The Future of Innovation Lies in Customer Engagement
Innovation in today’s context is not simply about the invention of a new technology in a lab.

In today’s fast moving business environment, innovation relies on a strong understanding of the business and customer context. Creating value for a customer allows a business to gain competitive advantage.

Innovation allows a business to provide new solutions to customers’ articulate needs and/or add value in new ways to the existing market. By creating value through innovation and other methods, businesses can begin to distinguish themselves from their competition and can be seen as cutting-edge within their industry.

Rather than just relying on internal knowledge, people within a company need to draw on ideas from people outside the business. Such networking with partners and peers allows executives to see potential pitfalls, and to learn from other businesses’ experiences.

True innovators recognise that customer engagement is at the heart of successful customer service.

Most companies intuitively understand the return on investment that comes from improving customer experience.

But in the era of mobile devices and social platforms and the collaborative economy, only truly innovative companies seem to have understood that customer experience hinges on customer engagement.
Customer engagement: The next frontier in product innovation
Listening to your customers can help companies successfully enter the collaborative economy. In this digitized world where consumers are also producers, customers often expect to be treated like partners.

Customer engagement is not a new focus for most companies. But what is new – and is continually changing – are the many ways and possibilities in which companies are able to engage with their customers.

As one entrepreneur puts it, successful innovators do not ask customers and clients to do something different; they ask them to become someone different.

The question here is, do customers adopt innovations, or do innovations influence consumers to adopt?

Some might argue that consumers do not simply adopt innovations. Instead, it is the other way around. Innovations ask customers to embrace new ways of doing things.

This begs the following question – how can companies come up with innovations that will alter consumers if they don’t have an idea who they are trying to influence?

For many companies, the pursuit of unique or breakthrough products is often tied to hiring better talent. Business owners with whom I have talked often understand the importance of R&D and do not shy away from spending money in this department.

Sprucing up R&D and hiring the right people are certainly important, but these are just a couple of factors that drive innovation in a company. Knowing your customers’ behavior is a better starting point than looking for opportunities through internal lenses.

If you want your customers to embrace new values and behaviors then you have to understand the ’why’ behind their purchasing behaviors. Some examples on how companies can help engage customers to drive innovation include:
  • Get feedback from people who are aware of your brand or industry. As users of the product or the category, they already have insights on key benefits and pain points of what you are offering.
  • Develop a strong customer engagement channel that lets you involve your customers in innovation. Simply engaging your customers in co-innovation is a great way to help them get more involved in your brand. For example, with the help of a multi-channel customer engagement system, Pizza Hut1 is able to incrementally capture, structure and leverage large quantities of customer data. The software enables the company to break down its massive customer base into numerous clusters and micro clusters based on expressed characteristics, purchase tendencies and behavioral indicators.
  • Close the feedback loop. If you want your next offering to be innovative, your number one goal is to figure out how to transform your customers for the better. And while customers are happy to share their thoughts, consistent engagement through social media and other tools is necessary if you want them to trust you with their insights.
  • Most of all, priorities your customers. You need to understand if innovation is creating new value for the people who buy your products or services. You have to continually test new ideas with customers and make modifications in line with their demands.
The customer, in short, must be the heart of innovation.
The evolution of engagement
Historically, we dealt with customers face to face, with a trusted word and a firm handshake. Then in the late 90s, with the dotcom boom, we created the first digital divide between ourselves and our customers.

This divide grew as companies found ways to cut costs and create customer delight by moving more self-service options to the web.

Technologies are rapidly converging, and with it the shifting and blurring of industry boundaries and in this process, the rapidly changing nature of products and services.

For example, the education, communication, and entertainment markets were traditionally served by several distinct industries: the consumer electronics industry, the computer industry, the communication devices industry, the music industry, and the movie industry.
The article was contributed by Owi Kek Hean, Head of Enterprise, and Chiu Wu Hong, Head of Incentive Advisory, KPMG in Singapore. The views expressed are their own.
1 Pizza Hut Enjoys Success from Targeted Customer Engagement Abroad, Source: http://loyalty360.org/resources/article/pizza-hut-enjoys-success-from-targeted-customer-engagement-abroad
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