Most companies will have some customers that possess a deep understanding of their products, and maybe even those of their competitors. And nearly all customers will have some opinion on a recent experience they have had, whether good or bad.

Yet few businesses take deliberate advantage of this knowledge to improve their products, create better experiences, build trust and loyalty or address root-causes of service problems. Indeed, a lot of marketing and CRM knowledge is limited to more explicit, transactional data about customers, their needs, purchases and lifestyles in order to acquire new customers.

Nevertheless, a number of progressive firms now recognise that by accessing their customers’ knowledge (or competence) and by creating a customer-learning culture, they can discover new opportunities to innovate their products and experiences on a continuous basis. In short, they are learning from their true “experience experts” - their customers.

Tips on bringing in customer knowledge

Here are some tips about how you might harness your customers' knowledge for superior innovation potential and continuous improvement:

1. Find new ways to observe customers in their “consumption environment” as they are using your products.

More and more, evidence suggests that observation is a much more effective method for learning with and about customers than conducting stale focus groups or surveys. Consider Alaris Medical Systems, a US leader in products for the safe delivery of intravenous medications.

It actively solicits customer knowledge through regular customer visits to hospitals, turns it into fact-based insights and then applies the learning to address user issues and needs as well as to prioritise new business opportunities and product/service solutions. For Alaris, customer knowledge has been a major catalyst for deepening the relationship between the company and its users.

2. Train contact centre staff to ask customer’s open-ended questions to gather contextual knowledge

Giving front-line staff new capabilities to enquire and learn from customers is a vital resource for any company. By asking open-ended questions about the circumstances of the event that led customers to contact a company or by understanding the desired outcomes that a customer is seeking from the interaction, employees can learn a great deal about the context of the interaction as well as how to deliver great experiences. But, you’ll need to incentivise staff to pass on this knowledge to their peers and supervisors.

3. Bring expert lead-users into your company.

Famously, Tesco co-opted the in-depth experience and competence that one of its shoppers held regarding food allergies, particularly the difficulties she faced when selecting allergy-risk free foods from the Tesco product range. Not only did Tesco listen to the customer’s problems and ideas, but also they actually gave her a job developing their new allergy-free product range!

4. Segment your customers according to their competence to share their knowledge with you.

Some customers are more knowledgeable and motivated than others. Companies should identify these competent customers and then invest in developing “learning relationships” with them, even if they are not the most valuable.

For example, The National Industrial Bicycle Company of Japan is developing knowledge-creation relationships with high-involvement customers by increasing the level of interaction between itself and these valuable users. Note: Learning relationships are fundamentally different from traditional CRM-style relationships, where the primary motivation of the firm is to keep the customer for longer and to cross- or up-sell.

5. Design and test incentives to motivate and reward customers to share knowledge.

Such incentives could be in the form of price discounts, access to pre-release versions of new products, invites to the company or maybe even, allowing the customer to name the product itself. Here’s an example mentioned in a recent paper by Karl Long (see link here). A friend of his who is regular at a bar asked the bartender to make her a drink that wasn’t on the menu.

Since she is a regular, not only did the bartender let her name the drink, but also he put it on the menu for other customers to try. Now, she brings a lot of her friends to the bar to sample her own custom-made drink. The lesson? Incentivising knowledgeable customers can help you seed new product developments, generate word-of-mouth and create a powerful lobby of company advocates.

6. Create a customer community to stimulate collaborative knowledge exchange between customers.

The growing knowledge of the customer, particularly online, is compounded by the growth of “thematic customer communities”. Here, individuals are organising around common interests, needs and experiences and are enjoying an unparalleled ease and openness of communication to share ideas, create knowledge and even experiment with and co-develop products.

With no regard for geographic or social barriers, such networked communities are slowly transforming existing markets as well as creating revolutionary new ones. In doing so, they are inverting traditional top-down company-centric branding and marketing approaches. Consider the Lego Mindstorms community, a forum for enthusiasts to create new permutations of the Robotic construction system. It is now so successful at generating new ideas that Lego has had to review its rules for control of intellectual property rights and how it makes use of customer inventions.

8. Use new communication interfaces such as weblogs to establish open conversation and dialogue between employees and customers.

One simple approach for firms to shift their boundaries to include their customers is through company weblogs – online journals maintained by employees that are open to contributions made by customers. At Sun Microsystems, over a 1000 employees now actively operate their own weblog. They are regularly interacting with customers and non-Sun technicians by posting and sharing ideas and comments for new product development and enhancement.

9. Overcome internal barriers to knowledge sharing by finding new spaces for employees and customer to socialise.

Use the company intranet to allow employees to customise their own personal knowledge interface. Even better, integrate employee weblogs into these interfaces. Another method to socialise knowledge is to hold regular “What does this mean?” cross-functional sessions to discuss and review customer learning and what can be done about it.

10. Open up and let go of your marketing and your brand

Finally, and perhaps most critically, a firm needs to open up its marketing communications and brand to create opportunities to engage customers in new ways. Traditional brand management focused on keeping tight control of image, positioning, message and identity. It assumed that customers were passive recipients of firm-created offers. But to thrive today, a looser form of brand management is needed, one that welcomes the active participation of consumers.

Summary: The Benefits

Put all the above together and you will discover powerful new benefits from integrating your customers within your company. These can include:

•A greater ability to sense emerging market opportunities before the competition
• More effective “unlearning” of established assumptions and practices through open-mindedness, shared vision and an enhanced commitment to market experimentation and organisational learning
• Higher innovation potential and predictability
• Better and faster response to latent customer needs
• Higher perceived customer switching costs arising from the customer’s knowledge investments in the firm
• Greater customer satisfaction through the delivery of superior value
• An enhanced ability to co-create mutual value on an ongoing basis; value in the form of personalised, unique experiences for the customer and higher profitability and growth through higher levels of customer loyalty for the firm

For more practical insights, tips and tools for customer innovation, subscribe to The OMC Group’s Customer Create newsletter.

Chris is the founder of The OMC Group - consultancy specialising in customer-based innovation and business strategy. The OMC Group can help you to: • Diagnose your key customer-related issues and challenges • Envision and explore innovative strategies and options for creating breakthrough customer value and enhanced marketing performance • Design and execute new customer experiences for lasting competitive advantage • Successfully undertake organisation-wide customer-based innovation projects that have top- and bottom-line impact You may contact The OMC Group at info@theomcgroup.com or www.theomcgroup.com. Company: The OMC Group, The Customer Innovation Consultancy