Real Results from the Crowd?
Plenty has been written about the benefits of crowdsourcing an article on Socialmediatoday.com outlines several of those benefits. Perhaps most interesting are those that can make money or save money for a business.
For example, businesses have utilized crowdsourcing to successfully identify a void in the market and creating a brand new market out of it. Then, once those customers have been identified, social media provides a platform for engagement, identification of their needs and to for calculating a business’ ROI. Through campaigns, competitions and prizes, publicity, and additional customers, can be generated. Anyone doubting the potential business benefit of crowdsourcing need only look to the success of Yelp.
A case study published by HarvardBusinessSchool presents findings that the popular crowd-sourcing review site is having a significant effect on the restaurant business. The study looked at more than 3,500 Seattle restaurants from 2003 through October 2009 and using data provided by the Seattle Department of Revenue, identified three primary findings. (1) A one-star increase in Yelp rating leads to a 5-9 percent increase in revenue, (2) this effect is driven by independent restaurants; ratings do not affect restaurants with chain affiliation, and (3) chain restaurants have declined in market share as Yelp penetration has increased. What does this mean? For one, Yelp may be improving the efficiency of the restaurant industry overall, steering customers to the better places, and driving out poor ones more quickly.
As the Social Media Today article points out, collective wisdom certainly helps in finding out the answers as with Yelp, but can work the other way round as well. An organization’s expert can find a solution and share it with the public. Social media platforms serve as a perfect place for public connectivity leading to crowdsourcing.
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