VideoIn 1927, the first cars rolled off the production line at fledgling Swedish automaker Volvo. The inaugural $800 sedan came in two versions: an open-bodied touring model and a "saloon" (that is, covered) model. Guess which one sold? Customers in Sweden, it turns out, were not enthusiastic about the prospect of driving a car with no roof. Buyers of the enclosed-coach version didn't have to worry so much about cold weather. They didn't have to worry about paint, either — the car's frame came wrapped in leather.
Car manufacturing has changed slightly since then. These days, the automobile business is all about options — fuel injection or turbocharger, leather or vinyl, clear or tinted, V-6 or V-8. Even so, automakers take a sizable — and expensive — gamble whenever they launch a new model. For every winner, for every Mustang or Mazda 3, there's also a thundering dud — an Edsel, a Vega, a Touareg.
To avoid backfires, some automakers have taken a page from the PC handbook and are beginning to enlist help from those who know customers best: customers. And they're doing far more than merely convening customer focus groups.
Consider the upcoming launch of Volvo's latest model, the C30. Before the hatchback's U.S. introduction (slated for this fall), Volvo offered a build-your- perfect-C30 tool on its Website. The software program — designed in conjunction with technology consulting firm Trilogy and rolled out this past February — let prospective buyers choose the features they would like to see in the new model. Just as important, it allowed management at Volvo to gauge customer reaction to different pricing schemes for various options — and suss out how many C30s the company should produce for the North American market.
Consumers have responded favorably. Between February and April, the site received more than 10,000 hits, and produced some surprising results. Despite Volvo's conservative, safety-first image, American buyers didn't seem overly interested in options like antiglare rear-view mirrors, front-parking assistance, or blind-spot notification systems. Instead, nearly half of the respondents said they want the two-door Volvo to be sportier.
That's a radical departure from what European customers choose. "The C30 for us is such a different car," says Art Battaglia, product manager of Volvo Cars of North America LLC. "We thought we knew what we needed to do, but we needed some proof."
Seeking out proof for concepts is nothing new, of course. Businesses have been conducting market research for decades. But typically, those assessments have been Monday morning quarterbacking — postmortems conducted long after a product has left the factory. Now, a growing number of companies are soliciting consumer suggestions before launching an item — in some instances, even before a product has hit the drawing board. In fact, some customer relationship management (CRM) advisers believe customer co-design may alter the whole corporate concept of research and development.
Patricia Seybold, CEO of Boston-based consulting firm The Patricia Seybold Group, notes that peer groups and user communities are already beginning to supplement, even supplant, in-house engineers and scientists. "At least 50 percent of a company's innovation," Seybold reckons, "should be coming from customer input and designs."
Increasingly, the Internet will be the source of that input. Threadless.com, which solicits T-shirt art from consumers and lets site visitors vote on the designs they want produced, has become a real success with the MySpace set. Likewise, user rooms aimed at distilling customers' wants and needs are popping up on more-traditional corporate Websites. Kraft Foods Inc., the consumer-products manufacturer, gathers feedback from about 300 targeted customers (predominantly middle-aged women) in a private, online chat group.
The virtual coffee klatch has paid dividends. After group members repeatedly mentioned their difficulties with portion control, Kraft developed 100-Calorie Packs, a smaller snack bag.
Sales of the packs weren't puny, topping $100 million in their first nine months on the market. Rebecca Wettemann, vice president of research at Wellesley, Massachusetts-based technology advisory firm Nucleus Research, believes businesses will come to rely more on this kind of virtual collaboration with shoppers. One driving force: the emergence of better Web and text-mining tools, which Wettemann says will make it easier for companies to analyze customer data. Says Wettemann: "It's just starting to become the job of the E-commerce manager to look at how to solicit input on product design and placement."
Got a Whiter Shade of Pale?
Software companies have long used the Internet to gather feedback from a disparate but enthusiastic audience. Now, nontechnology companies are seeing the possibilities as well.
Case in point: when John Fluevog, CEO of the Vancouver-based footwear company that bears his name, used to travel to the company's retail outlets, customers and employees would hand him slips of paper. "They contained drawings of their ideal shoe," recalls Stephen Bailey, marketing director at John Fluevog Shoes and Boots. Invariably, though, "John would lose the paper."
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