Originally posted at Innovate on Purpose on August 31th, 2010.

I’ve just finished reading a book called Intangible Capital (more on that in another post) by Mary Adams.  The book does a good job describing the value and importance of knowledge, intellectual property and other intangible assets, and why innovation is key to the creation of those assets.

But that’s not the subject of today’s post.  Today’s post deals with the fallacy that innovation “starts” with idea generation.  I’m picking on Mary’s book because it was at hand and the latest to suggest that innovation starts with idea generation.  I know this because it says so on page 85, but Mary’s writing does not stand alone.  Far too often I hear people suggest or read that innovation starts with idea generation.  Sorry, no – and my apologies in advance to Mary for calling out this small problem in what was otherwise a very good book.

Idea generation is at best the “mid point” of an innovation process, because by the time you start generating ideas you need to have:

1. A good sense of the strategic goals and direction of the organization
2. A good sense of trends and the unfolding future
3. An understanding of unmet or unarticulated needs

Only when you are armed with this knowledge can you generate ideas that are worth anything.  We at OVO call this “ideating in context”.  The obvious alternative to “ideating with no context” which is what many teams do, and why idea generation and brainstorming have such poor reputations.  Let’s examine why all three factors need to be complete before you can brainstorm effectively.

First, you need to understand the strategic goals, direction and strategic intent of the business, and how it will remain constant or change.  This aspect forms the “framework” for your idea generation.  If your firm has the goal to be the best at customer intimacy or experience, then that should inform your idea generation – you’ll want to spend far more time focused in those areas than in operational excellence.  Too often there are no clear guidepost or guardrails to shape your thinking and in those cases all ideas and all strategies seem equal.  They aren’t, and if you present ideas out of sequence or out of context with strategy then you’ll find that out.

Second, you need to understand something about the future.  After all, the average time to market for an idea in most large firms is between 24 and 36 months, idea generation to commercialization.  That means an idea you generate today will be birthed into a world two to three years from the one we are in today.  How much change will occur in that space?  If you create an idea today that assumes the world will be the same as it was when the idea was created, you’ve shot behind the curve and the idea will seem dated from the start.  Not to mention the fact that observing trends and understanding where the future may evolve is important. You may spot entirely new opportunities by spending time understanding the future, and your products or services may arrive at exactly the right time.

With those two factors safely covered, you can also understand what customers want and need.  You do this through many different qualitative exercises – voice of the customer, observation, lead users, ethnography, etc.  What you are seeking are the unrecognized, unmet or unarticulated needs that align to your strategic goals and to the unfolding future.  At the intersection of those three converging factors are ideas that will be relevant, valuable and in line with your capabilities.

These factors create the “context” that identifies customer needs in line with future trends and aligned to strategic goals.  Within that context or framework, generating ideas becomes far more easy and far more robust – actually becomes safer, since you are generating ideas you know link to strategic goals and to customer needs.  It’s less arbitrary since you know the goals, potential futures and customer needs.

Innovation doesn’t start with, and doesn’t end with, idea generation.  In fact we should place far less emphasis on the idea generation phase than we do, but it seems to get the most focus, probably because it is the easiest to organize and any one can participate, while the other tasks require real thinking, real planning and real work.  Generating ideas should be the outcome of good strategic thinking and careful assessment of customer behaviors and needs.  If that work is done well, idea generation is almost an afterthought, but it certainly isn’t the first step in the process.

In a post two weeks ago, we talked about how crowdsourcing for market research can avoid some of the inherent biases that can come with traditional research techniques.   There is another reason for why crowdsourcing is being increasingly applied for market research: it can result in better data.

A common question we hear is “how is the quality of information, ideas and data derived from crowdsourcing better than what you might get from traditional research?”   Here are a few answers:

More ideas: With a traditional survey, each recipient fills out the questions based on their thinking right then.  Once they have filled out the survey, they usually can’t go back to add additional thoughts that might come to them later.   In addition, since they can’t see other respondents’ replies to the survey (by design), their own thinking isn’t triggered by the thoughts of others.  How many times has a good idea come to you because of something someone else said?    Crowdsourcing provides not only a way to capture ideas both now and later, since most crowdsourcing sites live on for weeks if not months, it also enables the sharing of responses that can trigger more thoughts and ideas.

Better ideas: With traditional surveys, each respondent puts in their own ideas, and then those ideas are rolled up and analyzed, but at no point is there collaboration that enables the improvement of those ideas.   Sometimes this is desirable and intended, but if you are looking for innovation, what you really want are the best ideas, shaped and enhanced by the collective intelligence, experience and viewpoints of the community.   In some crowdsourcing models, the submitters or “owners” of the ideas can revise and enhance their ideas based on the feedback and comments from the crowd.   In addition, through ranking or voting, you get a relative rating of how the crowd feels about a particular idea relative to the other ideas submitted.   This can result in both better input, and a way to more clearly determine market preference.

Multi-media input: When was the last time you took a survey that allowed you to upload an image, document, hyperlink, or video to help communicate your idea?  This is becoming standard practice in crowdsourcing both for initial ideation, and increasingly for commenting and suggestions to those ideas.

Explicit and Implicit Data: When you think of crowdsourcing, you think of the ideas, comments and votes that generally come along with that.  Those are all forms of explicit data, and by themselves can provide superior input for market research than traditional research means as discussed above.   But with crowdsourcing, you can also measure how the crowd interacts with the data itself, which can provide valuable implied insight that traditional research would miss. Implicit data can include things like how often an idea was viewed vs. how often it was given a positive vote.   This is an important way to find ideas that might be superior ideas even though they didn’t get the most votes. (there are lots of reasons why the best idea might not get the most votes, but we’ll hold that for another post).   Analyzing comments to find the frequency of use of certain terms is another piece of implicit data that allows identification of important trends and themes.

I’ll stop here, but you get the drift.  Include your crowds in a collaborative way for market research, and you’ll likely derive better quality input.

Up next:  Identifying your best respondents

There are, of course, many reasons why crowdsourcing can go wrong, but most of the highly visible failures have two things in common:

1)  “Misguided” purpose:  I’ve found that too frequently the purpose behind crowdsourcing that flops is really about driving marketing and awareness for the sponsoring organization,  rather than on quality outcome. Instead of identifying a need that can be applied for good, the program is just another marketing program for the company.  As a result, less care is taken and more mistakes are made in planning and implementing, and people (participants) get frustrated and angry.

Do not take the attitude of  “whatever the crowd gives the most votes to will be good enough”.  Care about the result, and don’t allow your site to turn into a simple popularity contest that can be gamed,  such as the Mad Men Casting Call where they belatedly added a recaptcha to stop the use of proxy voting that has drastically skewed the voting.

2)      Inexperienced Implementation: Failed crowdsourcing sites are often implemented by companies that don’t have much experience with crowdsourcing.  One of the unfortunate things about crowdsourcing is it looks easy to do.  Hey, all you have to do is have people submit ideas and get others to comment and vote right?  How hard can it be?  Well, let me tell you,  some firms are learning the hard way.

Crowdsourcing done well is a LOT more than ideation, comment and voting.  You must consider crowd management, eliminating bias, ensuring fairness, reporting, providing at least some equality in idea visibility and much, much more.  You must plan for a great user experience so you can avoid problems such as those on the Pepsi Refresh site.  Experience is not an option, unless you want to risk a failure.

Any web-design firm that hasn’t done crowdsourcing in the past that looks at a crowdsourcing site and tells you “yeah we can build that” is something to be afraid of.  What’s behind the UI is  more important than what you can see.     At a minimum, you should get a consultancy firm that understands things like crowd recruitment and moderation, incentives, reporting and analytics to work with your web-design firm to make sure the implementation is done well, or quite frankly hire a firm like Chaordix, where we do crowdsourcing for a living. Sorry for the blatant pitch, but we’re good at what we do and it pains us to see crowdsourcing failures that could have been breakthroughs.

So, how to best understand good crowdsourcing practice?   I’d suggest starting off by reading blogs by people like Stefan Lindegaard, Robert Brands, Jason Spector and Andrea Meyer.   Or, join us for a free webinar. And be sure to read our “Eight Principles of Successful Crowdsourcing”  white paper and take a look at the Crowdsourcing Scorecards in our Resources section.

The good news is with the right planning, purpose and experienced implementation, your crowdsourcing initiative can be one of the success stories.

Originally posted at rediff.com on August 16th, 2010.

Social media is no more a buzzword today. Given the rate at which it is growing and the impact it is making in our everyday lives, we will soon see the answer to this question: ‘Why should I care about social media?’

Over the last three years, I have closely observed and actively used this medium, as one of the most powerful tools to solve and address multiple business challenges, ranging from hiring an employee to acquiring a new customer.

In the following pages are my learnings and points of view on why should a business pay attention to and invest in social media.

Statistics speak loudly: Given the volume of action on social media web sites, as measured by some of the key statistics mentioned below, it is evident that social media is no more a small or niche medium:

1. Radio took 38 years to reach 50 million users, TV took 13 years, Internet took 4 years, iPod 3 years and Facebook reached over 200 million users in less than a year.

2. The top two Twitter accounts — Ashton Kutcher and Britney Spears — have more followers than the entire populations of Sweden, Israel, Switzerland, Ireland, Norway, Austria and Panama.

3. Wikipedia has more than 15 million articles out of which over 75 per cent are non-English.

4. There are over 200 million blogs.

5. YouTube is the 2nd largest search engine in the world.

6. Social media has overtaken pornography as the most popular activity on the web.

There are endless reasons to use social media: Contrary to normal belief, social media is much more than just a channel to acquire new customers.

Here are some of the key business objectives, which can be met using social media:

CRM (Customer Relationship Management): Whether you want to continuously engage with your customers, take their feedback or provide them support, social media is a great tool. Dell is a classic example of using social media (especially Twitter and Blogs) to transform their customer’s experience.

ORM (Online Reputation Management): Social media has given the power of media in the hands of an ordinary user. More and more people will continue to express their opinions about a brand, a product or a service on tools like Twitter, Facebook, LinkedIn. I don’t think that brands have a choice to not listen to the conversations about them. ICICI Bank is an interesting example of a large Indian brand, which is doing a great job in effectively managing its reputation in the digital world, especially through Twitter.

Brand Building and Promotion: Social media is all about ‘word of mouth’, ‘building relationships’ and ‘conversations’. Where else can a brand get an opportunity to promote itself than on social media? Ching’s Secret is a great example of leveraging social media for brand promotion.

B2B Lead Generation: Given more and more professionals (LinkedIn has over 75 million users in over 200 countries) will continue to spend their precious time on social media, almost every organisation has an opportunity leverage this medium for lead generation. Evalueserve, a company who coined the term KPO (Knowledge Process Outsourcing) has highly effectively used Social Media as a great B2B Lead generation tool to acquire global customers.

Crowdsourcing: What can be a better choice than to include your customers and users in the creation of a product or a service? That’s what ‘crowdsourcing’ refers to and that’s what Social Media makes available. Among various examples, Starbucks asking their community members to provide inputs on the next coffee flavour, is an interesting one.

Human Resources: In addition to employee engagement (like CRM), social media is a great medium to hire new employees. It is not surprising that LinkedIn Profile is increasingly replacing conventional resume.

Timings can’t be better than today: The last but the most important reason to care about social media today is the timing. Given that only a few brands in few industry verticals have started to give a serious look to social media, the opportunity for early movers is immense.

I would like to share a personal example here. We happened to use search engine optimisation (SEO) way back in year 2000, for our first business. Today, I would know ten times of what I knew about search engine optimisation in 2000 but the returns on investment then were ten times more than what we get today.

Why? Obviously for the timing; we were among the early adopters of SEO. So, can be you for social media!

Do you need more and better reasons to start embracing social media?  Honestly, I don’t think so! You will not get a better opportunity to leverage social media than today. Embrace this medium before it’s too late.

Pradeep Chopra is CEO and Co-founder of DigitalVidya

http://www.linkedin.com/in/pradeepchopra

Out at the GROW2010 conference in Vancouver (not to be confused with grow events of the horticulture variety), we got to hear from Lane Becker, Co-founder and VP Strategy of Get Satisfaction talked about “well that didn’t work – startup lessons learned.”

He talked about Adaptive Path, MeasureMap (acquired by Google … Inspired GoogleAnalytics), and Get Satisfaction all with cheery cynicism.

Get Satisfaction is a peer to us – as Lane described they offer “Customer service communities online – getting customers to engage with and support each other.” Chaordix has a different focus on innovation and insight communities. Our members through crowdsourcing are collaborating with each other, but also with the company personally and via our moderation team. We generate innovation and insight for companies, where Get Satisfaction offloads work from companies, reducing customer support costs.

Early on we looked at Get Satisfaction and thought “great idea but that won’t work.” Why? Because it’s not a one way input world anymore and people contributing online expect more sometimes useful help from a non-invested stranger. They want connection, appreciation, and a near real-time response from the company on the feedback shared. Participation is the new brand loyalty.

Ta da! Turns out Get Satisfaction came to same conclusion. Now they bundle in moderation to their service.

There’s a lot we’ll all discover as online communities mature. At Chaordix we’re working hard to create the human and online expeience to trigger product co-creation, technology or research breakthroughs, open up new markets and predict future opportiny for world-leading brands we work with.

What do you think human behaviour tells us so far about how people participate and invent online, and what companies find most valuable about customer and other crowd input?

With the plethora of market research techniques out there, some people might question the application of crowdsourcing to get information from the market.   What with surveys, panels, focus groups, Neilsen, Ipsos, MyPoints, suggestion boxes, etc. we should be able to get all the input we need, right?  After all, if over 50% of Fortune 500 firms only used focus groups, they’ve gotta be good right?*

Well, yes and no.  The issue isn’t getting input, it’s getting reliable, accurate, unbiased input that’s most important.  Getting market input isn’t all that hard.   Ensuring that it’s accurate feedback that represents what the market truly wants and being able to assess all of that information to pull out only the most salient information is very hard to do well. And that’s where crowdsourcing differs significantly from traditional research.

Well designed crowdsourcing campaigns are a far less biased way of gathering and assessing marketing information.

Let’s take a look at three types of bias often found in traditional research that  crowdsourcing can reduce or eliminate:

Survey Bias: Generally, unless you go into your research with a pre-determined agenda of building support for an existing hunch, you generally try to avoid bias.  However, like it or not, when you build a set of survey questions, you are building in bias just by what questions you ask and by the way you phrase the question.  With crowdsourcing, you often ask just one question, which is chosen to be open enough to invite creativity yet focused enough to ensure the crowd wisdom is directed to deliver the information sought.  The crowd largely directs the conversation from there, without the survey bias of a list of pre-determined questions.

Sample Bias: Anyone who has run focus groups understands that when you get eight or ten people in a room around a table, leaders soon emerge that immediate start to bias the discussion and comments.   While you might try hard to pull from different profiles to round out your group, you will ultimate see your groups affected by this factor.  With crowdsourcing, you will typically see hundreds if not thousands more people participating in providing similarly rich data that you might get from focus groups, but without that “in room/cool kids” bias.  (and for the same cost or lower, but that’s another blog post)    Sure, you can reach the same number of people with traditional surveys, but then you get less rich data back, and you expose yourself to survey bias (see above)

Interpretation Bias: OK, so you do your traditional research – survey, focus group, whatever – and now you have your data. What do you do?  You bring all that data back in and start to sift through it, try to decide what’s most important, and what you should act on.  In doing that, you are subjecting yourself to your own interpretation bias.  Who says what you think is most important is what the market will think is most important?  With a well-planned crowdsourcing approach, you can enlist the crowd to help you vet, assimilate and rank the data.  Get the market to do the work for you and end up with a result that is likely to be more reflective of the market than if you did it yourself.

So next time you need to do market research, take a look a using crowdsourcing as a way to improve the market-driven accuracy and reliability of your results.

Next Week: Crowdsourcing for Research Part 2:  Getting better input

*Adams & Dougherty, Journal of Product Innovation #15

Originally posted at 15inno on August 9th, 2010.

One thing that defines a strong, innovative company in the future is the interaction it has with its stakeholders and in particular with its customers.

Not many companies do this as well as Lego as you can tell from the below impressive list of fan communities, market places and more.

Dive in and get inspired…

Communities:

Lugnet.org: 3,844 Lego User Group members in 53 different groups.

1000steine.de: The biggest German fan site with 969.000 hits on Google. This community holds the annual 1000steineland exhibition that draws more than 10,000 Lego fans.

Brickshelf.com: A community concentrated on MOC’s (My Own Creations) with 3.2 million files.

Brickish.co.uk: A paid membership with their own magazines and special events.

Magazines and Clubs:

Lego Club: Three million kids that receive the Lego Magazine and participate in local events.

Brickmaster: A subscription-based club where members receive six magazines and six Lego sets a year and get discounts on other Lego buys.

Brickjournal.com: A fan-driven magazine with 8 annual issues at $8.95 each.

Enthusiasts:

MasterBuilders: 10-15 employees who build models for exhibitions and Legoland.

Lego-certified professionals: 9 Lego certified brick artists who do not work for Lego, but has created their own Lego-based businesses.

Fans: AFOL’s of ALE’s stands for Adult Fans of Lego or Adult Lego Enthusiasts. KFOL is the same for kids. AFOL Lego results in 387,000 hits on Google.

Lego Ambassadors: The current program has 42 adult volunteers from 26 countries. They help test and develop products.

Lego Education Centers: In the US, Spain, China, Korea, Japan and Australia.

FirstLegoLeague.org: A partnership with FIRST, a technology-promoting and charity organization with more than 140.000 kids in 56 countries.

Lego Learning Institute: Virtual research lab that focuses on children’s play, creativity and development.

Designbyme.lego.com: Here you can download Lego’s own design program, build a Lego model online, design your own box and have it send to mailed. It has more than 1500 unique design creations made by Lego fans.

Market places:

BrickLink: An unofficial Lego market place with more than 131.000 and more than 42 million visitors.

eBay: More than 41.000 Lego articles are on sale at eBay.

We need to give lots of credit to Tage Otkjer, who first created this list in Berlingske Nyhedsmagasin, a Danish business weekly. Thanks for your work…

Tage Otkjer also did some Google searches. Lego came up 41,1 million times, Barbie came up 53,4 million times and Coca-Cola came up 37 million times.

Lego is a very impressive company. Now the question is:

How can your company get closer to your stakeholders?

photo by Andrew Becraft

There may have only been $5,000 at stake, and only 4 teams competing, but when you get the likes of GOOD Magazine and idealist.org jumping onto your bandwagon, you know you’ve hit something special. YOXI’s pilot competition took four teams comprised of writers, designers, strategists and storytellers and asked them to pitch a way to motivate people to ride bikes in urban areas. A very focused, small-scale crowdsourcing undertaking with well-directed crowds and extremely good execution.  We can’t wait for them to come out of beta.

2. Samasource

Samasource is working to alleviate poverty by reinventing the notion of outsourcing. TechCrunch described Samasource as, “a non-profit service that allows you to outsource microwork tasks like data, testing, transcription and research to poor, but educated, workers abroad — it’s a Kiva for small work tasks.” With such an clearly defined social mission and sustainable and innovative business model, Samasource is a great inspiration.

3. Orange Mobile Volunteering

It’s one we’ve partnered to build, and is near and dear to our heart. Just launched, mobile volunteering by Orange is a crowdsourcing community of developers, social entrepreneurs, a few Orange employees, NGOs and other partners to discover how people with a mobile phone anywhere could volunteer time for good. The community is asked to submit both raw ideas for mobile volunteering and descriptions of apps in progress or complete. There is no financial reward to participate (but there is the reward and rivalry of points, badges and leaderboard rank) and even if you contribute one of 20 winning submissions you get no cash. Instead, the 10 new mobile volunteering ideas have opportunity to be developed by Orange and the 10 existing or in progress apps get promoted by Orange when it launches the mobile volunteering app later this year.

4. givezooks!

There’s a few things we love about givezooks and their model. The first is that its model wholly embraces social media, allowing messaging to shared and sent, linking individuals to local nonprofits.  The second is how they’ve partnered with Plastic Jungle and accepts unused/unwanted gift cards as a way to donate. Leveraging both platforms and a unique source of funding, givezooks! is paving the way for charitable giving in the digital age.

5. Inventurefund

Where Kiva links entrepreneurs with people through lending, InventureFund creates that connection through investment.  Taking entrepreneurs previously financed through microfinancing with a good track record, they move them off of the cycle of borrowing and instead profit share. This allows dollars to go further and eventually helps get entrepreneurs into the market on their own.

Honorable Mentions

Chase Community Giving

Chase Bank ran a Facebook contest, inviting the crowd to vote for their favorites charities. After 5 million dollars, over 2 million votes, and a few last-minute misteps, 200 charities ended up winning in the end.  It wasn’t a perfect run – a little advice from crowdsourcing experts might have helped – but it was a remarkable undertaking and commendable effort.

GiveForward

Selling coupon books and chocolates is so very passé.  GiveForward is a platoform empowering individuals and groups to raise funds for school, sports clubs or other purposes.

Crowdrise
Whether it’s running in a race for MS, shaving your head for cancer or any one of the other multitudes of ways individuals can raise funds for charity, Crowdrise gives individuals the tools to maximize their exposue and raise as much money as they can. Fun fact: Edward Norton was involved at the beginning of this venture.

DonorsChoose

Where the average K-12 teachers spends $40 a month on classroom supplies, DonorsChoose allows donors to give classrooms projects and ease the burden while investing in education.

The Extraordinaries – Micro Voluntering Network

Linking skilled professionals with a few minutes to spare with non-profits looking for help, the network truly leverages the power of the crowd for the purposes of good. Quite extraordinary.

Photo credit: D’arcy Norman

There are tons of books, blogs and podcasts that have been hooked onto the topics of crowdsourcing, co-creation and innovation. Here’s a small sampling  of our must-reads (think of it as our version of #FF/Follow Friday but with books &  blogs rather than tweeps).

Books

The Wisdom of Crowds by James Surowiecki

Published in 2005, by New Yorker business columnist James Suroiecki it argues that “Under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them.”

Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business by Jeff Howe

Jeff Howe coined the term crowdsourcing in his June 2006 Wired magazine article The Rise of Crowdsourcing. With this book he investigates case studies and the history including iStockPhoto, Wikipedia and Barak Obama’s political campaign.

Outside Innovation: How Your Customers Will Co-Design Your Company’s Future by Patricia B. Seybold

Full of case studies and guides advising and inspiring you to engage your customers to co-create and thus innovate with you.

The Open Innovation Revolution by Stefan Lindegaard
Filled with case studies and outlining a clear, top-down, pragmatic approach, the Open Innovation Revolution lays a foundation for any company looking to pursue an open innovation approach.

Robert’s Rules of Innovation by Robert Brand

Robert Brand, president and founder of Brands & Company, LLC,  is a luminary and the driving force behind  the blog innovationcoach.com. The book is a step-by-step guide to innovation, from concept to full market launch.

Extra Credit: Democratizing Innovation by Eric Von Hippel

Eric Von Hippel is a leading scholar in innovation management and Democratizing Innovation is a book which presents a plethora of concrete examples on the subject.

Blogs

Blogging Innovation

We’ve posted a guest blog from Blogging Innovation recently, but there is a constant stream of high-quality, interesting posts on innovation, business and social media.

15inno

Stefan Lindegaard is an entrepreneur,  strategy consultant and thought leader when it comes to open innovation. Definitely one for your RSS.

Creativity_unbound

As a principal at Mullen, Edward Boches is great at shaking things up and turning things on their head.  He is also pushing (or pulling) the traditional ad agencies into the social media era, step by step.

Jason Spector

Jason brings a great viewpoint to the world of crowdsourcing, design and user experience.

Trends in the Living Networks – Opportunities for business and society in a hyper-connected world

Ross Dawson shares the perspective of a futurist, entrepreneur, keynote speaker, and strategy advisor. He has equal curiosity in how people behave and shaping behaviours that propel business. Oh and and he’s bestselling author Developing Knowledge-Based Client Relationships.

Extra credit:  Spark –It’s a blog, podcast & radio show created through online crowdsourcing with a focus on topics about innovation, co-creation and other interesting technology issues.

Photo credit: ibevymay

While many businesses are excited about opportunities to reach their customers on the social web, few actually believe they have done so successfully. According to a recent Social Media and Online PR Report from Econsultancy, 86% of companies surveyed planned to spend more on social media marketing in 2010, but only 25% say they have gained “real, tangible value” from the medium.

While the willingness to invest indicates that businesses recognize the potential to develop deeper connections with their consumers in the social sphere, many are still uncertain as to how to best join the conversation. To improve performance, firms may benefit from looking at the medium through a broader lens, recognizing that expanding their influence by enabling customers to connect with one another may be as effective, if not more so, than interacting with them directly.

Building Long Term Relationships

While it’s true that the web has made building individual relationships cheaper and easier than it used to be, this doesn’t mean that businesses can necessarily expect to build deep connections with their entire customer base; in many cases, this is neither feasible nor cost effective. However, if a firm focuses on building brand loyalty with a small subset of customers, they may find that it has an exponential impact.

Let’s look at a few examples of companies that have done this successfully:

Yelp’s Elite Squad: Yelp operates a social networking, user review, and local search website for members to post reviews and get user feedback on local businesses and restaurants. The Elite Program is a way for the Yelp to reward its most passionate users for making their site “funny, useful and cool” by providing them with exclusive offers and members only events. This allows Yelp to strengthen loyalty among Elite Squad members, offers an impetus for wanna-be-members to post additional reviews; and, makes the site content stronger – keeping the broader community active and engaged.

The Leukemia & Lymphoma Society’s Team In Training (TNT) Program: The Leukemia & Lymphoma Society is a charitable organization focused on fighting blood cancers. To raise funding, they developed a variety of programs to expand their outreach, including The Team in Training Program, which offers group training to those interesting in running a marathon to raise money for the cause. TNT encourages trainees to leverage the power of their personal networks, by providing participants with a personal, customizable microsite for reaching their fundraising goals by getting donations from friends and family. The microsite functions much like a Facebook Page – marathon participants can share their goals, visitors are able offer supportive messaging on the participant’s wall, and donations can happen directly on site.

Lion Brand’s Lion Brand Notebook: Lion Brand is a yarn company that has been in business for over a century. To build their online presence and appeal to passionate knitters, Lion Brand developed a bi-weekly podcast and corporate blog, They also helped to facilitate offline “knit-alongs” (shared knitting projects), by helping interested parties to find others in their local area looking to get involved. Lion Brand Yarn found that their customer outreach strategy drove impressive e-commerce results – those who visited the company’s blog were 41% more likely to buy at the Web site.

Securing The Commitment

You may have noticed that these three companies have very different business models: the first seeks a passionate and active user base, the second is looking to increase in donations and the third wishes to stimulate sales volume. Yet, despite the variance in their goals, they still share a number of similarities in their approach to the social web.

Each firm:

Inspires Their Most Passionate Customers – Then Puts Them to Work: By building strong connections with the most passionate segment of their customer base, firms such as Yelp, Lion Brand and the Leukemia and Lymphoma Society can create strong individual connections that can lead to exponential results – ideally, as customers spread the word through their personal networks, they inspire additional customers, who, in turn, pass the message along and begin a powerful ripple effect.

Does More Than Test the Social Waters: Like all long term relationships, building real connections with customers requires a certain level of commitment, and each of the three businesses above are clearly willing make the investment. Similarly, the Social Media and Online PR Report indicates that there may be a baseline level of social media involvement necessary for a generating tangible return: more than half (52%) of firms that were ‘heavily involved’ with the medium believed they had gained tangible results from their marketing efforts, while, in comparison, only 13% of those “experimenting” believed they had gained real value from the channel.

Avoids Getting Mired in Tactics, Metrics or Technology: The successful firms above recognize that social media should be used as a tool for achieving business goals. Recognizing that a social strategy is a means, rather than an end, they don’t waste time counting their Facebook fans, instead, the focus is on creating social communities that delivers a value add to their users, allows them to connect with one another, and, ultimately, increases brand engagement.

Blurs the Lines Between Online and Offline: Understanding that the customer exists both online and offline, these firms are finding intelligent ways to deliver an experience that incorpates the best of both worlds. The Leukemia and Lymphoma Society’s Team in Training helps participants to solicit donations from offline connections online, Yelp rewards Elite members with exclusive access to offline events and The Lion Brand’s Brand Notebook allows community members to connect with others in their neighborhood to participate in “knit-alongs”.

Do you know of other companies that are leveraging their customers to grow their businesses exponentially?

Yael Davidowitz-Neu is a Sales Strategy Analyst at Google responsible for analyzing consumer behavior, search trends and market dynamics. She is deeply curious, loves all things marketing and blogs less frequently than she would like at Stickystimuli.com.