At our organization, we thank anyone and everyone for their contribution. When they first give us the idea, we say we will evaluate the through our NPD process. So really nothing happens initially other than a thank you. We do take it through our process and many times we will kill it based on any number of factors. Business case is most common. Doesn’t hit our call points, poor margin, me too product, small total market, too much competition, etc.
If it does survive the low-hanging fruit round, we will then have the customer evaluate the idea. If they won’t buy it, it is easy to kill. If it gets through that, the first idea always sucks, whether it is from the outside or NPD, and we will need to develop it further. And like all NPD ideas, what launches rarely resembles the initial idea.
So giving immediate feedback is the wrong way to go because it is only your opinion and you will only get into a pissing match. But if you take the time to give the idea a proper evaluation, the answer to why the idea was killed or changed will be accepted by the person who submitted it. Be sincere and open, don’t make it personal, be timely and I have never had a problem.