Synthesis

Customer Co-creation
By Ruchir Gupta

160101080 MOS- sec D

As a rule of thumb, a customer demands his requirements to be exactly fulfilled, hence it is the
responsibility of the businessman to make sure that the customer requirements are heard accurately,
solved persistently and delivered as per the wish of customer. This means continuous involvement of
customers to make up for their changing needs. The best way to get an edge or POD is to involve the
customer in the sale process to jointly create a schedule or work option that would create value in terms of
time saving and money both. DHL has proved to be a leading example for co creating a value. They are a
multinational company with 490000 employees, for such a mammoth company attaining agility is very
difficult but this would have attained with the help of customers who know their local environment well
enough to suggest a supply chain which is quicker and more efficient. Helping DHL deliver their
packages quicker.
To achieve this co creation of values, DHL conducts workshops with the purpose to conduct intense
sessions that explore and understand technology economy, socio political and cultural trends to develop
new ways to manage supply chain and logistics. Some of these sessions start with the theme of 4
quadrants, describing different types of world in 2050, one is doomsday scenario for DHL the other a
perfect world, rest are mixture of both. From here on they try to track back to 2020 and realize to reach
that 2050 target world. This helps realize trend lines, core competencies and solution building.

Parcelcopter: drone delivery

Smart Glass in warehouse. To reach and manage inventory faster and better by 25%.
Maintenance on demand
All of these and many more are being developed by co creation. IoT in logistics is birth child of CISCO
and DHL. One of the key problem for DHL was assigning a team to customer as multiple teams work
with customer. This is a problem common to many businesses, if correctly solve can lead to higher CSAT,
new business opportunities, business retention etc.
Similarly, the other aspect is creating for customer. Earlier the market used producer dominated, whatever
they produced consumers must use that. The change in this has been swift and now customers are
demanding something and companies are looking at ways to fulfill them. One such method is discussing
future with consumer and looking at what they want. This in turn is the only focus of R&D rather than
searching to make things better they want to, they are now looking at what customer wants improvement
on and work on that only.
This can be achieved by:

Continuously looking to work out of comfort zone

Conducting Outside-In journey mapping. Mapping emotions and actions taken
Yet not all markets are willing to accept the change of Co creation. Hence the markets and consumers
must be chosen wisely. Always go after strategic customers that bring bulk of the business and follow 80-
20 rule. While markets must be tested first before going all in.
Here are some examples of both success and failure
Zara: The brand driven by customers
It was established in 1975 in a small town in northern Spain. The initial brand strategy to was to create
low price lookalike of higher end clothing and fashion. Due to their quality and attractive price, they
gained traction among Spanish customers. This lead to nationwide expansion and a change in ownership.
This lead to heavy investment in IT and latest fashion trends. The model was changed from low cost look
alike to low cost quick moving inventories. The quality of product is still maintained but the quantity of
any particular design is limited. Creating an artificial scarcity of the product, at the same time creating
new fashion trends.
Customer co creation is at the heart of these designs. In 2015, Zara noticed that people in different parts
of the world came to the store for pink scarf. Zara did not have any stocks of the product. Seeing the
demand within the next 7 days Zara was selling pink scarf throughout the world. The stocks were getting
sold within 3 days of ordering. This is achieved by noticing small changes in buying behavior of
customer. To do this all the Zara store employees are specially trained to look at the buying pattern of
different demography of crowd. The IT system which took in high investment at the start, is used to create
virtual link between the customer and designer through the help of store workers and internet.
Unfortunately for Zara the market it works in is highly unstable and opinionated. The customer does not
know what he or she wants. Hence direct involvement of customer will be harmful for business rather
looking at their subconscious desires and fulfilling them can be termed as customer co creation.
The dark side of customer co-creation: exploring the consequences of failed co-created services by
Heidenreich, Wittkowski, Handrich and Falk (2014)
Co-creation is beneficially for both firms which can adapt changes better to customer needs and
customers who will be more satisfied because of more empowerment. However, more involvement asks
for more contact points between the firm and the customer, which in turn leads to higher complexity of
the process and service. And as we all know; higher complexity increases the risk of failure. In case of
service success, highly involved customers are more satisfied than customers who barely participated in
co-creation. However, in case of failure, co-creation triggers a greater imbalance between customers
expectations of delivery and the actual outcome. As a result, negative disconfirmation is enhanced,
leading to a decline in satisfaction.
After failure of service delivery, a firm must make up for its mistakes. The process of fixing failures is
referred to as service recovery. Current literature even shows that sometimes customer satisfaction,
customer loyalty, and customer repurchase intentions are higher after successful service recovery than if
the service delivery was successful in the first time. Hence the degree of customer co creation is more
relevant. Consumers who experience a mistake in the service delivery of a highly co-created service tend
to blame themselves for the flawed outcome and thus feel a sense of guilt. In such cases it is best to have
no recovery process at all to restore customer satisfaction.
The outcomes of this study lead to some interesting implications for managers. First it highlights the
importance of awareness of the potential negative consequences of offering highly co-created services.
However, because of the high potential positive influences, firms might want to offer highly co-created
services. Therefore, firms should implement measuring indicators to minimize the change of co-created
service failure caused by human mistakes. Because not all failure is inevitable, managers must focus on
higher customer satisfaction along with the overall service. This can mitigate negative effects in case
of failures. The importance of a proper recovery system is highlighted in this research.