http://ift.tt/2gz64ys Does Engaging with Customers on Facebook Lead to Better Product Ideas?
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Feedback on social media can serve as a valuable source of information for companies, helping them to improve and develop products and services. Examples include Gillette, which launched the very first product for assisted shaving based on feedback inferred from social media, and Tesla, which improved the company’s app based in part on CEO Elon Musk’s reading a customer’s complaints on Twitter. At end of 2016, Airbnb CEO Brian Chesky asked on Twitter what the company could launch in 2017.
Anecdotes aside, does this user feedback actually help create better products? In our study, we analyze the role that Facebook plays in the innovation process. For our analysis, we used data from nearly 3,000 German manufacturing and service firms from a 2015 survey by the Centre for European Economic Research. In contrast to studies focusing on large listed companies, our data set includes a large share of small and medium-size enterprises reflecting what’s typical in the German economy. With this data, we set out to study how important social media is for smaller firms.
About half of these firms have introduced a new product or service to the market or have significantly improved existing products or services. Twenty-one percent have a Facebook page. We wanted to see whether firms that more actively engaged with customers were more likely to release new or significantly improved products.
We found that the probability that a company introduced a product innovation was significantly determined by firms’ adoption of a Facebook page and by the activity by users, measured by both quantity and quality. We analyzed the contents of firms’ Facebook posts and found that firms using keywords in their posts that encourage users to leave feedback were significantly more likely to release a new or improved product.
We also measured the emotional sentiment of the interactions on companies’ Facebook pages. Surprisingly, only the share of negative user comments was significantly predictive of innovation, perhaps suggesting that customers were helping to steer companies away from bad ideas.
The results held up even after accounting for variables such as a company’s R&D and IT spending, its industry, its exposure to trade, and even its history of past innovation. We also controlled for a firm’s Google search volume, to make sure that the relationship between Facebook engagement and innovation wasn’t just capturing the fact that consumers are really interested in keeping up with innovative companies. In the paper, we used some additional techniques to try to rule out reverse causality — that innovative firms are more likely to talk to customers, rather than that talking to customers makes firms more innovative — and the results underpin our previous findings.
Of course, our analysis has some limitations. First, it is focused on mainly small and medium-size enterprises located in Germany, so the results should only be applied to similar countries. Secondly, our analysis is focused on Facebook as the social media platform of interest. Future studies might include different social media channels.
Nonetheless, our results confirm the importance of soliciting feedback from users as part of the innovation process. When developing social media strategies, companies should not only focus on marketing aspects but also consider the potential for the firm’s innovation success. Social media provides valuable feedback from users, and this information can be used to improve products and services or even to develop new ones. Negative feedback may be particularly important. Seeking out feedback from users on social media is most of all an opportunity to identify problems.
business
via HBR.org http://hbr.org
October 12, 2017 at 08:09AM