Local Motors sets up competitions between different providers in order to find solutions to engineering and design requirements. The customer votes, comments and selects the plan s/he wants and can also personalise the vehicle s/he chooses.
Matching products as closely as possible to customer needs generally results in increased sales. And the best way to do that is to involve your customers in the process of developing the product. The case study by Norton and Dann (2011)* demonstrates how successful this ‘shared creation’ approach is for Local Motors. Since 2009 the Arizona-based automaker has encouraged its customers to build their own vehicles based on winning designs from competitions launched on the company’s website. In practice, the concept is more complex than simply consulting individual people. Local Motors started by setting up a community, called The Forge in order to design vehicles. Anyone, professionals and amateurs alike, provided they are over 15 years of age, can join. At the present time, the community has 15,000 members with a variety of profiles, including designers and engineers. Relying mainly on its partnerships with software vendors such as Solid Edge and Ponoko, the automaker supplies the graphic tools for working on the model in 3D and encourages its members to design cars.
Choosing a design
Local Motors runs several competitions simultaneously. Some relate to the look of the vehicle, others to the engineering. The timeframe for each – from one day to two months – depends on the complexity of the challenge. The selection process and the reward obtained by the winners will also vary accordingly. Once the ideas have been generated, the community is asked to vote, or in some cases the ideas are submitted to a selected panel. It’s at this point that customers get involved. They can vote on the ideas, give their opinion, and comment on the proposals. Once the winning ideas have been selected, the vehicle can be built. Here again the customer can put his/her personal stamp on the vehicle if s/he does decide to buy one, choosing, within certain limits, the way his/her car looks. The company will build a maximum of two thousand units for each model.
Don't get'prosumers' involved too early
The personalisation approach does carry a cost however: each car has a price tag of two million dollars. "It’s an interesting initiative, as it’s a very good idea to turn your customer into a ‘prosumer’ and get as close as possible to his needs," Yassine Damil, senior consultant at Bluenove, told L'Atelier. He stressed however that the success of this type of initiative depends entirely on getting the customer involved at just the right moment. "If people are involved too early in the process, they may not, at that stage, always be able to visualise what they really want,"he explained. But the company can also take advantage of this fact. "It’s then that they really need support," the consultant pointed out. The cars are built in small local factories and an additional advantage for the automotive industry is that the concept of using a community for car design can help to reduce research and development costs, underlines Local Motors.
*Norton, Michael I. and Dann, Jeremy B., Local Motors: Designed by the Crowd, Built by the Customer (September 12, 2011). Harvard Business School Marketing Unit Case No. 510-062.