Making Your Customers Part of Your Product Development Strategy

One of the problems companies face during new product development is trying to predict if it is actually what the market wants. While this is a basic concept it is a fundamental problem that all organisations face. The mismatch between the internal product development team, the marketing department and the marketplace results in wasted time, money and energy. So what are some of the ways in which an organisation can improve its product offering without stifling creativity and a risk taking, “getting things done” culture?

Let’s consider product development as a “sausage factory”. The inputs include things such as: the creative team; the budget; marketplace trends; customer feedback; surveys; manufacturing or engineering; historic sales and the company’s overall strategic direction. The output is a brand new product or service that you want to test in the marketplace. Let’s focus on the customer-centric inputs of this “sausage factory” by breaking business types into four main organisation-types: High-Volume, Product-based; High-Volume, Service-based; Low-Volume, Product-based; Low-Volume, Service-based. Although I have broken them down this way, many of the tips below can be utilised in all four categories

High-Volume, Product-Based

Examples: consumer electronics, FMCG (Fast Moving Consumer Goods), software developers, fashion brands, web 2.0, internet businesses, media.

In this segment, there is often a large research and development team developing new products and ideas. In most cases, these companies will have large global distribution networks that reach right to the end consumer:

The important type of marketplace information is:

• Feedback from your customers. This is usually a gold mine of information. Make sure it is part of your product’s evolution.
• Competitor trends and market share. What are your competitors doing? Can you do it better or with a discernable difference?
• Split A/B testing. This is where you release a control product together with slight variants of the product. You can then analyse the effectiveness of each product variant. This is popular with direct mail and BETA trials. Release new versions and variants, test and apply. Rinse and repeat.
• Analysis from focus groups. This can include surveys and organised group sessions or one on one interviews with subjects in your target market. Be sure to spread the results to all of your members in your product development team.
• Previous sales. What were your previous sales history? What products were stars; which ones are dogs?
• Partners and Distributors. What are your partners, agents and distributors saying about your products and your brand? Do they have any data that they can share with (or sell to) you?

High-Volume, Service-based

Examples: Airlines, fast-food chains

In this scenario, there is less “physical” products to produce but are more intertwined with your systems and processes. Due to the high volume, high turnover nature of your business, ensuring that you streamline your customer service processes is paramount. So when your team is creating a new line of services offering consider:

• Customer feedback about your processes. Do you have the systems and processes in place to support a new line of service? What can be improved? Let your customers know what happens with their query.
• Competitors. Have a group of people from your office (or outsource this) to sample what your competition is doing and report back. What was good and bad about the process?
• Web analytics. Many services can be ordered over the web. What service lines are working? Where are you getting your hits from? Do A/B split testing (see above).
• Focus groups. As with product based designs, involve focus groups early. Alternatively, try sampling a service in a defined geographic area to gauge interest and feedback.
• Front line staff: in many service businesses your people are the “face” of your company. Make sure you include them when trying in your development process. They are the ones that hear customer complaints on a daily basis. Have a system of capturing and synthesizing your front-line employee’s thoughts and opinions when developing new lines of business.

Low-Volume, Product-Based

Examples: commissioned artists, construction projects, industrial manufacturers, large software development projects, industrial designers

In this category, we can range from small commissioned art pieces to large million-dollar building projects. In most cases, companies in this sector have a very close (and sometimes rather complex) relationship with their customer. So what can you do as part of your product development strategy?

• Evaluate your requirements process. At the heart of every successful project is a thorough investigation of your clients needs. Be sure to include your sales and engineering/technical team early to understand your clients project aims.
• Get early feedback. This is a common practice with software developers – show incremental progress to your clients and get their feedback. Even with “physical” goods such as buildings and product packaging design, show computer models of what you are planning to your customer. I have found in the past showing incremental progress can spur further discussion and changes to the original design (just make sure you have a solid specification change process!)

Low-Volume, Service-based

Examples: law firms, accountants, custom software developers, dentists, advertising agencies.

By definition, this segment requires your business to be close to your customers to provide close, personal service. This is an increasingly popular area for small business entrepreneurs. To engage with your customers to continually improve your products and service to the marketplace consider:

• Feedback forms. When you are an owner operator of a business, sometimes it is hard to ask for feedback from clients. Sometimes your customer will be “polite” and not offer their true opinion. However, it is an important aspect of your business to an overall feel of your customer’s future needs. Think about hiring a third-party organisation to collect this data for you to get a more objective view of your customer’s perception of your business.
• Industry groups. With a limited budget, smaller companies can leverage industry groups as a potential source for market trends and try to get a gauge of where your competitors are at.

Conclusion

By adopting these tips in a systematic way, your business can use these customer “inputs” into making wonderful “outputs” – products and services that help you grow your business. Be open to sharing customer and marketplace data with your employees – you will be amazed at how they use it to improve product and service offering in organisation.