Was Quirky a little too “quirky” for business?

Marelle Pint    February 15, 2016

I am not an avid social media user.  Sure I have my Facebook, Twitter and Instagram personal and business accounts which I update and browse a couple times a week but only if time permits.  There are users however who spends hours upon hours site surfing, tweeting, snap chatting or blogging their way into the hearts of many.  It is because of this influx of social media activity that many companies changed their business strategies and took to the web to research and design their products.  I am aware of companies utilizing various platforms for customer engagement and its employees or perhaps even promoting their range of products on line through various social media campaigns, but putting your faith in customers to help innovate and design your products seems a bit risky to me.  There are companies who have jumped on the bandwagon and have gained much success in their product innovation cycle, but there are also companies that have suffered greatly from it.  So the million dollar question is should companies put their trust in such a process if it could lead to their downfall?  Is there a way to strategically use social media for product development and design?

One such company that should have done things a little differently,  in my opinion is Quirky. Who is Quirky you ask? I had no idea until I accidentally stumbled upon them in an article by blogger Leena Rao.  Leena informs us, “Quirky, which is brainchild of serial entrepreneur Ben Kaufman (he’s behind mophie and kluster), is a platform for product ideas… the site tries to use crowd sourcing to develop the product, by engaging participants in collaborating on every aspect of product creation – from ideation, design, naming, manufacturing, marketing, to sales.”

What is Crowdsourcing?  According to Krista Bunskoek, a blogger at the Social Media Examiner “Crowdsourcing is a method of getting ideas, content, support or other types of solutions from a group of people. The term was coined byWired magazine in 2005. In a nutshell, it is like “outsourcing” solutions to crowds through social media.”  Krista’s article provides plenty of useful tips for corporations looking for ways to “crowdsource” product ideas by hosting Social media contests as an incentive to maximize consumer interaction.  I asked Kris Lal, Controller of Quoting & Logistics at Globestar Systems what methods or Social media platforms he found useful for gaining customer feedback and his response was, ” In my experience, what works best is a Web-Based Portal which can be accessed by all customers, where they could do a “Live Text Chat” with technically qualified personnel. Customers should automatically be given a Reference Number to their Input, and a means to follow-up on their suggestion or concern at a future time. This gives them a sense of being taken seriously and makes them feel a part of the team, in the effort to provide a better product or service.”

Even with a wide variety of resources available for companies and consumers alike such as podcasts, blogs and research papers, is it still enough to convince businesses to take their product development cycle on line?  In the research paper Social Media and Product Innovation written in collaboration with Kalypso consulting firm, ” businesses are beginning to explore how social media can help them grow and improve profits, not just with common practices such as outbound marketing, but to enhance business interactions as part of the innovation and product development process.”  Kris Lal also shared his thoughts on the matter, “When customers use the social media platforms set up by companies which provide products and/or services, they expect a speedy response and satisfactory solution to their requests or problems. This will not only guarantee customer loyalty, but convert them to advocates.”

Quirky encouraged its users to “submit their product idea for $10. Users can also vote, rate, and influence other people’s product ideas. Every week users can post ideas on Quirky to be rated by the Quirky community. After a seven day evaluation period, the Quirky community chooses one product from the pool of submitted ideas to move forward through the process. Quirky’s community engages and contributes to every part of the product’s development, weighing in on everything from naming to logo selection to packaging.”  The company was also averaging 60 products a year and was expected to make over $1 million in 2011.  They were cited to “star in a new reality series on the Sundance Channel, set to debut at the end of August 2011″.

However something went horribly wrong for Quirky in the year 2014.  Ben Popper  blogger for The Verge wrote “the company had spent over $800,000 developing the products, but neither one ever made it to store shelves…To make matters worse, many of the products did not live up to the elegant design, spiffy packaging, and glossy commercials that were used to sell them…Quirky had just above $50 million in the bank in February of 2014 and was burning through an average of $5.8 million a month.”  The Quirky team came up with a plan to save their business, which was haemorrhaging money faster than its products sold by focusing on a few areas of production.  Ben states, “instead of a dozen different verticals, it will now operate in just three: the connected home products it makes with GE, the new line of Poppy appliances that work with Amazon Dash, and electronics like Pivot Power that have been very successful.  Second, the company is shifting to focus more on helping to create products for other companies, and less on creating products itself.  Quirky’s community will still submit ideas, and the company will help shepherd the best ones to a point where they can be produced. But the working capital to actually design, develop, manufacture, and market will be spent by these corporate giants, not Quirky.”


Lessons for Others

Despite efforts to turn things around, Quirky filed for bankruptcy in the fall of 2015.  So what is the lesson we have learned today? More companies are using Social Media in the Product innovation cycle, however maybe companies should implement and follow a set of guidelines to ensure they benefit the most from this process.  I asked Zoran Bosancic who is an Online marketing and business strategist at Zoran Bosancic and Co-founder at POINT OUT for his thoughts on the subject.  Zoran agrees with my sentiments, “They need to thoroughly plan ahead. Companies need to carefully define the whole process. They need to answer the basic question “how would they include social media in that process”. Businesses need to take into consideration all possible platforms. For instance, Facebook page, or even better, Facebook groups are a great way to open a debate. If an advanced interaction is needed, a Facebook app would also be a great choice. If companies need quick and short responses, I would go with Twitter. If the target group are professionals, LinkedIn (again probably LinkedIn groups) would be a solid choice. But companies could also use other platforms, such as YouTube to show their product in a video, Periscope for live streams etc. Social media is in a way similar to how we interact in real life. The main benefit is that it is faster and cheaper. Like in non-digital environment, you need to carefully listen to the respondents, provide them guidelines but don’t be suggestive.”   When I asked if companies should use Social Media as a marketing tool for product design and development while replacing their traditional methods, he responded “Of course, they should. As said before, it’s cheaper and faster. Also, we spend a whole lot of time on social platforms, so it’s also quite convenient for people. Companies should go to people and not the other way around.”  Kris Lal, also shares this point of view, “Traditional design processes are based on market experience and trends up to the current situations, and cannot be ignored or replaced. However the use of social media provides the insight into current and potential customers concerns and “wish lists” which can provide invaluable wealth of info hitherto unavailable to companies. A healthy combination of both methodologies is recommended.”  If going on line to conduct focus group based research is the logical step for businesses during their product design and development cycles, why did it prove to be detrimental to Quirky’s business plan?

Christine Lagaro-Chafkin, Senior writer for Inc.com believes its more than just the implementation of crowd sourcing that caused Quirky to fail.  She hints that the designs that Quirky users submitted along with the packaging, marketing and pricing of the products also contributed to its downfall.  She questions, “was the crowd simply not a good decision maker when it comes to products?…But endorsing something on-line is not the same as voting with your wallet…Truth is, manufacturing anything out of plastic and metal quickly and cheaply is going to yield a product that’s, well, cheap…The story line added to any individual product…But that wasn’t enough to reliably draw in a profit on any given product. No amount of great storytelling was going to put an $80 app-enabled egg tray in my refrigerator.”

So there you have it folks, maybe the world of Social Media is still too risky for product development and design or maybe companies need to have a sound business plan and use their social media platforms in compliance with company marketing strategies in order to benefit the most from this process.  As many companies debate the need to reach out to its customers and maintain the bonds of customer engagement, keep in mind the sad example of Quirky.  Learn from it, better your process and create a path that will work best for you.  In the words of Mary Lou Cook, “Creativity is inventing, experimenting, growing, taking risks, breaking rules, making mistakes, and having fun.”  

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Organization: Quirky
Industry: Retail
Name of Organization Contact: Ben Kaufman, Founder and CEO

Authored by: Marelle Pint

If you have concerns as to the accuracy of anything posted on this site, please send your concerns to Peter Carr, Program Director, Social Media for Business Performance.


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