Performance effects of involving lead users and close customers in new service development

Customer involvement has been recognized as a key factor for successful service development. One important aspect affecting the outcome of new service development (NSD) projects in whose development customers are involved is the choice of the appropriate participating customer. This study aims to examine the effect of two customer characteristics (relational closeness and lead‐userness) on four indicators of new service performance. The paper uses data from 102 NSD projects. Covariance‐based path analysis is used to test the model. The results reveal that involving close customers in the NSD process has a positive direct effect on service advantage and speed to market and a positive indirect effect on market performance. The involvement of lead users, on the other hand, has a positive effect on service newness and service advantage, and a negative effect on market performance. The focus on Spanish companies puts constraints on the generalizability of the results to other national contexts. Future research should replicate this study in different countries. Also, future research could explore more deeply the performance impact of close customers and lead users by collecting data on the roles that customers can play in NSD. The findings from this study suggest that firms need to make conscious choices about the types of customers to involve in service innovation as different types of customers affect new service performance differently. This study makes an original contribution by investigating the effect of customer's relational closeness and customer's lead userness on four indicators of NSD performance.