Evaluating New Models of Value — Treating Customers as Stakeholders
It’s not uncommon within the insights industry to see good arguments for recognising customers as stakeholders when it comes to actioning insights and driving change for businesses. Stakeholders want to see the insights generated by research to be actioned towards successful changes for brands — so do customers, particularly those who have contributed to the generation of such insights as research participants.
I’m defining “stakeholders” here as anyone who has a stake or vested interested in the quality or success of a project or organisation. Stakeholders might be expected to have a consultative role in the processes of actioning business decision-making, seeking to ensure that decision-making results in growth and added value for a business or brand.
These arguments have brought with them new models of value based on the principle of treating customers as stakeholders. But what is the value of these models, how do they work, and what impact would they incur on business and research strategies?
What does it mean to treat customers as stakeholders?
Whilst it might be a common argument that customers should be viewed as stakeholders, what does it really mean to “treat” customers as stakeholders? It’s one thing to recognise that customers can play an important role as stakeholders in a project or business, but it’s another to proactively engage with customers and take steps to involve them as you might other, more obvious, stakeholders.
Firstly, there is great value in improving communication with customers to demonstrate that their perspectives are valuable to the business and how they can contribute to positive change within in a business. This communication should also allow for customers themselves to feel like they have a voice and feel able to communicate with the business (and other stakeholders within the business, including peer-to-peer communication with other customers).
This is where cultivating a strong online “community” via effective community engagement techniques can play a key role in making customers feel more like stakeholders. Customer stakeholders involved in an online community can feel like they are contributing to key changes, in addition to being more willing to participate in research activities that produce valuable insights that other stakeholders within a business can engage with.
There can be great value in communicating research outcomes with customers, particularly those who participate in research, because it can demonstrate to these customers that there are other stakeholders within the business who value customer contributions and view them as important. Whilst communicating insights must be done in an accessible way for customers, understanding that they might not understand the language used by other stakeholders within a business, articulating how their contributions will be used to action positive change adds value to the customers-as-stakeholders relationship with a business.
It is also worth evaluating how the transactional nature of research participation intersects with how we treat customers as stakeholders, particularly with regards to the value we assign to customer contributions to insight generation and the ongoing relationships between customers and other stakeholders in decision-making processes. If customers are only treated as potential research participants, how can they truly feel like stakeholders in a business? It’s important to consider how the role of the customer is communicated to them throughout the research journey, to ensure that they feel valued as stakeholders and they understand how their contributions drive actionable insights.
In addition, it’s worth considering how much you are asking of customers-as-stakeholders, following similar considerations that you would when engaging with more obvious stakeholders. For example, there is a need to recognise that customers may be stakeholders to multiple brands, so it’s worth considering how you demonstrate that their contributions to generating insights are valued — how are you valuing their time in a competitive marketplace? There is a need to be strategic in getting their attention, without exhausting them with overbearing communications. Think also about what incentives customers-as-stakeholders might value, beyond monetary incentives, such as, for example, giving them a “first look” at a new advertising campaign, perhaps noting how their contributions have helped to shape it, making them feel valued as stakeholders in a key business change.
Value and stakeholder hierarchies
It is worth understanding, however, what the emphasis on recognising customers as stakeholders may have on customers’ expectations of participation, both in terms of research contributions as well as decision-making processes for a brand or business. With the recognition of customers as stakeholders may come certain customer expectations about the value of their insights and their impact on decision-making.
Might customers expect certain outcomes in the business as a whole? Might they have unrealistic expectations of how quickly change can occur, and might this affect their perception of the brand when expectations aren’t met? Careful management of how we communicate the role of customers as stakeholders is important to ensure that expectations are managed, much in the same ways in which you might manage stakeholder expectations at multiple levels of a business.
Therefore, it’s worth reflecting on the hierarchies of stakeholder engagement with particular aspects of a research project or wider business decisions, that is that whilst all stakeholders have a vested interest in the success of the business as a whole, some stakeholders have more interest or decision-making power in a particular part of the business than others.
For example, how much would you allow customers-as-stakeholders to drive decision-making processes within the business? In much the same way that some stakeholders harbour biases that may impact decision-making, so too do customers, whose unique perspectives as customers may not have added value at all decision-making levels or may indeed vary in quality and quantity in their potential impact as value for a business. For example, individual B2B customers may add a different level of value to insight generation and decision-making for a business than individual B2C customers, though each add value in their own way.
Despite efforts to include customers as stakeholders, there is a still a hierarchy of power and expectation throughout the various stakeholders involved, both with regards to their own contribution and to the contributions of other stakeholders. For example, participants might be paid for their time for participating in a research project, with the expectation from other stakeholders within the business that that is the extent of the customer’s contribution.
Whilst insight generation is a direct result of customer participation in research and is of great value to other stakeholders, it is worth engaging existing stakeholders on the added value of bringing customers into a business’s stakeholder hierarchy. This is where communication becomes key to managing stakeholder engagement between different hierarchies of power and decision-making, ensuring that you can get the most value out of stakeholder contributions and interactions throughout the business, whether that be as part of research projects and insight generation, or decision-making processes to drive positive change.
This article was originally published on the FlexMR Insights Blog and can be accessed here.