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Customer-driven Innovations Deliver 8 Times the Revenue as Employee Ideas 

Ernan Roman | Sep 17, 2015 874 views 3 Comments

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Once upon a time, brands made products and consumers bought them. But not anymore.

Today, it’s all about what people want to buy — not what companies want to sell. Consumers have very smart and specific ideas about the products they are willing to purchase. And, it’s the brands that listen who get their business.

In a study from the Institute of Management Sciences the following findings were reported:

  • Customers can have very innovative ideas.
  • User-created innovations have been successfully utilized to turn around “innovative slump periods.”

Additionally the study followed products developed via employee input vs. customer input:

  • Customer/User innovations had an average revenue of $146 million dollars (in 5 years).
  • Internally generated/Employee innovations had an average revenue of $18 million (for the same span of time).

Nestle Gets the Message – Less is More for Consumers

“The dialogue around consumers’ changing relationship with food is prevalent,” said John P. Bilbrey, president and chief executive officer Nestle USA. “…Consumers are telling all manufacturers that they want to recognize all of the ingredients in their food…” To meet the demand for more natural and simpler labels and ingredients, the corporation is transitioning the formulation of its most popular chocolate brands, keeping consumers apprised of the changes at every stage. “We are committed to sharing what we achieve and what we don’t,” explains Bilbrey.

Nestle CEO Paul Bulcke commented: “The consumer has changed what he values.” To keep up with the wishes of consumers, the company used various research reports to understand the exact changes desired. Leslie Mohr, nutrition, health and wellness manager, Nestlé Confections & Snacks noted, “We conducted consumer testing to ensure the new recipe delivers on our high standards for taste and appearance.”


Engage with customers in real-time across every channel, no matter the medium. Use visitor tracking and email analytics to know what your customers are seeing.

In its most recent financial call, the company noted that it is now moving on to innovate and adapt to consumer trends in regards to all of its brand products. Nestle reported 4.5% organic growth for the first half of the year, which beat analysts’ estimates.

Target Changes Store Signage to Gender Bias

According to its website, Target recently announced, “… we know that shopping preferences and needs change …we never want guests or their families to feel frustrated or limited by the way things are presented. Over the past year, guests have raised important questions about a handful of signs in our stores…We heard you, and we agree… We thank guests all the time for challenging us to get better at what we do and take the shopping trip to new levels. We’re always listening.”

In direct response to consumer feedback over the next few months, Target will change in store signage and labels on toys and other areas after it says customers raised raising concerns about unnecessary gender-based product associations. Besides accommodating consumer requests, this move immediately sparked (predominately) good will among consumers through social and blogger posts in which consumers acknowledged that their opinions and voices were heard and acted upon.

TakeAways:

1. Your most valuable business growth resource is the input of your consumers. By understanding how they want to buy, you can innovate your brand and products to increase value based on meeting customer demands.

2. Don’t get so caught up in your corporate environment and historic brand or product positioning that do not hear essential consumer feedback. Cultivate avenues of communication and listening so that you can hear and act on customers’ viewpoints and opinions.

3. Develop an ongoing process for gathering guidance from surveys, social media, customer service comments, etc. Then be prepared to take action so you can demonstrate to consumers that you are in fact responding to the voice of your customer.

In summary, understand that there has been a fundamental shift in the product creation-consumer purchase cycle. It is no longer about how brands want to sell, but how consumers want to buy. Missing the message on this is no longer an option. Your customers are now your brand partners and listening is now one of the primary keys to business growth.

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3 Responses to Customer-driven Innovations Deliver 8 Times the Revenue as Employee Ideas

  1. Maurice Adams September 21, 2015 at 10:48 am (1 comment) #

    John P. Bilbrey, president and chief executive officer Nestle USA is incorrect. He is president of Hershey.

  2. Andrew Rudin September 21, 2015 at 7:17 pm (861 comments) #

    Hi Ernan: I think that there are some illogical conclusions about the Institute of Management Sciences study. I don’t question that customers can come up with innovative ideas. This has happened for a long time. But a company still engineers, develops, tests, refines, improves, distributes, prices, and sells products based on those ideas. ‘Based’ is the operative word here. Toward that end, they create infrastructure – supply chains, factories, warehouses, information technology, and accounting systems to support all of it. The innovations customers create is a small piece of the entire innovation process. So I’m unclear, too, on how the study’s authors could accurately partition the revenue generated from Customer/User innovations and Internally generated/Employee innovations.

    When I think of customer-driven products that are truly customer-driven, I think of youbars.com, which enables an online customer to custom-formulate his or her own energy bar. Even then, the customer is using established infrastructure (there’s that word, again!) to obtain the product. And then there are constraints. Add the wrong proportion of this or that, and a customer will end up with a sloppy mess inside of a cellophane wrapper. The ‘business rules’ won’t allow it.

    I agree that having empathy for how customers want to buy – and creating experiences that closely adhere to their needs – is paramount for any company to grow revenue. In the end, it takes a company to provide a product, and outside of youbars.com, we’re a long way from reaching that holy grail.

  3. Ernan Roman September 22, 2015 at 1:14 pm (41 comments) #

    Hi Andrew,

    Thanks for your thoughtful comment.

    My takeaway from the Institute of Management Sciences study was that the power of customer generated ideas was formidable and impacted the bottom line.

    I agree with you that these ideas must still go through business rules and process.
    I did not read their findings as indicating that customer ideas should not go through the business disciplines.

    Thanks again.

    Ernan

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