Product and service innovators who are
seeking to create lasting value will embrace this philosophy. Product or service value must always be
defined from a customer perspective – not an internal perspective. An internal perspective of value is focused
upon cost and price. An external
perspective of value is focused upon demand and satisfaction. Demand and satisfaction can change overnight
based upon numerous factors outside the seller’s control.
Everyone wants to be the market
leader. But market leadership is hard to
gain and hard to maintain. Customers
have a mind of their own and they will decide what products and services
provide the most value to them. The
customer determines demand and the customer determine the measurement for
satisfaction. Therefore the product and service innovators must stay nimble and
react to quickly changing customer perception of value.
Demand
While the innovator and seller can
stimulate demand, they cannot control it.
Demand for a product or service is not static. The innovator and seller can stimulate demand
through advertising and pricing.
Competition can also stimulate or suppress demand. A market with healthy and sane competitors
will often grow the size of the market, creating more demand for everyone. A market with unscrupulous competitors can
damage the reputation of all sellers – think of the used car industry.
Outside factors can also influence
demand. Current events can drive sales
up or down. The recent banning of the
Confederate battle flag from selected government sites has actually stimulated
sales of the flag. Likewise a product
recall or bad publicity can drastically curtail demand. In 2007 there were many recalls of toys
manufactured in China because they had been painted with lead based paint. Consumers reacted to this news in Christmas
of 2007 by avoiding or curtailing their buying toys. Toy sales were down 25% even among those toys
that were not part of the recall.
Innovation will often create demand, but
the demand may be from different customers than those targeted. Roller skate manufacturers never had the
skateboard in mind when then created roller skates. But some surfers in California strapped those
onto a box and then a plank and the next thing you know there is a skateboard
industry.
Satisfaction
Innovators and sellers have more
opportunity to impact satisfaction; yet there may still be elements outside
their control. Satisfaction with a
product or service is based upon whether the product or service meets the
customer’s expectations. The product or
service is designed to provide a type of value to the customer. But the customer’s expectations can be
influenced by many factors. The seller has
the opportunity to interact with that customer and ensure that the expectations
are met.
An element of product marketing is setting
the expectations for the customer. Marketers
have a particular category of customer and customer experience in mind when
creating both the product or service design requirements and the advertising
and marketing materials. However, there
may be other customer segments that use the product or service for different
applications. Their satisfaction was not
considered when designing the product or service because it was not even
known.
Further, the customer’s expectations may be
changed by their experiences with other products or services. This experience can change the expectation
for what is considered acceptable or high quality. Because of my experience finding user manuals
and instruction books online, I now expect them to be available for every
product and I read through them for major products before buying. If the user manuals or instructions are not
available online, I do not trust the company or product and will not buy it.
Leading Customers with Customer Value
So what does this mean about customer value
and being a market leader? Two
things. One affects how you design your
product or service and the other affects how you manage customer interactions.
If your products and services are expected
to have a long lifecycle, they need to be designed to be adaptive. A product that is a fad product and expected
to be here today and gone tomorrow does not need this capability. But if your product is to have long legs, it
must be able to adapt to the changes in customers. The changes in demand and changes in
expectations will create the need for changes in your products and
services. If these are designed to allow
rapid modifications and customizations, they can quickly adapt to the
changes. If you need more information on
how to design your products in this manner, contact me.
Second, you must create, maintain, and
monitor a regular stream of customer interactions. It is not enough to survey your customers
periodically or conduct focus groups.
These approaches provide “lagging” indicators of customer
dissatisfaction. In today’s very fast-paced market, by the time these methods
inform you of a problem; your customer’s are gone. You need real-time feedback on satisfaction. This will require a monitoring system of
customer interactions that is feeding your Business Intelligence system and
providing information to both managers and front-line staff about problems and
successes. Again if you want more
information on how to design a system like this, contact me.
To lead in the marketplace, you need to be
a fast-follower. Not of your
competition, but rather a fast-follower of your customer.
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