The process of collecting work, information, or opinions from a wide number of people who submit their data via the Internet, social media, and smartphone apps is known as crowdsourcing. Crowdsourcing participants may operate as paid freelancers at times, while others complete little chores willingly. For example, traffic applications like Waze encourage drivers to self-report accidents and other roadway occurrences in order to give app users with real-time, up-to-date information.

Crowdsourcing allows businesses to farm out labour to people anywhere in the country or across the world; as a result, crowdsourcing allows businesses to tap into a wide range of skills and knowledge without incurring the regular overhead costs associated with in-house staff.

Crowdsourcing is becoming a popular method to raise capital for special projects. As an alternative to traditional financing options, crowdsourcing taps into the shared interest of a group, bypassing the conventional gatekeepers and intermediaries required to raise capital.

With crowdsourcing, companies can collect information from customers and use it to their advantage. Brands gather opinions, ask for help, receive feedback to improve their product or service, and drive sales. For instance, Lego conducted a campaign where customers had the chance to develop their designs of toys and submit them. To become the winner, the creator had to receive the biggest amount of people’s votes. The best design was moved to the production process. Moreover, the winner got a privilege that amounted to a 1% royalty on the net revenue.

By using people’s skills, work, and opinions, businesses manage to save their time and resources on developing a product or improving it. Often, people from outside the company can provide brands with amazing ideas, skills, and knowledge they can use to convert more customers and receive bigger profits

Crowdsourcing, as the name implies, is when an entity – whether an individual or an organization – asks certain resources from a group of people. This technique has been used by businesses, individuals, and organizations of various types to gather ideas, generate funds, and consolidate and spread information.

These organizations rely on the internet, social media, and purpose-built platforms to find and receive the information, goods, or services they require. This method enables them to engage with a greater range of sources than if they had used staff, vendors, and other traditional sources of expertise through traditional channels of engagement.

Cost and time-efficient crowdsourcing is widely applied by big brands. Companies strive to do everything possible to meet customers’ requirements and they can do it with crowdsourcing. In this section, we’ll unveil several examples that demonstrate how the technique works and review the benefits it brings.

Lay’s

Lay’s, the world-known producer of potato chips, created the ‘Do Us A Flavor’ crowdsourcing campaign. The campaign lasted for around ten months and aimed at finding a new universal taste its customers would love. The brand encouraged consumers to think of a new taste of chips they would like to eat. After voting, customers identified ‘Cheesy garlic bread’ taste as the winner of this competition. After its release, Lay’s had an 8% increase in sales.

Waze

Waze is an app that provides users with information about closed roads, traffic jams, and the fastest routes. The company is based on crowdsourcing because it receives current information about traffic from people. Users update the app on closed roads and in traffic jams. Moreover, the platform calculates the average drivers’ speed to identify overcrowded roads.

How do You Benefit From Crowdsourcing?

With crowdsourcing, business owners can reap various benefits, from saved costs to employee salary. However, these aren’t the only advantages. In this section, we’ll review all pros you can obtain after a successful implementation of crowdsourcing.

First, this marketing approach helps you find solutions to problems your team has worked on for a long time. These solutions are often out of the box and enable brands to drive customers’ attention fast. Many famous brands rely on experts outside the company to change the usual way of thinking and ideas. New people solve existing problems, provide different solutions, and bring new ideas to a business. As a result, brands gain new approaches to various difficult situations with products and clients.

By engaging people outside the company, a business can create marketing buzz around its product. Crowdsourcing causes competition among customers and word-of-mouth marketing. Let’s take Lay’s ‘Do Us A Flavor’ campaign which was widely discussed by people. They encouraged buzz by inviting people to create a new taste for Lay’s potato chips. More people were willing to participate in this competition and win it. Customers strived to try the new release.

Companies have more customer insights. After gathering data from customers, brands manage to understand customer preferences, needs, and desires. As a result, they can offer personalized solutions. Customer satisfaction increases, and sales rise.

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Crowdsourcing offers significant benefits to companies hoping to complete complex tasks on a budget. Additionally, asking for the wisdom and input of the crowd elevates customer engagement and improve brand reputation. Crowdsourcing:

• Keeps customers engaged: Crowdsourcing shows your audience that you value their opinion, leading to stronger brand connections. Additionally, customers are more likely to feel involved with campaign concepts, service ideas and products they helped to create.
• Promotes innovation & diversity: Accessing the thoughts of a broad group of diverse people allows for more out-of-the-box thinking. Crowdsourced concepts access the wisdom of groups to help companies innovate.
• Saves time and money: Connecting with dozens or even hundreds of professionals is typically expensive. However, bringing people together digitally reduces cost and widens the parameters for input.
• Attracts ambassadors: If crowdsourcing collects enough positive enthusiasm from your audience, participants evolve into brand ambassadors. Your new ambassadors may be an excellent source of word of mouth marketing.

Types of crowdsourcing

There are different types of crowdsourcing.

A crowd contest is one popular type of crowdsourcing. In this case, an organization may use a crowd contest to create something, such as a graphic design. The organization may seek multiple qualified designers who will each submit their best idea or ideas in the hopes of being the winner who will be paid for producing the top design.

Similarly, an entity can use crowdsourcing to seek out an individual who can handle a specific project — a type of crowdsourcing called macrotasking. Or the entity can seek out many respondents, assigning each one a task or a smaller part within a larger project. This is called microtasking.

Another subset of crowdsourcing is crowdfunding, in which individuals or nonprofits ask for money to cover the costs of an identified endeavor — whether it’s a dream vacation, a down payment on a house, an artistic endeavor or something altruistic. Entrepreneurs can also seek out funds for their businesses, although investment laws can limit what they’re able to request and promise in return.

There is also a type of crowdsourcing known as crowd voting. It’s as simple as the name sounds: The crowd votes to determine the best. Entities may opt to use crowd voting to engage stakeholders, such as employees or customers, as well as the public to help prioritize ideas or help determine a course of action.

Some areas of crowdsourcing have spurred specific recognition for the individuals involved. Citizen science, for example, recognizes the contributions that individuals make to science when they contribute data or help with reporting and analysis.

There are four main types of crowdsourcing. In this section, we’ll review each of them in detail.

• Wisdom of the crowd. It’s a collective opinion of different individuals gathered in a group. This type is used for decision-making since it allows one to find the best solution for problems. Many brands pay attention to the collective opinion of their customers because they help bring their businesses new ways of thinking, ideas, and strategies. As a result, the overall performance of a company improves.
• Crowd creation. This type involves a company asking its customers to help with new products. This way, companies get brand new ideas and thoughts that help a business stand out. For instance, McDonald’s is open to new ideas from its consumers. The famous fast food company asked customers to create their perfect burgers and submit their ideas to the brand. The company released winners’ burgers each week, including the creator’s short bio.
• Crowd voting. It’s a type of crowdsourcing where customers are allowed to choose a winner. They can vote to decide which of the options is the best for them. This type can be applied to different situations. Consumers can choose one of the options provided by experts or products created by consumers. For instance, if a brand asks its consumers to create a new taste, package, or design of a product, other consumers vote to identify the best one.
• Crowdfunding. It’s when people collect money and ask for investments for charities, projects, and startups without planning to return the money to the owners. People do it voluntarily. Often, companies gather money to help individuals and families suffering from natural disasters, poverty, social problems, etc.

What are the Major Advantages of Crowdsourcing?

1. Unexpected solutions to tough problems

The most significant benefit of using crowdsourcing is the ability to find unexpected solutions.

When a business or organization considers problems internally, it’s easy to fall into existing modes of thinking. After all, if a company has been doing something a certain way for a long time, it can be hard to break out of this habit. 

This kind of status quo inertia is a major problem for all kinds of businesses. It’s one of the reasons why innovation geniuses like Steve Jobs place such a high priority on bringing in experts from outside the business to challenge conventional thinking.

This is why crowdsourcing provides such a huge advantage. By involving a broader group of people in solving a problem, a company can gain access to hundreds or even thousands of different approaches to problem solving. 

A great example of the benefit of crowdsourcing is Unilever’s Open Innovation portal. Here, the company asks experts around the world to contribute out-of-the-box solutions to tough problems like sustainable packaging and product cooling technologies, with unexpected results.

2. A greater diversity of thinking

Putting a wider pool of people to work can also unlock a greater diversity of thinking, as well as unexpected ideas. For many businesses, especially smaller businesses, staffing levels may not provide the level of innovation diversity needed to solve the truly tough problems. 

Crowdsourcing can change all that. By inviting a broader group of thinkers to participate in a problem solving exercise, a company can get access to a mixture of knowledge, experience, expertise, and contexts it wouldn’t have been able to otherwise.

Lego’s Ideas Portal is a great idea of this innovation diversity in action. By asking fans around the world to submit their ideas for new Lego sets, the company gets access to a truly diverse set of thoughts and preferences and ends up with suggestions for amazing new products.

3. A reduced management burden

The management aspect of crowdsourcing isn’t something that’s as well-understood as the other benefits, but it’s a significant advantage.

When businesses innovate internally, there’s often a significant management burden placed on whoever is leading and organizing a project. Thinkers and designers need to be reminded to contribute their ideas, and sometimes need to be encouraged along the way.

With crowdsourcing, a business or organization just sets clear terms and conditions for the exercise, then lets the ideas roll in. This hands-off approach takes less time than traditional ideation processes and can free people up to focus on other more exciting things.

However, this also means there’s less control over the ideation process – more on this to come.

4. More marketing buzz

Because it’s an engaging public spectacle, crowdsourcing can be a great source of marketing buzz. Rather than just resorting to the same old traditional problem solving processes within a business, crowdsourcing has a communal and competitive aspect to it. This not only helps to build a greater network of fans, but gives people something to talk about, too. 

This marketing buzz is why companies like Frito-Lay turn to the public for competitions like their ‘Do Us a Flavor’ contest, asking chip fans to submit their best – and wackiest – ideas for new potato chip flavors. 

Here, the snack company not only gets the chance to develop ideas for what may become immensely popular products, but they also get a huge amount of media coverage for their existing products. It’s a win-win. 

5. Faster problem solving

Crowdsourcing isn’t just about getting access to the best ideas – it’s also about finding ideas as quickly as possible. When businesses solve problems internally, they’re constrained by how fast their employees can work. After all, even a company’s superstar innovators can only work so fast. 

By inviting a wider pool of people to participate in the process, companies can get great ideas in a far shorter timeframe. For time-sensitive projects like medical research or emergency software patches, this can make all the difference to project success. 

A great example here is the Human Genome Project, an international effort to map out the human genetic code in full. This project harnessed the work of scientists across 20 institutions from six different countries and was completed in 2003 after just 13 years of work.

Without crowdsourcing this work across multiple institutions, this project would probably still be stuck in its early stages today. That’s the power of crowdsourcing. 

6. A rich source of customer data

Finally, crowdsourcing also offers businesses and organizations a detailed window into their most dedicated fans and customers. For companies like Starbucks, with its My Starbucks Idea portal, crowdsourcing is much more than just a way to get great new ideas. By collecting and analyzing information about participants, Starbucks can also gather extremely valuable customer profile information.

For example, what are the core demographics of those submitting? Which communication mediums are best for connecting with these individuals? And what do the responses themselves tell you about the tastes and preferences of the company’s most dedicated fans?

This shows that the benefits of crowdsourcing extend beyond just the solutions themselves. Done correctly, crowdsourcing can also generate compelling customer insights.