Customer Insights Optimize the New Product Development Process

July 18, 2016

A truly revolutionary product was launched in 1997, one that would allow people anywhere on the face of the planet to pick up a phone and make a call. Iridium’s satellite constellation communication network launched to great fanfare as a possible replacement to land-based cell towers, but while this Motorola-backed startup got all the technology right (the constellation is still in use today), they failed to assess the market correctly, and filed for bankruptcy shortly after launch. Iridium’s executives did not rigorously canvass the market for their product, leading to a catastrophic rollout of their technologically innovative product. Had Iridium done their homework, they may have discovered that their cost structure could not be supported by the small customer base willing to pay for their product. Instead, its research failed to provide objective insight into its market, and the result speaks for itself.

Conducting a truly objective study of the market before hitting the launch button could have avoided this outcome. Testing central assumptions, validating customer preferences and prioritizing feature sets are mission critical objectives for any B2B product development team going through the new product development (NPD) process. From a new office chair to a constellation of satellites, getting the product and the market right are prerequisites for a successful product launch. Well designed and executed customer research allows companies to hit the mark with their NPD efforts.

 

 

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Validate central assumptions early on with qualitative customer insights

 Early stage product development is generally about testing out new ideas and central assumptions about the market. Just like hockey players are taught to skate to where the puck will be, rather than where it is, product developers and managers need to position their products to meet the future needs of customers, not simply fulfill their wishes today. Isolating exactly where there is room for improvement and how you can position your future product among existing competitors is where customer insights come in handy.

Early stage product development is a critical juncture. This is the time when companies need to place big bets or fold altogether. Market research that collects firsthand customer insight about your customer base can help you validate or invalidate the central assumptions your team has about its market. When undertaking a major product launch or overhaul, most managers say the more information the better. However, having information is objective and sourced from a variety of inputs can make or break a product launch.

For products in the early stages of development, a qualitative approach is generally preferred over a quantitative approach since you likely will be sourcing insights from a smaller group of customers. For this reason, conducting more open-ended qualitative interviews or focus groups are a good choice. Reaching out to existing customers using similar products for market research also serves as a great way to build an audience for your product, especially in niche markets.

Later stage research helps nail down feature sets, customer preferences and messaging

For products further along in the development cycle, market research can help teams optimize the value of products that have already been approved for development. To paint a complete picture of your customer base gather customer insights from a variety of sources, both qualitative and quantitative. While in the earlier stages, identifying or validating customer preferences is the main objective. After a product has moved further along in the development process, it becomes important to hammer out which specific feature sets get included in the final version.

Surveys yield quantitative insights that can be especially useful for developers working on products with a large pool of potential customers. Quantitative methodologies are especially helpful for ranking the importance of features against each other, in relative terms, or as a whole, in absolute terms. Importance ranking forces participants to rank certain features or preferences higher than others (rank these five features in order of importance to you), whereas importance rating can judge which features or preferences are important in an absolute sense (rate the importance of these five features on a scale of 1 to 5). Both methodologies yield useful insights, but must be deliberately applied in appropriate contexts to yield useful insight.

For markets with a smaller customer base, such as niche B2B markets, a methodology which elicits more detailed insight from a small group of people is generally more productive. Collecting insight through customer interviews and focus groups works well for this purpose. One important consideration with qualitative interviews or focus groups, however, is sampling. Choosing a diverse set of sample participants while keeping costs low is a challenge, but one that should not be overlooked. Customer insights extracted from interviews or focus groups should ideally conform to your understanding of the market, but in cases where there is inconsistency, a deeper look may be warranted.

Present and share your data effectively for maximum impact

Even the most well thought out study could turn out to be meaningless if the results are not communicated effectively within your organization. Establish communication lines to ensure product development team members and senior management see the research. Invite as many people as you can to view survey results or interview transcripts. Moving information across boundaries between functional silos can be difficult in some organizations, but if customer research gets lost in the shuffle of interdepartmental communication, it can’t impart value into products.

Debrief sessions with senior management are a great way to share impactful insight gleaned from customer research. Discussing research findings in this way should highlight what was found in the course of research, how the new findings should be applied to the product development process and also identify new possibilities for further research. To take full advantage of debrief opportunities, engage your audience with your presentations or documentation. Rather than dumping your data into a debrief document, consider distilling customer insights into customer personas with similar characteristics. Personas give your data a memorable face and provide a common language for your team to discuss it, making it much easier to comprehend and share throughout the organization.

Customer insights are a lynchpin of the NPD process. Without a thoughtful approach to customer research, all the hard work that goes into developing a new product could go to waste. Had Iridium’s executive team insisted on investing in rigorous, high quality and objective research to inform their product planning and strategy, they could have averted their disastrous launch and possibly changed the way we communicate with eachother.



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