Running a small business is expensive and a lot of work. You need to develop new products; you need to resolve customer complaints; you need to optimize pricing to hit your revenue targets; you need to have experts on staff to handle certain areas of the business, and you need money to keep it all going. There is a way to manage the costs of many of these tasks without taking on a long-term expense to get them done – it’s called crowdsourcing.

How does it work?

Crowdsourcing offers a way to outsource tasks to your target market and employees to build better solutions. Basically, instead of outsourcing tasks to an agency, you’re outsourcing to a collective interest.

The business in need, a.k.a. the crowdsourcer will broadcast the problem they are trying to resolve to the public. This can be done in a variety of ways including issuing an advertising campaign, running a contest or promotion, or leveraging a crowdsourcing platform. The “crowd” might be made up of professionals volunteering their time, amateurs with an interest, consumers and even employees of the company. The person or persons with the “winning” solution is offered compensation, which may or may not involve money, for their efforts. Examples include:

1. Recognition – the solution is named after the winner, or winner is announced publically.
2. Prizes – free goods or services, such as a free trip, or a 1-year supply of the product.
3. Money – Lump sum payout.

Or it could be a combination of all three.

What can be crowdsourced?

Just about any step in your product development and product marketing model can be crowdsourced. You can outsource one step or multiple, including fundraising, naming, conception, development, Q&A, and pricing, depending on your company’s resources, needs, and goals. The biggest benefit is that crowdsourcing is a very cost-effective way to resolve business issues. The biggest disadvantage is that if not properly managed, the process can lose control and spiral into a time-consuming disaster.

Here are a few examples of how successful crowdsourcing can work for promotions, production and even for long-term contribution:

Audi Production Award 2012 Automotive production improvement where the winners receive a combination of trip, recognition and a monetary prize.

The Great Glamburger Challenge – Submission of unique hamburger ideas. The winning burger would be added to the restaurant’s menu for 1 year and the winner would be awarded a trip.

LAY’S® Do Us A Flavor™ Contest Creation of a new chip flavor by the public for a $1 million dollar prize or 1% of net sales.

My Starbuck Idea Submit process and product innovation ideas, anything from employee recognition, to producing more green-friendly locations. No prize is offered.

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