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Five Keys to Engaging the Customer to Produce Real Innovation (Part 1 of 3)

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Most marketing professionals understand the value of understanding the customers' needs, wants and perspectives ("voice of the customer," or "VOC") in performing the marketing functions. Unfortunately, far too often the use of VOC focuses on testing marketing initiatives—messaging, advertising, promotions, and the like.

While it often used in the product/service development process as well, its role frequently is more limited than it should be.

VOC is often used to measure customer satisfaction with current products and services, identify gaps in current offerings to provide ideas for the next generation products, and validate ideas that were generated internally. A common misperception is that customers are good at providing input for product line extensions, which many refer to as "incremental innovation," but they lack the vision necessary to generate ideas for "radical" or "breakthrough" innovation—which results in a disruption of the industry and a change in the rules.

Radical innovation can occur in any facet of a business—the business model itself, processes used to run the business, products and services to name a few. This series of articles will focus on product/service innovation, but the principles apply equally well to other types of innovation. In this context, "products" will refer to both goods and services.


How can marketing professionals engage the customer to produce ideas for radical innovation? Marketing's leadership should materialize in five ways:

1. Use your VOC activities to explore new territory

VOC results range from "exploratory" to "validation." Exploration involves delving into new areas representing great uncertainty—you often don't know the right questions to ask, let alone the answers you will receive. Validation involves relatively low uncertainty: you are fairly confident of the answer, or at least you have a strong hypothesis, and you already know all of the questions you need ask.

Common VOC methodologies for exploration include observation/ethnographic research and in-depth interviews. Often, these are done in conjunction with each other.

The in-depth interviews require asking open-ended questions with considerable follow-up. The follow-up is in the form of "why?," "give me an example," and "how do you measure that?" A good start is getting the customer to articulate their unmet needs—today's "pain," as it is often called, but it can also mean unrealized pleasure—and that information often leads to radical innovation.

Through its close contact with its customers, National Semiconductor identified opportunities to help the engineers who were designing National's products into their system. They developed a web-based set of general purpose design tools and information libraries that reduced the time and money required to complete a design. This innovative approach, in which National redefined the relationship between it and its customers, ultimately drew new designers to National's web site for the first time and resulted in many more design wins. This, in turn, ultimately translated into large production orders1.

2. Develop a deep understanding of your customers' business

While learning "today's pain" is an excellent start toward radical innovation, the best results come when you develop an in-depth understanding of your customers' business. What is their cost structure? What is important to their customers? How can they gain an advantage over their competitors? What changes are occurring in their industry that will disrupt their business in the future?

This enables you to collaborate with your customers to identify solutions for problems which are not (yet) causing pain. Sometimes the problems are latent and will become apparent months into the future, in other cases there are creative new ways of solving a problem to produce a much better outcome and/or greatly lower cost.

By developing an in-depth understanding of a certain market segment—vendors who needed to ship replacement parts to keep critical equipment running—UPS figured out a way to solve the customers' problem: sub-24-hour delivery times (often within two hours) by redesigning the service it provided. Instead of the conventional approach of picking up the shipment from the vendor when needed, it warehoused the parts at various UPS locations so they could be shipped immediately from the location closest to the recipient. The vendors got the parts to their customers faster, and UPS increased the value of the service it provided.2

3. Learn from your lead customers

Not all customers are created equal. Some are inherently more adventurous and pioneering than others. They will modify your product to perform functions you didn't envision, make requests that seem out-of-the-ordinary, or even use your product for applications you didn't anticipate.

These are called "lead" customers (or "lead users"), and as a group they can be very innovative! You should identify whose these customers are, and monitor them closely since many of the enhancements and applications will be appropriate for a broader market. It is especially important not to routinely dismiss unusual requests as being "off-point" to the current product/market strategy, since these often are indicators of new opportunities.

Nabisco was a proactive lead user. Its engineering group designed modifications to bakery cooking and packaging equipment that increased efficiency and that were not yet available from the equipment manufacturers. Nabisco then contracted with the equipment vendors to incorporate the modifications into prototypes for its use. Eventually, the vendors included many of the Nabisco innovations in their standard designs, which Nabisco would then purchase since the commercial equipment was less expensive than the prototypes.3

4. Co-design with your customers

By involving your customers directly in the design process, you get much more input—and more of their creative juices flowing to produce innovation. Customer involvement may take the form of periodic review of designs in process (e.g., mockups, prototypes, partial products) or periodic attendance at design meetings to discuss tradeoffs. When there are one or two large customers (an OEM relationship), each customer may be represented directly. When the number of customers is large, several individuals may be chosen to represent the general population.

In the case of a highly complex product, a customer may become a formal design partner. That is what Wonderware did when designing Version 1.0 of its first product, InTouch (industrial automation software). It partnered with a local manufacturing company and offered them use of the product and virtually unlimited support in return for helping them design the product, being the test-bed and acting as a reference account.

The marketing professional can play an important role in engaging the customers in the design process by identifying and recruiting customer representatives, and by managing the relationships during the process.

5. Provide a forum for idea submission

Your customer base represents a rich source of new product ideas, if you tap into it properly. In addition to the VOC and lead user activities discussed earlier, it is useful to provide a forum for contributing new ideas. The web-based idea submission form is one method, although that provides limited feedback even if each submission receives an acknowledgement.

A more powerful method is an on-line forum in which customers can see and respond to the submissions of others—it becomes a community where customers can interact. You can increase the excitement by having contests for the best/most unusual/"I wish I had thought of that" ideas (or any other categories you can think of). While this involves more effort to set up and monitor, it is much more effective at getting your customers engaged. Any prizes you award will be inexpensive relative to the information you will get in return.

There are certainly many more ways of engaging your customers in innovation. A highly innovative company will use multiple methods. The important first step is recognizing that customers are, in fact, innovative, and using them in the idea generation process as well as in the validation of your existing plans.

(In Part 2 of this 3 part series, we'll explore this topic further.)

Notes:

1Patricia Seybold, "Outside Innovation" Collins, 2006

2Donald Lurie et. al, "Creating New Growth Platforms", Harvard Business Review, May 2006

3The PDMA ToolBook for New Product Development (Paul Belliveau, Abbie Griffin and Stephen Somermeyer editors), Chapter 10, Lead User Research and Trend Mapping by Lee Meadows.

Note: MarketingProfs is interested in learning more about the role of marketing in your company. Please take this short 20-question survey (it should take less than 10 minutes to fill out). Those who take the survey will have access to the full report when it is available.


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Leland D. Shaeffer is Managing Director or PLM Associates (www.plmassociates.com). Reach him at lee.shaeffer@plmassociates.com.

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