If you're like most B2B suppliers, you're probably making certain predictable mistakes that can greatly impact your ability to compete. Dan Adams explains what they are...and how avoiding them can help you survive and thrive in a tough economy.
You already know that organic growth makes for a stronger company. In today's tough economy, it just makes sense to grow from within by developing outstanding products and services that win over new customers and keep current ones coming back. (The alternatives are to grow via debt financing or an army of flush-with-cash buyers on a spending spree—and clearly, neither is easy to come by these days!) Problem is, your competitors are playing by the same rules. But according to Dan Adams, you can outwit them simply by putting a halt to the mistakes you (and they) are making right now.
"Unless your company has smarter employees, some inherent unassailable advantage, or a markedly different approach to satisfying customers, those competitors always seem to throttle your growth," notes the author of New Product Blueprinting: The Handbook for B2B Organic Growth. "But what if you and your competitors were committing some serious mistakes that stunt organic growth—and you corrected them? Wouldn't that be enough to propel you to the front of the line?"
It makes sense. And Adams should know: He has spent his career helping some of the largest business-to-business companies in the world overcome the obstacles that clog up their organic growth engines—the ability to develop new "stuff" that customers want to buy. Through New Product Blueprinting (the process described in his book), his company helps clients bring clarity to the "fuzzy front end" of product development.
"In 20 years the common mistakes B2B companies make will be as glaring as trying to improve quality with inspectors rather than statistics," he says. "Correct them now and you'll enjoy a substantial head start on years of healthy organic growth."
Adams identifies the seven deadly sins that too many B2B companies commit:
Sin #1. Imagining customers' needs in your conference rooms. Does your new product process begin with the word "idea," perhaps with a light bulb next to it? So whose idea is it: yours or your customers’? Unfortunately, says Adams, most suppliers start with their solution, "validate" it by showing it to some customers, and measure market needs by watching sales results...after the product launch!
"Companies should invert this process: Begin with customer needs and end with supplier solutions," asserts Adams. "While doing things in the wrong order may 'feel' better to you, it is far less likely to result in sales and customer satisfaction. Besides, intelligent B2B customers can detect your 'validation' a mile away. They correctly sense you are more interested in your idea than in them...and that doesn't do much for the long-term relationships you need to build."
Sin #2. Relying on sales reps to capture customer needs. A salesperson is unlikely to uncover a full set of market needs if he is a) rewarded for near-term selling, b) unable to reach true decision makers, or c) not calling on most of the customers in your target market segment. But put a good salesperson on a team with marketing and technical colleagues, train all in advanced B2B interviewing methods, and you'll run circles around your competitors.
Be wary of VOC (voice-of-the-customer) consultants who want to exclude your sales force from interviews because "they can sell but not listen," warns Adams. In the long run, your company will fall behind competitors who have taken steps to develop teams of engaged and enlightened salespeople.
Sin #3. Counting on just a few VOC experts. Some companies rely on a handful of internal VOC experts to interview customers. You'll do far better training a critical mass of employees—who routinely interact with customers—to gather customer needs. Keep your VOC experts as coaches and trainers, but implement "VOC for the masses." You'll overwhelm competitors by turning a trickle of customer feedback into a torrent.
Sin #4. Using hand-me-down consumer goods methods. "Traditional VOC methods rely on questionnaires, tape recorders and post-interview analyses," says Adams. "That's fine for consumer goods, but your B2B customers are insightful, rational, interested and fewer in number. They're smart and will make you smarter if you engage them in a peer- to-peer dialogue. Use a digital projector, let them lead you to their areas of interest, probe with skill, and you'll be shocked at how much you'll learn you never knew."
Sin #5. Gathering only qualitative customer feedback. "I once had a new client who came to me extremely frustrated," recalls Adams. "He had spent months interviewing customers, only to hear his boss say, 'Nah, I don't think they want that; they want this.' Unfortunately, interviewers often hear want they want to hear…and then parade some customer quotes for support."
What you need, adds Adams, is quantitative data, which measure customer importance and satisfaction on key outcomes. Skip quantification and your new product will be based on assumptions, bias and wishful thinking.
Sin #6. Listening only to immediate customers. Unlike B2C producers, your product might be part of your customers' products, your customers' customers' products, and so on. It's a mistake to interview only your direct customers, because they are usually unable or unwilling to disclose downstream customers' deepest needs. Also, B2C producers assign "one vote" per consumer...while you need to weight the buying power and value chain position of downstream customers.
Sin #7. Ignoring competitors when you design your product. "I find most product development processes are far too casual—and late—in assessing competitive offerings," says Adams. "Your new product makes a lot of money only if two conditions are satisfied: a) it offers significant value to customers, and b) customers cannot get this value elsewhere. Interviews tell you only about Condition A. You need side-by-side testing to learn about Condition B. This allows you to attack competitive weak spots, avoid getting blind-sided, and optimize pricing."
So why is it so important to focus so intensely upon customer needs? Consider three points, says Adams: First, the average new product success rate is only one in four. Over 30 years of research says the number-one reason is inadequate market understanding.
Second, the "how" continues to get easier than the "what." You have twin goals of understanding what your customers want, and then how to satisfy them with your solutions. In these days of open innovation and global access to technology, the "how" is easier than it's ever been...if you have a solid grasp of the "what."
Finally, you reap benefits beyond good product design when you use respectful peer-to-peer interviews. You engage customers in the design process, which primes them to buy your product later.
"Our clients often enjoy benefits well before product launch," says Adams. "Their interviews cast them as caring, competent suppliers, so they have a better shot at other near-term business.
"Never forget that relationship building is everything," he adds. "We're living in an age where anyone, anywhere on the globe, at any time can start a business that competes with yours. By engaging customers in a respectful peer-to-peer dialogue and genuinely soliciting their ideas, you position yourself as a valuable partner and not just a vendor—and that in and of itself is a reason to stick with you." iBi
Dan Adams, president of Advanced Industrial Marketing, Inc., has over 30 years of experience working within and with major B2B corporations, exploring every aspect of product development. New Product Blueprinting: The Handbook for B2B Organic Growth is available at bookstores nationwide and from major online booksellers. For more information, visit newproductblueprinting.com.
