The Company knows all. Since customers really don’t know what’s possible, let’s have the R&D team push the envelope with new and derivative concepts and products, and then have marketing and sales convince the customer of what they really need.
Success doesn’t always breed success. Feeling a false sense of security in knowing exactly what customers want and need happens most frequently with companies that have had a major new product success. They become too surefooted and less market vigilant, so they seek to shortcut the process by developing solutions without much (if any) market validation. They often do this without proper customer relationship management strategies. This is especially true in developing a new generation of products or what I refer to as derivative products. The thought is, “We knew what the customer wanted in Generation X so why not add to it and update for Generation Y?” Mistake!
Customer relationship management is essential to success, but guessing at what the customer needs is problematic on a number of fronts:
- Adding capabilities to the product invariably means a higher Average Selling Price (ASP) that customers may not be willing to pay. The company is later forced to cut price and compromise margins to get sales (I’ve had a lot of input on this from CFOs).
- It makes too many assumptions and doesn’t take a fresh look at what customers may need (yes I know, “Customers don’t always know what they want,” so it needs to be teased out through careful – but not necessarily costly – research)
- There is an underlying assumption that because the sales channels have figured out the current product, they can certainly find success with the new version. So when the channels have a hard time selling new versions, they are often blamed for being resistant or not working hard enough. This causes ill will and tension between sales, marketing, and product development.
We don’t need to go much farther today than RIM’s Blackberry, which was once the darling of business cell phone PDA users. Now RIM has had more than a few product design missteps and is left with a future that is cloudy. As RIM continued to do what they always did well, competition raised the bar. Now the Blackberry is struggling to catch up and could well be left behind. One company who has had much success is Apple, and while Steve Jobs doesn’t openly admit to doing much research, the company does in fact study consumer’s usage needs, in high detail.
Folks in R&D can become lethal in developing products if they are presented with key issues and problems that are being faced in the use of various devices or any other products. I’ve found that if R&D is left with the mantra “Create baby, Create!” they will, but are then left to think only in terms of technical specifications and not in terms of customer needs. I’ve learned over the years that R&D folks work quietly but are intent on helping make a difference for their company. They would rather be working on something that has a chance of being a homerun than taking lots of swings and striking out.
My suggestion is that R&D should carve out 10% of their budget to invest in effective Voice of the Customer research. This is essential tocustomer relationship management. This investment, if applied properly, will have a multiplier effect on products and solutions that truly connect with the market. If companies think that marketing should do this, even if they do, the investment will come too late – after the product has been baked. Besides, marketing isn’t given a budget that comes remotely close to what R&D has to invest.