Home Business & Industry There Is an Overlooked Downside to Crowdsourcing

There Is an Overlooked Downside to Crowdsourcing

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Crowdsourcing might have a negative effect on consumers who participate and lose, according to new research by the Vienna University of Economics and Business. This research was published in the Journal of Interactive Marketing.

Crowdsourcing is a promising approach for identifying new product ideas. Many consumer goods firms, such as Starbucks and Lay’s, have identified successful innovations by tapping into the creative potential of their user-community “crowd”.

Crowdsourcing contests commonly have one winner (or a handful of winners) – the overwhelming majority of participants lose.

The study, conducted by Professor Martin Schreier, reveals that crowdsourcing participants whose ideas are not selected temporarily disengage from the brand

“There is a sharp and immediate drop in brand engagement following the feedback that one’s idea was not among the winners. The bitterness of losing manifests also in other key marketing measures such as future purchases and word-of-mouth intentions,” says Professor Schreier.

However, the study also reveals a way to save relationships and rip the benefits of crowdsourcing at the same time. Reframing the contest as a community activity (for example, “Join the crowd and help us find a name for our new restaurant”) rather than a competition (e.g., “Compete with the crowd to be the one who names our new restaurant”) helps address the problem.

Firms can give credit where credit is due and acknowledge every customer’s contribution. This approach is inexpensive and can be adopted from the very beginning by framing the focal crowdsourcing call. As such, doing this led to higher actual spending with the hosting brand shortly after learning about the campaign’s outcome,” says Professor Schreier.

Community framing shifts attention away from losing the contest to collectively creating a superior outcome, without changing the nature of the contest itself (participants continue to work and submit their ideas as individuals).

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