7 Ways Entrepreneurs Can Crowdsource Their Business
Posted by Raj on December 22nd, 2008
The Geekpreneur article Why Entrepreneurs Should Pay Attention to Crowdsourcing covered the general aspects and origins of the crowdsourcing phenomenon. This article discusses some ways that entrepreneurs can use crowdsourcing – in its loose definition – as part of their online operations, even if a business has an offline component. To recap, crowdsourcing refers to a relatively new phenomenon online where large groups of people from a global pool provide feedback and resources for commercial and non-commercial causes. Their incentive for doing so varies from pure pleasure in doing a good deed to fees for their efforts.
7 Wa ys t o Crow dso urce Yo ur B us iness or Orga niz at io n
Here are just a few of the ways that you can crowdsource your business. 1. User-contributed resources. Aka distributed computing. Often used for non-profit organizations or scientific research. User incentive: Opportunity to contribute towards projects they feel are worthwhile or at least interesting. Business gain: Reduced cost of technical resources and operations.
Example: SETI@home and numerous similar applications for environmental modeling, etc.
Example: Mass Animation Facebook Group. Users join the group for information and download the Autodesk Maya application and select “assignments” from the FB group for rendering animated frames. They get credits for each “assignment” rendered. 2. Beta testing. Voluntary user testing, bug reports and features wishlist feedback for desktop or web-based software. User incentive: Exclusivity of access to a new application. Business gain: What better way to give your user base what they want from your product than for them to tell you? Example: These days, new web applications first go through closed beta, then private beta, then public beta, then official release. The same cycle is sometimes applied to desktop software, and will likely be applied to apps on the mobile platform. (Though until cell phone data plans are more affordable in some countries, don’t expect a lot of buy-in globally.) 3. Affiliate programs. Crowdsource your online marketing. Affiliates sign up, get a unique ID for tracking purposes, then display ad banners on their websites. Any customer leads from their sites to yours that result in a sale produces a commission for them. User incentive: Affiliate programs them to earn a commission by generating sales leads. Business gain: You get free advertising upfront, and your customer base helps evangelize and promote you with articles and reviews. (At least, that’s one effective way to do affiliate marketing.) Example: Numerous businesses that sell products or services online employ affiliate programs. Of course, some are more successful than others. (Educate your affiliates.) 4. Idea sourcing. Setup a system in which users generate ideas for you, then vote on them. This could be applied to a number of business niches. User incentive: Participation, ego gratification, prizes, or more. Business gain: Quality feedback from end users and/or colleagues. Example 1: Cambrian House crowdsources ideas that might in turn be business concepts that use crowdsourcing. Techcrunch published an article about some of the difficulties Cambrian House has had in gain traction. Erick Schonfeld, the author, asks,
Or is crowdsourcing simply a bad idea that should be put to rest?
Despite what the article says, Cambrian House says they are not going out of business. They’ve just changed their strategy, which includes developing Chaordix(tm) – a “crowdsourcing in a box” platform for other organizations wanting to implement crowdsourcing.
Example 2: Another example includes a number of online t-shirt companies. A few of them, including Threadless, source either full designs from the crowd or just slogans. 5. User-generated content. Offer a central marketplace for a certain type of content. The resulting synergy of the network effect ends up being beneficial to all participants. This is possibly the most prevalent monetized crowdsourcing model, though not all usercontributed content implementations monetize. User incentive: Publication channels, personal brand-building, promotional incentives, revenue. Business gain: Members are often end users, and they promote your site. Example: Non-monetized examples include wikis such as Wikipedia and microblogs such as Twitter. Twitter content is now appearing on some news websites monetized with ads. (Don’t forget to check out Geekpreneur’s Twitter ebook for self-promotion strategies.) Monetized examples include sites that sell stock photography (.e.,g iStockPhoto and even flickr), audio and video snippets, screencast lessons, etc. Video sharing sites fall in between monetized and nonmonetized. Even video commercials can be crowdsourced, as can custom annotated maps – though monetization does not appear to be part of the equation yet. As Jeff Howe discusses in a video at the Crowdsourcing blog, a lot of this crowdsourced content is possible because of cheap technology – especially when it comes to photography and video. Crowdsourcing allows businesses to treat some customers as partners. Instead of harming business ideas, it allows for synergy to take place.
6. User-contributed services. Lease your membership to your clients, using incentives for members (but not the general readership). With the economy in a downturn, crowdsourced personnel will be cheaper than employees or even freelancers and contractors, and companies have an entire online world of people to choose from. User incentive: Revenue and personal brand-building. Business gain: Released from the costs and management of having a large employee pool. Opportunity to monetize virtual employees. Example: As discussed in our previous crowdsourcing article, uTest and TopCoder both use this model. Both offer a pool of software debuggers, and TopCoder also offers developers. 7. Funds sourcing. Crowdsourced funds can be accumulated for various entrepreneurial or charitable purposes. A number of platforms make it easy to set up the infrastructure online. User incentive: Depending on the implementation, possible fame, ego gratification, investment opportunity. Business gain: Operating capital upfront. Example 1: Microloan sites such as Kiva and Prosper are popping at the same time some are either closing or being given the ultimatums by the U.S. SEC (Securities and Exchange Commission) to be more transparent in their operations. Still, they’ve proven the potential of crowdsourced funding. Example 2: Film funding. People contribute funds and get a credit in the film. Since the cost of entry is relatively low and the benefit emotionally high, this model has the potential to work – but probably up to a point. Could it work for every film? Probably not. Just a personal feeling, but it’s more likely to work for “underdog” projects (indie films, documentaries), not films by large studios. The Internet allows niche filmmakers to reach their niche audience. The same goes for TV series. Firefly was funded by fans who paid upfront for a DVD of an entire season.
This article discusses some ways that entrepreneurs can use crowdsourcing – in its loose definition – as part of their online operations.
This article is for the entrepreneurs who would like to find out some ways they can utilize the knowledge of the crowd in their business.