external expectations. The idea needs to be capable of creating the desired effect; increase in revenue, heightened customer retention, etc. And all of this needs to be achieved without the discussion, prompting, probing and directional management available via alternative research methods. It’s a risk, not a seismic risk depending on your circumstances, but a risk to consider.

    Crowdsourcing Debate 3 – Ease Vs Complexity

    What if an organisation is interested in a niche market or consumer?

    Another drawback of crowdsourcing, in my opinion, is complexity. And I’m not talking about the complexity of crowdsourcing; I’m talking about complexity of the idea subject. If you are looking to develop a relatively well-known, well-used product or service type or element, i.e. packaging, fragrance, search function, etc. there will be a lot of people ‘out there’ who have an opinion and/or want in this regard relevant to you.

    But, if you are working on is something very complex – advanced electronics, robotics or engineering, for example, would you trust the crowd to ideate? Trust them to have the necessary knowledge to provide viable desirable options… probably not. This is an area where more focused market research methodologies with smaller targeted participants, i.e insight communities.

    Crowdsourcing Debate 4 - Competitive Advantage Vs Publicity

    My final pair of crowdsourcing drawbacks/benefits relate to competitive advantage and commercial sensitivity. Crowdsourcing needs publicity in order to generate enough traction to ensure large volume idea submission, but not every business strategy or product development will benefit (commercially or competitively) from this – some cards are better played close to the chest…

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    Crowdsourcing needs publicity in order to generate enough traction to ensure large volume idea submission but some strategic brand cards are better played close to the chest

    Oh the other hand, the publicity required for effective crowdsourcing can be a fantastic addition to the marketing strategy. Done well, crowdsourcing can create an incredibly engaging brand message; a new and exciting story about the company and their products. This has a potential to spark interest in those who would have not engaged with the brand otherwise. The crowdsourcing publicity alone can result in the desired business effect: an increase in enquiries, greater awareness; all linking to more sales opportunities and hence revenue.

    Crowdsourcing as a Market Research Methodology - Yes or No?

    The answer is very dependent on your business, its research needs, target market, etc. and most importantly your business strategy / objectives. In my opinion, crowdsourcing is great for identifying ways to improve; not so much for innovation in practice (from idea to launch) where an iterative market research methodology is most effective. For ongoing product or service development a dedicated customer panel might be better suited as it enables ongoing dialogue; constant feedback and the ability to go back and re-discuss suggestions with participants.

    I wouldn’t be inclined to use crowdsourcing alone unless you are Pepsi co and can sustain a loss if it fails in favour of publicity - if you promise something publicly you have to deliver or face set-backs in customer brand perception.

    Questions to ask yourself: Can I crowdsource the volume of relevant people required? Do those people have the knowledge necessary to make this decision/ideate? Is this decision commercially sensitive? How can I validate the outcome?

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