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Co-creating customer value

Customer value can be created by co-creating solutions through higher participation of customers in the solutions discovery, design, or production stages. This has its origin in co-production where customer participation was integrated into the supply chain. Subsequently, the customisation of products that involved customer participation was seen to produce greater customer satisfaction and differentiated offerings[i]. In the recent past, service-dominant logic has begun to influence corporates to look at products or services as vehicles of experiences that create customer value. LEGO, a 100-year-old Danish toy production company, is the largest toy company in the world. LEGO is well known for involving its customers in its decisions to make products. LEGO Ideas, an online community, lets enthusiasts and creators create, vote, and provide feedback on new LEGO kits. Projects that receive more than 10,000 votes are reviews by the senior management to decide whether the product would get into production. If the product gets into production, the creator of the idea is given 1% of the net sales of the product and is recognised as the creator on all the packaging and marketing. This saves the company market research costs and ensures high levels of customer participation from idea to development.

Co-creation in the B2B space can also add value to all the stakeholders involved in such activities. DHL (Dalsey, Hillblom and Lynn) International GmbH is a global market leader in courier services and logistics. It employs 490,000 employees around the world and delivers over 1.3 billion parcels per year. To deepen its understanding of customer challenges and engaging with customers in evolving customer-centric solutions, DHL brings its customers and service partners together in its innovation centres located in Germany and Singapore. These engagement activities have resulted in co-creating many innovative solutions such as the parcelcopter, a drone delivery project for cost-effective and agile deliveries; “smart glasses” and augmented reality that was co-created with DHL customer Ricoh to improve inventory and warehousing picking efficiency by 25%; “Maintenance on-demand”, co-created with DHL customer Volvo truck that uses sensors that automatically send back data to help identify when and where truck maintenance will be required; IoT report, an industry report, authored by DHL and Cisco, that evaluated the implications of the Internet of Things on logistics; and other robotic applications such as self-driving trolleys and co-packing[ii]. It was observed that customer satisfaction improved after DHL began using co-creation, and according to Forbes, DHL’s co-creation efforts created an increase of over 80% in customer satisfaction scores.

Xiaomi is another company that co-creates value by involving customers and suppliers. Xiaomi Corporation, located in Beijing, was founded in 2010 and makes a wide range of electronics products such as smartphones, mobile apps, laptops, home appliances, customer electronics, and so on. It also makes its own mobile phone chips. By 2018, Xiaomi became the fourth-largest smartphone manufacturer in the world and was ranked number one in both China and India.

To keep costs low, Xiaomi avoided traditional advertising and instead relies on social networks and word-of-mouth publicity. It has built a strong online community through the MIUI forum that has more than 10 million users with more than 100,000 daily posts. Xiaomi is highly customer-centric and co-creates solutions with the help of customer feedback. It calls this process “design as you build.” More than 200 employees scan the community user forums and through Miliao, the chat application, for suggestions or ideas every day, and the founder personally responds to customer queries and suggestions. Interesting suggestions are picked up and passed on to the engineers, and phones can be shipped with the updated solutions within a week. The most active users get a preferential right on booking Xiaomi’s products, special privileges, discounts, and recognition in the community. The company is constantly engaged with the online members, and every launch is advertised through this forum that generates pre-order demand and ensures customer-loyalty and strong brand relationships. Xiaomi holds frequent supplier conferences to share ideas, deepen engagement, and co-produce solutions. The emphasis is on open discussions and collaboration[iii].

[i] Jotte Ilbine Jozine Charlotte De Koning et al 2016) Models of Co-creation. Conference: Service Design Geographies.Proceedings of the ServDes.2016 Conference,Copenhagen, Vol. 125

[ii] Christine Crandell (2016). Customer Co-Creation Is The Secret Sauce To Success [Online] 10 Jun, 2016. Forbes.com. Available from:

https://www.forbes.com/sites/christinecrandell/2016/06/10/customer_cocreation_secret_sauce/#704090745b6d [Accessed on: 14 Oct 2020]

[iii] Kuo, Hsien-Chih et al. (2017). Value co-creation of Xiaomi in China. International Journal of Business and Economic Sciences Applied Research (IJBESAR), Vol. 11, 1, 18 Oct, 2017