5.5 Deep Customer Insight

When it comes to R&D success, deep insight into customers' needs is more important than size of R&D budget, quality of engineers, technology deployed, or market research intensity. 1 DeWalt's president, John Schiech, for example, described DeWalt's secret: "It's engineers and marketing product managers spending hours and hours on job sites talking to the guys who are trying to make their living with these tools."2

You must, however, do more than keep the customer in focus during idea generation. You need to pay close attention to customers in every phase of the innovation process, from idea generation to development to launch. For example, Fred Palensky, 3M's chief technology officer explains: "Our goal is to include the voice of the customer at the basic research level and throughout the product development cycle, to enable our technical people to actually see how their technologies work in various market conditions." 3 Let's take a look at some of the tools companies use to get into the lives of their customers and understand their needs (see Table 5-2).

Table 5-2

Tools for Obtaining Deep Customer Insight

Traditional Market Research
Customer Surveys	Surveys poll customers to identify their level of satisfaction/dissatisfaction with existing products and to discover their express and hidden needs and expectations for new products.
Focus Groups	Bring a number of customers (usually 4 to 14) together with a moderator to discuss their experiences, needs, and expectations regarding a new product concept.
Expert Panels	Rely on a group of experts to gain insight into product characteristics and viability. Usually used when specialized or technical insight/ opinion is needed.
In-depth Interviews	One to one discussions designed to identify the underlying motives regarding the interviewee's attitudes and behaviors.
Observational Approaches
Shadowing	Researcher accompanies (i.e., shadows) users to observe how they use a product or service in a real-life, day-to-day setting.
Ethnography	Market research that involves “living” the life of the customer to understand the consumer in terms of cultural trends, lifestyle factors, attitudes and how social context influences product selection and usage.
Sales and Customer Support Feedback
Cadence Calls with Sales Team	A systematic approach of talking with members of the sales team on a regularly scheduled basis to identify what is working, what needs to be addressed, and opportunities for future products.
Digital Tools
Customer Profiling	The use of “big data” to identify develop a detailed description of an individual customer’s shopping behaviors. The description may contain demographic, geographic, or psychographic characteristics. Analysis seeks to identify “hidden” patterns that hold true across a segment of customers.
Crowdsourcing	The outsourcing of idea generation to individuals (e.g., customers, suppliers, employees, general public) who might have good, insightful ideas—usually via the Internet.
Social Networking	An attempt to analyze comments (or other content) found on dedicated websites to identify important product trends or customer pain points that might lead to new product ideas.
Customer Immersion Labs
Simulation	The use of technology (e.g., virtual reality) to act out or mimic an actual or probable real life event or situation to find a cause of a past occurrence (such as an accident) or to forecast future outcomes. Simulations can show how a customer will interact and use future product designs.

Traditional Market Research

Marketing engages customers to find out what they are thinking. What are their expectations? How satisfied were they with the experience? What new products would they like to see? Classic market research tools include customer surveys, focus groups, expert panels, and in-depth interviews. You'll find these approaches very cost effective for discovery where needs can be easily articulated; that is, for product extensions or incremental improvements.

Direct Customer Observation

Desi DeSimone, then CEO of 3M reminded us that, "The most interesting products are the ones that people need but can't articulate that they need." Although DeSimone's statement is a little counterintuitive, you've experienced this. You've been in a situation where you felt/knew that something was inconvenient or a hassle. Simply put, you knew a pain point existed! But, somehow, you had learned to live with it. You no longer really considered what alternatives or solutions might exist. You simply accepted the inconvenience as "just the way it is." As a result, if asked, you wouldn't (or maybe couldn't) articulate a need. When someone else finally brings the product (solution) to the market, you say, "Why didn't I come up with that?" One way to identify these "hidden" needs and translate them into a product is through direct observation.

Such was the case with Kimberly Clark's Pull-Ups. By adopting families—visiting homes and observing parents of two-year olds—researchers discovered that parents were looking for a way to graduate their children from diapers to "big-kid" pants. Parents, however, were frustrated with the transition process. They didn't want to deal with the mess and emotional stress that comes from soiled training pants. And they didn't want to talk about it. Michael Barry, consultant to Kimberly Clark related, "The stress in toilet training came from parents' feelings of failure, and you'd never get people to admit that in a focus group. The worst thing for a parent is to have someone gape in horror and then ask, 'Oh, is your child still in diapers?' " 4 Direct observation and storytelling validated the Pull-Ups concept. Pull-Ups met parents' ego needs and promoted children's emotional development. By helping "babies become big kids," Pull-Ups became one of Kimberly Clark's greatest success stories. By the time rivals caught up, Kimberly Clark's annual sales of Pull-Ups were $400 million per year. 5

Despite repeated failures to introduce an inexpensive washing machine to developing countries, designers at Whirlpool persevered. The 30 million low-income households in Brazil, one of Whirlpool's best international markets, appeared anxious to buy a washer if only someone would make a high-quality, low-cost machine. Independent surveys showed that automatic washers were popular—the second most coveted item among low-income consumers. Only cell phones were more coveted.

To gain deep insight into the washing habits and mind-set of poor Brazilian homemakers, Whirlpool initiatied focus groups and home visits. Dozens of representative families were "adopted" by Whirlpool researchers to provide feedback throughout the development process. Designers quickly discovered several key facts:

Washing clothes by hand required homemakers to spend hours bent over the washing tub.
Homemakers were willing to live with a slower spin cycle as long as the clothes still had the appearance of being "wrung automatically."
Low-income consumers viewed washers as a status symbol and were insulted that less-expensive appliances were often unattractive.
Brazilians prefer cheery and rounded styling—control panels that included yellow buttons and blue lettering were perceived as stylish.
White was a favored color because homemakers associated it with cleanliness.
Because the typical Brazilian worker earned only about $220 per month, the retail price point had to be between $150 and $200.

Whirlpool's answer, the Ideale, was a huge hit. In the first 15 days, Whilrpool shipped twice the number of machines as forecasted. Customer comments indicated that the Ideale had "home-run" potential. One Brazilian housewife said,

She's my second mother. Before she came along I spent hours bent over the washing tub. Now, I can put Ideale to work and do other things, like tend my children, cook dinner and even visit my mother.

Getting into the lives of customers had already begun to pay off.

Sales and Customer Support Feedback

Every touch point between your firm and a customer generates a data point. When the data points are combined, they tell a story. Many of these touches occur between customers and your firm's sales and customer support teams. You need to talk with these team members on a frequent basis—both formally and informally—to make sure you don't miss opportunities to remove customers' pain points.

Digital Tools

Technology is providing new insight into customer behavior. Customer profiling has become one of today's hot new tools. By tracking customer preferences, companies can see what you're interested in, searching for, and ultimately buying (or not buying). Companies track your behavior by getting you to use a preferred customer card or by placing cookies on your web browser. Kroger used such insight to introduce three-quarter-gallon milk cartons, which fit the needs of today's smaller families better than traditional half or whole gallon options. 6 Tesco, Britain's largest grocer, developed its highly popular "Tesco Finest" line when it discovered what customers weren't buying at Tesco: wine, cheese, and fruit. 7 Closely related, companies are using big data tools to search social media content. The goal: Identify word threads that provide insight into customer pain points—and the products that might solve them. 8

Crowdsourcing doesn't dig into existing data; rather, it lets you invite "the crowd" to share ideas with you. Procter & Gamble, one of today's best R&D companies, established its "Connect + Develop" open innovation strategy to help it look everywhere for product ideas. A. G. Lafley, CEO and instigator of Connect + Develop noted: "I'm a big believer that we sometimes need help in solving problems. So I have set a goal to get half of our innovation from outside." By 2009, Connect + Develop helped P&G obtain 42% of its new product ideas externally (up from 10% in 2000).9

Customer Immersion Labs

Customer immersion labs provide early customer reactions to new product designs by engaging actual customers in digital, simulated experiences. Gwenne Henricks, CTO at Caterpillar, notes that Cat, "makes significant use of immersive visualization, where we can bring in customers, service technicians, or assemblers from the assembly line and expose them to three-dimensional, real-time virtual depictions of new product designs. It's here that we are able to capture their feedback [in terms of] usability, serviceability, manufacturability, and the like—all of those design aspects of our product that involve interactions with humans." Finding out what works early in the design process is a big deal. In fact, companies spend as little as 5% of the total, cumulative product cost on design. However, design locks in 70%-80% of the total product cost.

You may wonder, "Is all the effort to gain deep customer insight worth it?" When you see the ROI (return on investment), the answer is clear: Yes. Companies that understand how their products solve customers' problems achieve double the shareholder returns of their less-in-touch rivals. 10

Bayerische Motoren Werke (BMW) takes pride in delivering the ultimate driving experience. BMW also prides itself for caring for the environment. BMW believes its customers do too. BMW's goals are to:

Save energy and raw materials where possible
Keep emissions to an absolute minimum
Take preventative steps to avoid or reduce waste

When redesigning its 6 series, BMW designers considered steel, aluminum, Sheet Moulding Compound (SMC, duromer plastics), and thermoplastic polymers (TP) for the side panels. To compare such diverse materials, designers used an ecobalance software program. The ecobalance system considers the environmental impacts of different materials on environmental footprint for key lifecycle stages: production, fuel consumption during use, and recycling/end of life.

After a rigorous analysis, TP came out the winner. TP's performance was superior in all three lifecycle stages:

Production (over 20% better)
Fuel consumption (11-16% better)
Recycling (over 20% better).

The 6 series became BMW's first car to use a TP side panel. BMW notes, however, that each car project must be assessed independently. The vehicle size and weight and the way it is driven can affect which material will deliver the ultimate driving and sustainability experience.

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