Part 1: Customer Intimacy. Key Indicators to Monitor.

By Kelly Lawrence

Introduction

In the current market, 85% of companies are in decline.[1] Four of the common reasons companies - and their new products - fail can be attributed to a lack of marketing science.[2] In this four part series, we examine each and provide indicators to help you identify areas that your organization needs to improve in order to accelerate growth.

4 Root Causes of Business & New Product Failures[3]

• Part 1: Not in touch with customers through deep dialogue

• Part 2: Lack of unique value proposition / differentiation

• Part 3: Failure to communicate value proposition

• Part 4: Inability to nail a profitable business model with proven revenue streams

One of the most common reasons companies - and their new products - fail is poor customer intimacy. Organizations are not really in touch with customers through deep dialogue.[2]  

10 Indicators That a Lack of Customer Engagement Is Undermining Your Growth.

1. Project hit rates are low.

On average, 3 in 4 new product development attempts fails.[3] Conversely, we expect 3 in 100 failures from manufacturing utilizing Six Sigma. [4] Why are we wasting our precious R&D resources?

2. Upfront project spending is a low percentage of the overall budget.

The average company invests only 10% of project spending in project understanding and the rest in solving… and even this 10% is done poorly. [5][6][7] Investing in customer and market insights focuses R&D efforts for higher returns.

3. Customer engagement does not include the ultimate decision maker.

Procurement is a necessary contact but is not the ultimate decision maker. Engaged with R&D leadership? Good, now you can understand technical requirements. Who sets the R&D direction? Usually someone from the commercial side of the organization – marketing, new business development, a business manager. If your team states they have a hard time reaching the business contacts at your customers, how can you understand and align with customer strategic direction?

4. Customer interviews do not include both commercial and technical team members.

The best customer interviews generate an exhaustive list of problems and desired outcomes. It takes different perspectives and questions to fully mine this information. If either technical or commercial is missing from the discussion, likely so is half of the customer input.

5. Customer Interviews are only held to validate your idea.

You have a great idea so you take it to customers for feedback. Great. You should be using prototyping in the innovation process. The danger comes when you are only collecting customer reactions. To offer real customer value, you have to listen to customer desired outcomes to understand the full picture. Over 80% of project teams believe advanced customer interviewing methodologies have a great or significant impact on their projects.[8]

6. Teams cannot quantify the benefit a project provides customers.

Many times project teams talk about features. A higher solids resin, a more durable faucet, a cleaner taxi… When we take the time to understand why customers need a given feature, we are in a better position to be able to effectively solve the problem and get paid for doing so. For example: I hate going grocery shopping. I don’t have an extra 1.5 hours each week to buy the same products. I wish I could get that time back to spend more time with family. I would pay a premium to get that time back. The solution: curbside pick-up and grocery delivery. Get your groceries delivered to you. For <$10, save up to 80 minutes per week and improve your lifestyle. Quantified and effective.

7. Test marketing is not conducted.

Reid Hoffman, co-founder of LinkedIn states, “Any product that you’ve carefully refined based on your instincts rather than real user reactions and data is likely to miss the mark and will require significant iteration anyway.”[9] He should know. His first venture, Socialnet, failed due to a lack of test marketing. He learned from this experience and the business world has benefited from LinkedIn. The message here is to engage customers early in test marketing to ensure the solution you are proposing to deliver their desired outcomes is viable and still relevant.

8. Customer feedback is ignored in test marketing.

Nearly 30 years after the Crystal Pepsi failure, David Novak maintains the product failed because he did not listen to feedback that the product needed adjustments in order to have a successful launch.[10] Listen and make necessary adjustments.

9. Customer feedback takes a long time or never comes.

Customers that are engaged follow-up and provide feedback quickly. If your teams are waiting on customer response after 3+ months, don’t have a feedback schedule or are not participating in product trials, the customer is not engaged and you need to find out why.

10. Communications use your language.

The first stage of selling any product is to build trust. To do so, it is critical you speak in your customers’ language. They need to know you understand. If you typically sell in pounds, but your customer buys in liters or speaks about costs in terms of dollars per square meter, it’s time to revamp your vocabulary. You’ll never achieve engagement if you can’t communicate in the customers’ vernacular.

Ready to grow? Contact us.

About Kelly Lawrence

Kelly Lawrence is the Founder and CEO of Lawrence Innovation. We bring over two decades of expertise in converting customer and market insights to growth. We’ve delivered results for B2B innovators around the world including Berkshire Hathaway’s Lubrizol & Fortune Brands’ Moen. We know how to identify profitable problems to solve, develop and communicate unique value propositions, and implement profitable business models that generate results.

Sources

[1]2020. The Board of Innovation. https://www.boardofinnovation.com/low-touch-economy/.  “The Low Touch Economy Is Here To Stay.”

[2] Eric T. Wagner. “Five Reasons 8 Out of 10 Businesses Fail.” Forbes, 2013.
https://www.forbes.com/sites/ericwagner/2013/09/12/five-reasons-8-out-of-10-businesses-fail/#4402fefa6978

[3] Dan Adams. “Drive Organic Growth With Optimized B2B Customer Interviews”. (2020, June 29). In AATCC webinar series. Retrieved from https://aatcc.webex.com/aatcc/lsr.php?RCID=279ecf38ea9644209a5eb74ac01fdaa8.

[4] Anbu Joel. https://www.fabmarks.com/blog/metrics-of-six-sigma  “Metrics of Six Sigma.” 2019.  

[5] The AIM Institute (www.newproductblueprinting.com). 2015.” Timing Is Everything. Exposing Deep Flaws in B2B Innovation Today.”

[6] Improving New Product Development Performance and Practices, American Productivity & Quality Center, 2003. 59% of companies studied spent 10% or less of total project spending in front-end work.

[7] Robert G. Cooper, Winning at New Products, 2nd Ed. (Reading, MA: Addison-Wesley, 1993)… citing 1971 work by D.S. Hopkins and E. L. Bailey, “New Product Pressures” Conference Board Record 8, 1971: Inadequate market analysis was the leading cause of new product failures, cited by 45% of respondents. 1971! Our front-end problem is very old indeed.

[8] The AIM Institute (www.newproductblueprinting.com). 2017.” Guessing At Customer Needs.”

[9] Reid Hoffman. “7 Counterintuitive Rules for Growing Your Business Super-Fast.”
https://marker.medium.com/7-counterintuitive-rules-for-growing-your-business-super-fast-9dcdc2bfc649. 2018.  

[10] David Novak. 2020. https://davidnovakleadership.com/blog/learn-from-my-crystal-pepsi-mistake/. “Learn From My Crystal Pepsi Mistake.”