Enable Best Customers to Create Financial Services

All vendors and platform operators feel an obligation to look after their best customers. But to what extent are those customers really allowed to influence product development?

In the course of researching a presentation on the long tail of payments services for GikIII (a two day workshop on the intersections between law, technology and popular culture), I've been struck by how these observations combine to emphasise the same point:

• There is value in marketing "long tail" products if adding selection is cheap (as it is online): Anderson;
• Compared with heavy users of online retail services, light users much prefer better selling products; both prefer “hit” products more than those in the tail; but it is the heavy users who venture into the tail: Elberse;
• Successful Web 2.0 businesses are those that facilitate an 'architecture of participation': O’Reilly;
• "Lead-user product development can be a far more effective means of innovation than conventional product development in a closed system": Sheahan (citing von Hippel, of course) and giving various illustrations of the same concept in Threadless, Jones Soda, LEGO's Mindstorms Users Panel, and of course Linux.

Suggestions that even "excellent retailers" have run out of ways to improve the online shopping experience, and the only scope for real innovation is on the buy-side, are way overdone. But it must be true that improved tools for buyers as well as, e.g. 'power sellers', are an important set of features in the overall consumer experience mix. And it should also follow that enabling your prolific buyers to add to the range of products available for all buyers is a powerful step to take. Some of those products might even prove to be popular enough to work their way up the 'tail'.

In the payments context, it's interesting that recent research by Datamonitor suggests financial institutions are too mired in last century's anxieties to let their online customers loose with a bunch of web-based tools.

Seems my 2008 predictions for the SCL are still holding up nicely!