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Is Your B2B Market Research Half-Baked?

If it does not include a quantitative measure of market needs, it is.

Marc Benevento

Industrial Market Insight

First, the good news: if you include voice of customer research in your front-end market research, you are on the right path.  Capturing the voice of customer (VoC) is the most reliable way to identify unmet market needs.

Now, the bad news: if your VoC research does not include both qualitative and quantitative methods, it is half-baked.  Just as batter is not a cake, a half-baked marketing process does not lead to successful new products and services. Without both qualitative and quantitative portions of VoC, there is no way to be sure that you are focused on the most significant unmet market needs. 

Frequently, B2B companies engage in qualitative market research informally through customer meetings and sales calls. They then develop products or services based on what they heard and hope the market will want this product when they launch it a year or two later.  These products are designed based on a myopic view of the market based on current products and customers, rather than a comprehensive view of market needs. The result is disappointment when new product sales fail to meet expectations.

Adding some structure to VoC processes can help. Research by the AIM Institute shows that nearly 90% of respondents felt that use of “Discovery interviews” – a structured process to uncover desired customer outcomes – resulted in a deeper understanding of customer needs as well as yielding information that was more valuable and unexpected compared to informal processes[i].

Better interviewing techniques are only half of the equation. Without an unbiased, quantitative measure of desired customer outcomes, it is impossible to be certain your project is focused on significant unmet needs. The quantitative portion of market research enables companies to distinguish market needs from wants, which is critical to success in B2B.  Defining a project properly prior to development, which includes distinguishing between “wants” and “needs” can make B2B projects three times more likely to be successful[ii]. With this information in-hand, why would companies skip this critical step?

Industrial new product success
Factors affecting industrial new product success rate

Companies omit the qualitative step of market research for a variety of reasons, including:

  • A belief that they have heard the same things repeatedly, so they already know what is important to customers
  • Pressure to accelerate the timeline and begin developing a product or service immediately
  • Lack of a process or budget for quantifying customer needs

Many B2B companies, industrials in particular, work in highly concentrated markets and spend a lot of time talking with customers and fall into the trap of thinking this is sufficient research. Without a formal VoC process, important desired outcomes can be missed.  It is also common for customers to talk about issues that are urgent, but not important in the grand scheme of things. If an effort to quantify desired outcomes is not taken, companies often find new products aimed at the wrong set of outcomes.

Time is another reason companies fail to conduct both steps of VoC research. Every company wants to accelerate organic growth efforts, and one drawback of VoC is that it can take 4-6 months to organize, schedule, and conduct qualitative interviews, and another 2-3 months to capture and analyze quantitative data. Product development can then take 6-12 months, if not longer. In the spirit of “failing fast” companies often decide to skip the quantitative step to trim a few months off the development cycle.  The team spends a year developing a product that the market doesn’t need, and, ironically, failure comes much more slowly than intended.  The time spent on qualitative analysis not only improves the chances of success by a factor of 2-3 but can also accelerate development by focusing the team on exactly what is needed, informing trade-off decisions, and eliminating unnecessary features. 

Finally, many industrial companies do not have a dedicated marketing process or function to execute these steps. New Product Blueprinting™ is a best-in-class tool for VoC in B2B markets that includes qualitative methods and quantitative analysis, while integrating easily into existing product development frameworks. If you lack the tools, resources, or expertise to execute comprehensive VoC projects, Industrial Market Insight can work with your team to complete projects at a B2B-friendly budget.  Schedule a call with Industrial Market Insight to learn how to prevent half-baked market research and improve sales, margins, and time-to-market of new products.

[i] “Guessing at Customer Needs”, Dan Adams, The AIM Institute

[ii] Winning at New Products, Robert G Cooper

5 Steps to New Product Success

Marc Benevento

Industrial Market Insight

Some studies cite new product success rates to be as low as 10 or 20 percent, while other research shows the success rate near or above 60 percent for industrial products.  There is much debate about the “correct” figure, which depends upon the definition of success and when one begins measuring.  What is certain is that investment in new product development is necessary to drive growth, and companies should endeavor to maximize return on investment in new product development.

Improve your company’s new product success rate by focusing on establishing a strong value proposition very early in the new product development process. The value proposition is not only a tool for articulating benefits of a product or service to prospective customers, but the process of assembling it requires a development team to focus on delivering true value to the customer.  Investing time and resources to better define projects can result in faster technical development, increased peak sales, and accelerated business growth.

Given the importance of value propositions to business growth, it might be surprising to learn that many companies in the business-to-business world feel they are not proficient in constructing them.  In a recent Industrial Market Insight survey, the ability to develop a value proposition ranked as the most pressing concern of industrial marketing professionals.

Although it takes considerable time and effort to craft a strong value proposition, the five steps below outline a clear path to success.

Step 1:  Create a customer-oriented statement

Value propositions should be written for the customer in language that is meaningful to them.  Benefits should be stated from the customer’s perspective.  For example, instead of listing a benefit as “low viscosity”, explore costs and challenges with “pumping and metering highly viscous liquids.”

Step 2: Identify the target market or customer as specifically as possible

For industrial products, this could include identifying customers that make similar products, or those that use the same process or specific type of equipment.  The better the target is defined, the more precise your team can be when developing a solution.

Step 3:  Identify and address the most meaningful outcomes

This means the project team has listened to customers, identified and prioritized their needs, then elected to address the most significant unmet needs of the target customer group.  Too often, teams focus on customer needs that can be addressed immediately, and fail to identify larger, more urgent, more profitable opportunities. This is a critical, yet often overlooked, aspect of value proposition development.

Step 4:  Quantify benefits

Demonstrate, for example, how much money or time can be saved if the new product is selected instead of other options.  Reporting the relative change in performance against an existing or competing product is a great way to quantify benefits.

Step 5:  Differentiate from the competition

Demonstrate how customers will benefit by selecting your product instead of competing offerings.  Using the results of benchmarking tests to show benefits relative to competing products is one way to accomplish this and showcase the hard work of your development team.

If you follow the five steps above, you are well on your way to establishing a winning value proposition for you new product or service.  Visit the Industrial Market Insight value proposition page for more pointers, or to see how well your value proposition practices compare to the best in the industry.

Marc Benevento is the founder and managing director of Industrial Market Insight, a consultancy focused on the needs of manufacturing companies seeking performance improvements and organic growth.  Industrial Market Insight has tools and resources to help uncover and market needs and translate them into new business opportunities.  More information can be found at www.industrial-market-insight.com or by email:  info@industrial-market-insight.com