"You see things, and you say: 'Why?' But I dream things that never were, and I say 'Why
not?'"
George Bernard Shaw
Why not, indeed. The corporate response should be, is there any profit involved? One of the
world's most successful product-oriented companies lived by this George Bernard Shaw quote. The result? Revenue went through the roof. The problem
was, so did costs. It's relatively easy to make $62 billion in revenue if you are spending $70 billion....
Many product oriented companies find themselves in the position of "making things" rather than
satisfying
customer needs. I believe this stems from the fact that many product companies, founded by and perhaps still run by an engineering owner, focus
almost exclusively on
building the best product. Having the best product is not necessarily a bad thing. Yet the best does not always become commercially viable. There is
a
litany of great products that never achieved commercial success. IBM's OS/2 is one example. It was largely lauded by many critics as being better
than
the competition, but when it came out, it was up against Windows 95. Guess who won, despite being considered an inferior product?
Product-based companies looking to create the best or most innovative product eventually become product focused and loose sight of who they are
building
their great products for. IBM is the shining example of this type of company because they not only typify the problem, but they also found their way
out.
Up until the mid-1990s IBM was laden with research and development, always looking inward
for new ideas, believing they only needed to fill
market voids and not having to actually find new markets, or that the markets will find them. And what happened? They were successful, on one
criteria, bringing in huge amounts
of revenue (about $62 billion), but it cost them even more (about $70 billion) to make those sales. Hardly a sustainable business model.
The reason IBM and other product-based companies end up in this situation is that the motivation
to discover customer needs has diminishing
priorities, especially when the customers voluntarily come forward with new product demands. Moreover, in a product-based company, the customers are
generally seen as unpredictable, stupid, and generally irksome.
So why bring customers into the mix when they just get in the way?
The reason is because a company is in business because of the customers. We touched on this in
a previous newsletter and won't go into
depth here. Suffice it to say, without delivering real value to the customers, there will likely be no business. Since marketing's role is to
match customer needs with the company's capabilities, it is essential that marketing's and product development's efforts become
coordinated. And this is exactly what IBM did to improve their business.
One of the best ways to discover what your customers value is to simply ask them. This is
actually more complicated than it sounds. Paraphrasing Henry Ford, if the Ford Motor Company simply asked their customers what they
wanted, Ford
would have made faster horses. Therefore, you have to be diligent in your search for what your customers really value.
One of the most important aspects of creating valuable solutions for your customers is
thoroughly understanding their needs. To create and sell solutions, the organization must have an extensive database of information on the customers
and their business processes. This can be done through surveys, questionnaires, and direct experience with your customers. One of the most important
and straightforward methods of understanding the needs of your customers is to interview them.
Once you have information about what your customers perceive as issues, you need to do something
with that information; you need to understand and distill the raw data into something usable. A needs analysis, using such tools as problem
statements
and fishbone diagrams, will help you transform the raw data into more digestible information and will help you understand the root causes of issues
and turn them into what would be considered a valuable solution.
To get you started, we are offering our latest Marketing Tool & Diagnostic, "Creating Solutions through Needs Analysis," for free through the month of January. Simply visit our online store to
download this Marketing Tool to get started with your customer requirements gathering process. And, of course,
if you need
assistance or simply want to ask a question about how to better use this tool, we are always available.
Discover your marketing elements.
