Customer Co-creation, The Mindset Shift as Steppingstone to Customer Success Management (CSM)


Publish date September 11, 2019

Lakshmi Nanduri

Lakshmi Nanduri Program manager

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“We Live in A Subscription Economy — Learn to Manage Your Customers [1]

In a subscription economy, the customer’s economic value is realized over time. This means that the duration of the customer relationship has a more significant economic impact on the company’s financial health. To be successful in this new economy requires that companies actively manage their customers during their engagement relationship, instead of just focusing on making the technology sale.

One key aspect required here is a customer success mindset for which customer co-creation is a precursor. Customer co-creation is not new and has existed from the late ’90s.

The power of co-creation has been established by many leading consumer brands, like Apple, Google, Ikea, Nike, and Starbucks. These companies have successfully embraced this new paradigm to revolutionize the way they relate to their customers, engaging them continuously in the process of ideating, producing, and marketing products. Airbnb or Uber have shot to the top by using co-creative platform technologies to turn passive consumers into active providers of goods and services.

The famous Jack Welch quote – Again, your challenge is not just to improve. It is to break the service paradigm in your industry or market so that customers aren’t only satisfied; they’re so shocked that they tell strangers on the street how good you are.”

As per Gartner, Co-creation is a collaborative initiative between companies and their customers, enabling the joint design of products and services. These initiatives include the creation of goods, services, and experiences, amplifying the process via the inclusion of client intellectual capital.

Clients realize that customer alignment leads to a transformation that exceeds their expectations in the right way. The operative phrase is to “be involved in.” Increasingly, that is taking the form of customer co-creation. Prahalad and Ramaswamy [2] defined co-creation as “the joint creation of value by the company and the customer”; allowing the customer to co-construct the service experience to suit their context. Customer success management focuses clearly on the customer’s definition of success and how well they believe they’re reaching it.

The Interesting Theory Behind Co-creation

Co-creation is a strategy that brings together multiple parties to jointly produce a mutually valued outcome. The paradigm was put on the map by C. K. Prahalad and Venkat Ramaswamy with their article Co-Opting Customer Competence.

LEGO company probably best exemplifies the power of co-creation. Research also shows that a smaller product portfolio often leads to an increase in sales and profitability.

Some examples of successful co-creation initiatives:

Given the scale and pace of disruptive innovation in today’s age, CSM cannot be considered as a channel for selling technology, managing accounts, and creating marketing content. It is more of a discipline of accountability and proactive action to allow businesses to refresh their landscape in a way that best meets their need and on their terms. Customer success managers can become a business’s best partner when it comes to intelligently assess specific work behaviours, collaboration preferences, data usage, and digital maturity that can, in turn, empower businesses. To understand CSM, the thought should shift to the point of view of the customer. It is here; customer co-creation helps build and anchor the steppingstone to CSM.

One of Gartner’s article quotes – ‘Thirty-four percent of product marketers at technology and service providers (TSPs) select “retaining clients” as one of their most significant challenges [3]. Product marketers must think beyond the initial sales cycle and support the entire customer journey, including customer success and ultimately, customer retention’. It is here businesses can achieve, the One number —-

To be able to implement a co-creation strategy, Gartner [4] further suggests four key steps –

Step 1 — Identify Your Co-creators

Step 2 — Incentivize Co-creators

Step 3 — Identify a Platform and Tools for Co-creation

Step 4 — Begin Collaboration with Co-creators

Road Ahead

In an aspiration to customer co-creation and CSM, being aware of Peter Drucker’s famous quote – ‘Culture eats strategy for breakfast’ would be helpful as Organizational structures will have to change to meet the new reality of creativity as CSM is only going to grow and become more important to customer retention and business profitability.

Think with Customer on customer-focused business [10] talks about four possible mistaken outlook and fixes on each of them –

Mistake 1: You focus too much on “the customer.” Fix 1: Celebrate customer heterogeneity
Mistake 2: You take a siloed approach Fix 2: Think and act in cross-functional terms
Mistake 3: Your metrics focus only on volume and cost Fix 3: Use metrics that reflect customer equity
Mistake 4:There’s a disconnect between you and your external stakeholders Fix 4: Prioritize clear communication with external partners



Forrester Consulting Thought Leadership Paper


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