Customer involvement in new service development : how does customer involvement enhance new service success?

Abstract

This master thesis investigates how customer involvement enhances new service development and investigates what role the service characteristics play for this development. An exploratory and quantitative empirical research was conducted among small and medium sized firms in selected business categories. Before the empirical work could be conducted a thorough literature study on innovation research, service research and customer involvement was completed. Literature from new product development was also included. The literature study showed that services have been treated as something different from tangible products, but no distinction between services with different service characteristics have been done. All services have been treated alike, despite having very different service characteristics. Customer involvement in the development process is also described. Some authors argue for the use of lead users, whereas others for lay users. The literature shows no link between service characteristics and customer involvement. The type of success a customer contributes to is also not described. Specific firms in service categories were selected to contrast firms offering services were the characteristics of these services were assumed to be different. This strategic selection of participants was done to investigate the effects of the different variables, such as intangibility, inseparability etc. The results of this research reveal that different service characteristics contribute different to the innovation process and to the form of innovation. Perishability and heterogeneity significantly promotes customer involvement in the development process. Inseparability and perishability is found to be the two characteristics contributing the most to customer involvement in development of service innovations, whereas inseparability and information intensity contributes to the development of process innovations. The results also reveal how the different users contribute to innovation success. Service innovations contribute most to increasing customer value, whereas process innovations increase process quality the most. Lay users contribute mainly to increased customer value and market performance, whereas lead user also contributes to process quality. This master thesis concludes that the findings in this research support the view on treating services after their service characteristics and not as a whole.