How to Work With Customers to Guide Your Product Development Learn from Microsoft's 'Open Hack' approach to collaboratively solve customer problems.

Customer experience is a top priority. In fact, one report estimates that it will overtake both price and product as the key brand differentiator by 2020. But, there is no need to sacrifice one for the sake of another; customer experience can easily go hand in hand with a high-quality product.

Related: Why We Waited Four Years to Launch Our Second Product

In a recent article, I shared how Microsoft had started experimenting with a new "open hacks" approach to customer experience, sending its developers to work side by side with its customers to co-build technology that solves their biggest pain points. After just a few months of experimenting with this approach, we've learned innumerable lessons, including just how effective this methodology can be. This close collaboration has not only offered us a deep understanding of customer needs and firsthand feedback, but has also helped guide our product development. And it can unlock the same potential for companies both big and small.

Here's a look back at the lessons we've learned along the way and some advice to help your company embrace a similar strategy:

Direct evangelism: Learning from customer problems and questions

Today, many businesses are out of touch with their customers' needs and thus slow to innovate to meet those needs. The open hacks approach was born from efforts to find a more customer-centric approach.

Rather than hosting tutorials for your clients to learn how to use your tools, the open hacks methodology involves your team members working side by side with customers in an effort to gain a deep understanding of their needs and help them successfully complete projects for their clients. In an aim to help with technical assistance and marketing, for example, your team members might accompany customers to meetings held with their clients, listening intently to the concerns expressed.

Such a strategy has shown to significantly boost customer engagement. For a company of any size, it can help you discover the "cliffs" -- or hidden problems -- that arise for your customers when using your technology. Given the close proximity in which you work with your customers, you gain clear insight into their sharpest pain points, validating your new solutions before they're built and boosting the adoption of your products.

Related: 5 Lessons on How You Can Deliver a Product Your Customers Actually Want

Developer experience hackfests: Solving problems with customers

But, it's not just about working with customers to understand their problems and achieve their goals. You should also actually include customers in the process of building solutions that address those problems.

The time has come to think beyond internal hackfests and invite the customers themselves to participate in the hacks. Many businesses might worry that having customers participate would mean exposing them to the shortcomings and failures that the development process inevitably entails -- that by pulling back the curtain you'll potentially cast your business in a negative light.

In truth, inviting the customer provides a huge opportunity for everyone to learn together, and from one another. Rather than viewing your business negatively, your customers are more likely to begin to see you as a partner working together to solve tough problems, writing code shoulder to shoulder.

What's more, inviting multiple customers who share similar problems to a hack can enable problems to be solved even more quickly and elegantly. Cisco's IVP Labs Hackathon last year provides a perfect example. Inviting three valued customers to participate in a 24-hour hackathon aimed at improving customers' content discovery in video services, the hack generated ideas that went directly into the development pipeline.

As was the case with Cisco's hackathon, customers are likely to jump at the chance to join in and help build a robust solution that best meets their needs. And regardless of the type of problem being targeted -- be it code, engineering or otherwise -- an environment of open collaboration and respect is formed. Through this co-innovation, relationships and bonds that last far beyond the hack can be built.

Related: Sell More Products by Letting Your Customers Design Them for You

Sparking the competitive spirit and the power of open registration

What can make a collaborative hack even more fruitful is adding the element of friendly competition. Early on, Microsoft experimented with gamification in its hackathons. In its first OpenHacks events hosted in October of last year, the gatherings invoked the competitive spirit as customers teamed up with Microsoft developers to complete five progressively more difficult challenge-based hacking activities. With the clock ticking, and the teams' progress displayed on a big screen, groups leveraged the collective expertise and problem-solving of the team to work with specific technologies and complete certain tasks.

As one activity was completed and the next unlocked, teams were rewarded with a simple cup of coffee before starting the next mission -- even the smallest prizes added to the energy of the competition. And as teams progressed through the challenges, a fun, competitive spirit emerged, driving people to work hard to learn and solve problems together.

The event was a huge success and demonstrated the value of an open hacking environment driven by camaraderie and friendly competition while still focused on solving real customer problems. Building on that success, Microsoft has since taken the concept to the next level, now hosting its OpenHacks events internationally and opening registration to include not just customers but also customers' competitors. Over the course of three days, OpenHacks participants dive into customer scenarios and problems, working to engineer solutions that benefit their mutual clients.

One participant went so far as to say that he got more out of the few days in the open hack than had in the previous six months of solo work.

You don't, however, have to be a large corporation like Microsoft to help your customers reap the same benefits. Small and medium-sized companies can do the same by bringing together their customers and the developers responsible for building their products. Consider it a new spin on classic startup strategies like design thinking or the lean startup methodology, where the customer is at the heart of the process. You can make an open hacks-type approach work for your company by taking a well-known problem that you've had, putting it into this environment and working shoulder-to-shoulder with clients to innovate and solve it.

For entrepreneurs and other business leaders, OpenHacks have the potential to benefit your customers as well your own business. But, even without launching an OpenHack, and simply preparing for one, you have the potential to innovate and to engage customers in a more fulfilling way by addressing their biggest concerns. By learning about customers' problems and solving them together with a little bit of competitive spirit, implementing OpenHacks within your own organizations will far surpass your expectations.