Viable businessmodels for co-creation communities

2009 – The extent to which people participate in online communities grows considerably in recent years, and the shared information is becoming increasingly larger and more diverse. Wikipedia for example, has more than 75,000 people worldwide who contribute to the encyclopedia and work on 10 million articles in over 260 languages.
The use of these co-creation communities seems promising. Consumers have valuable product knowledge and by sharing this information through a community the innovative nature of a company is reinforced. Products that are new on the market have a greater chance of success when they are based on the knowledge and experiences of their own consumers.
There are no clear business models for these communities yet. This report aims to provide clarity in this area and clear examples. With the aid of qualitative research, a contribution is made to the development of these models and offers better understanding of the practice.

Research Question
What are viable business models for co-creation communities?

Approach
The focus of this research is on the existing co-creation communities of companies that discuss service, products and innovations with the consumer. During the investigation several progressive co-creation communities in the Netherlands and America were studied, including initiatives by Nokia, Starbucks, KLM, ABN Amro and Robeco. Here are listed the goals that organizations can achieve with co-creation and the motivations of users to participate in a co-creation communities. And the revenue and cost structure of co-creation for organizations was studied.

Based on interviews with both workers and consumers a model is established that can assist organizations that want to start co-creation, in determining a suitable business model. The study answers the following questions based on three elements of business models:

Value Proposition: What are the benefits for users of participating to in a co-creation community?
Value Network: How are the roles of organization and consumer in the community distributed?
Revenue Model: What are the expected results of these communities for the company in terms of costs and benefits?

Results
Regarding the value proposition users called the product-related benefits as the main reason to participate in a communityin all phases. In addition, there is a relationship between community-related benefits such as recognition and effectiveness and monetary advantages: when the community benefits are clearly present, the monetary benefits do not matter and vice versa.

An important aspect of the mobilizing role is the involvement of the company. This involvement is important to strengthen the community-related benefits. Involvement is shown in enthusiastic staff that play an active role in the community and speak normal language. Also, feedback to the user is of great importance. The confirming of the content is necessary in order to maintain the users. The biggest expense is paying the staff and the digital platform. However, the community is an important tool to keep in touch with the consumer and may increase the degree of customer loyalty. In addition, consumers can indicate via a platform to what extent a new idea is desirable and likely to succeed. Remarkably, it became clear in all cases examined that the results were more than worth the cost of the platform. But then it is necessary to keep the platform up to date and come up with new input regularly.

Reference
The report Viable business models for co-creation communities (2009) by K. op den Kamp can be downloaded free of charge via:

https://www.tno.nl/content.cfm?context=markten&content=publicatie&laag1=182&laag2=1&item_id=513

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