The Ownership Quotient: Putting the Service Profit Chain to Work for Unbeatable Competitive Advantage (Boston: Harvard Business Press, December 2008).

The Internet and related technology has freed customers to express their feelings, exchange information, and act in ways that previously were unheard of. Several recent writings suggest that the next phase in the activation of customers will be putting them to work in the service of an organization. Characteristic of this thinking is an article in the October issue of the Harvard Business Review by Scott Cook, Co-Founder and Chair of the Executive Committee of Intuit.

Cook argues that a number of successful organizations have gotten that way by making it easy for “volunteers” to contribute to their success. Business models are designed so that volunteers (often customers, but also others) can easily contribute content (opinions and ratings for Zagat guides), “stuff for sale” (eBay online marketplace), behavioral data (Google’s search engine algorithm), and even resources (Skype’s Internet-based phone system). What is contributed benefits other users (as, for example, when a network is enlarged) as well the organization itself (providing lower costs, greater resources at little cost, better customer service, more effective marketing, increased employee engagement, and better design).

Research reported in a book, The Ownership Quotient, that three of us recently co-authored suggests that the benefits of customer contributions are significant. Further, an organization’s best customers—measured in terms such as size, loyalty, or lifetime value—often are the most willing to go to work for it, whether that means referrals of new customers, ideas for new products or processes, or even help in the selection of its frontline employees. Of greater significance than satisfaction or even the willingness to recommend the organization to others, these “ownership” behaviors can make some customers more than a hundred times more valuable than others.

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Just how far can ownership be taken? What’s its downside? Those are questions explored by Pete Blackshaw, the incoming Chair of the Better Business Bureau, in his new book, Satisfied Customers Tell Three Friends, Angry Customers Tell 3,000. The title is a play on the standard pre-Internet belief, based on the results of only one research study that became a mantra, that satisfied customers tell five others but dissatisfied customers tell ten. Blackshaw’s experience with consumer-generated media suggests that consumers today can be a major force in making or breaking a product or service. But they have to be given the latitude and freedom to do so, involving a risk that few organizations are willing to take.

Note that the term “marketing” has not appeared thus far. Our work suggests that customer and employee “ownership” has as much relevance for operations and human resources as it does for marketing. Blackshaw argues that organizations that regard their web sites as marketing devices run the risk of destroying the credibility of information presented there, thereby losing their effectiveness with potential “volunteers” and “owners.” It requires that marketers, as Blackshaw puts it, work in an “atmosphere of complete honesty,” something sometimes difficult for them to do.

These phenomena raise interesting questions. Just how much risk do organizations with well-established names, policies, and processes take in encouraging volunteerism and ownership on the part of customers? How can the risk be mitigated? Are customers being underutilized by the typical enterprise? Going forward, will customer-fueled strategies provide significant competitive advantage? How much can you ask of your customers? What do you think?

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Published: November 10, 2008
Author: Jim Heskett

To read more:

Pete Blackshaw, Satisfied Customers Tell Three Friends, Angry Customers Tell 3,000: Running a Business in Today’s Consumer-Driven World (New York: Doubleday, 2008).

Scott Cook, “The Contribution Revolution: Letting Volunteers Build Your Business,” Harvard Business Review, October 2008, pp. 60-69.

James L. Heskett, W. Earl Sasser, Jr., and Joe Wheeler, The Ownership Quotient: Putting the Service Profit Chain to Work for Unbeatable Competitive Advantage (Boston: Harvard Business Press, 2008).