MANAGING CUSTOMER INVOLVEMENT AND ROLES IN NEW SERVICE DEVELOPMENT (NSD): LESSONS LEARNT FROM WWW.MYSTARBUCKSIDEA.COM Marianna Sigala University of the Aegean Chios, Greece m.sigala@aegean.gr ABSTRACT As understanding customers' needs is a major determinant of new services' success, the literature highlights the necessity to increase customers' involvement in NSD. Advances in web 2.0 enable firms to actively engage customers into NSD. However, research provides only descriptive analysis of web 2.0 enabled NSD practices, while studies in NSD have primary focused on measuring the impact of customer participation in NSD rather than on how to manage customers' involvement into NSD process for maximising benefits. This paper fills in this gap by adopting a qualitative case study for analysing customers' contributions in a social network developed by Starbucks and aiming to involve customers in generating and evaluating ideas for NSD. Netnography was used for analysing customers' contributions. Findings provide several practical and theoretical implications for identifying and managing customers' involvement and roles in NSD. Key words: customers, new service development, hospitality, social networks, Starbucks INTRODUCTION As in-depth knowledge and understanding of customers' needs have been advocated as one of the major determinants of new services' success (Karkainen et al. 2001; Lagrosen, 2001), several authors have been advocating the important role of customers' involvement into NSD processes (e.g. Gruner & Homberg, 2000; von Hippel, 1976 and 2001; Magnusson et al. 2003). More recently, a new stream of research (Dahan & Hauser, 2002; Pitta & Fowler, 2005; Sigala, 2008b; Kohler et al., 2009) examines how firms exploit new web 2.0 technologies (such as virtual communities, social networks and gaming, wikis, blogs) for actively engaging appropriate customers into NSD processes. However, despite few studies providing preliminary descriptive findings regarding the use of technologies for integrating customers into NSD processes, there is limited research investigating the role and influence of customers on the processes and outcomes of technology-based NSD (Sigala, 2008b; Kohler et al. 2009). The emerging research investigating the customers’ role in co-creation and NSD has also mainly focused on the benefits of customers’ involvement and their impact on NSD outcomes, while it has ignored on how customers’ involvement should be managed and integrated into NSD processes, so that the NSD outcomes due to customers' involvement are maximised (Kristensson et al, 2008). Moreover, previous studies have also provided divergent and conflicting results regarding the benefits, the risks and the problems created due to customers’ involvement in NSD processes (Enkel et al. 2005; Leonard and Rayport, 1997; Christensen, 1997). In this vein, research is required to provide theoretical and practical implications on how firms can identify and manage the role and contributions of customers' involvement in web 2.0-enabled NSD. Research should also investigate the ways in which firms can effectively manage customers' participation into technology-based NSD processes in order to maximize the NSD outcomes from customers' participation. This paper fills in this gap by adopting a qualitative case study for analysing customers' contributions in a social network (www.mystarbucksidea.com) developed by Starbucks and aiming to involve customers in generating and evaluating ideas for NSD. To achieve this, the paper first reviews the following fields of the related literature: customer participation in NSD; web 2.0 enabled NSD processes; and methodologies for analysing online customers' contributions for NSD. Netnography was used as a qualitative methodology for analysing customers' contributions, and the application and appropriateness of netnography for this case study are discussed in the methodology section. Finally, the discussion of the findings provides several theoretical and practical implications for managing customer participation in NSD.