Most businesses these days are under pressure to differentiate their products and services to attract new business. Although customers can play an important role in helping companies define their differentiation, a surprising number of businesses decide to skip this important customer research and launch offerings based on what "we think our customers want."

Companies risk building offerings that customers do not want to buy by bringing products and services to market without fully understanding what customer's need, why they need it and how they need to purchase it.

How can companies remain aligned with customer needs?

There are three critical and interdependent steps in the product and service development process. There are major risks in skipping any one of them entirely.

Step 1. Discovery: Finding out what customers really need

The goal of the Discovery step is to learn about customer needs and priorities and identify opportunities to meet these demands with new or enhanced products and services.

Through guided one-on-one or small-group discussions, customers describe their unmet needs and their willingness to pay to address these needs. For priority needs, customers also discuss their ideas for potential products and services.

The result of the Discovery step is a set of product and service concepts that deliver what customers need. After these concepts have been fully defined, they are ready to be shared with customers during the Definition step.

Step 2. Definition: Shaping the offerings to meet customer needs

The goal of the Definition step is to prioritize prospective offerings and identify key features and benefits for each one.

During moderated focus group sessions, customers review and provide feedback on the proposed concept descriptions. Companies observe as customers sort through the list of potential features and focus in on features with most value. When there is an issue with a given concept, the moderator works with the customers to define changes that may be required. Often, changes are in how the proposed products or services work or are priced.

At the conclusion of the Definition step, the prioritized products and services are described in detail, including key features, benefits and pricing. Customer input is used to refine the descriptions for the final Validation step.

Step 3. Validation: Insuring your offerings fit into your customer's world

As the final step before launch, the goal is to validate that the products and services are packaged and presented in a compelling way.

These checkpoint conversations are often done one-on-one, in person or over the telephone. Customers confirm that the product and service descriptions are clear and are presented using their (the customers') words.

As customers review the refined product and service descriptions, they provide the final set of comments to fine-tune the offering and message prior to launch.

The last step continues after the product or service is launched. Companies reach out to customers to further refine the message, identify future enhancements and surface opportunities for new offerings.

Risks of Building Without Your Customers

Companies that short-cut the research process can end up pouring money into marketing activities for offerings that may have missed the mark. The risks of bypassing these research steps are that your product or service:

  • Offers limited value. Skip the Discovery step, and you may be designing your offering to meet only some of your customers' needs. You risk creating the foundation for the offering without knowing the full context for the product or service. Is your offering related to another product or service that your customer is currently using? If so, it may need to fit in with that offering in order to be a viable option. A product may need to integrate with another product. A service process may need to be incorporated into other existing business processes.

  • Doesn't meet customer needs. Companies gather critical insight during the Definition step as customers trade off features for a specific product or service. Bypassing or moving too quickly through this step can cause a company to end up with list of nice-to-have instead of need-to-have features. Will customers buy a product that is missing a key feature or a service that does not have a key step in the process?

  • Doesn't resonate with customers. Although it is tempting to rush products and services to market, it is important to first validate that you have effectively communicated your offering. Do your customers understand how this offering addresses their needs? Have you used your customers' words to describe the features and benefits that were most important to them? Do your marketing materials describe these products and services clearly and completely, including the buying and delivery processes?

Building with Your Customers

Take a look at your own organization. Are you checking in with your customers at different points in the development process to minimize your business risk?

As soon as your press release hits the street, your competitors will know about your new offerings. If you have not successfully designed, positioned and priced your product or service the way that your customers want to buy it, you may be giving your competitors a huge advantage. You have created awareness for a market opportunity that your competitors may capitalize on if you have not done your job completely.

Your customers already have a relationship with you. Consider how you can leverage that relationship to build offerings with your customers instead of for them. Build it with your customers, and they will buy from you.

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Sherri Dorfman is the CEO of Stepping Stone Partners (