Is there a need for the Voice of the Customer at the Back End of Innovation?
I had the opportunity to spend several days with a number of innovation executives at the Back End of Innovation Conference, in Santa Clara. ‘Back end’ innovation specialists differ from those that deal with the ‘front end’ innovation, in that they are focused on turning ideas, insights and trends into results. This creates business practices that are heavily immersed in metrics, process, and returns on investment, as leaders look to demonstrate the value that innovation brings as a business practice.
On initial inspection, one would think that crowdsourcing and online community technologies would not deliver additive value to ‘back end’ processes, however, after spending time in all the great sessions that this conference delivered, there are a number of clear places where the customer perspective can help back end of innovation executives further the goals of their team and their stakeholders.
Fail Fast, Fail Forward. Failing is one of the greatest fears of any executive. Many marketing and innovation leaders toss and turn over issues that are beyond their scope of control, and focus on finding ways to mitigate risk. These top executives, however, recognize that failure can be your friend, and stopping projects bound to fail before they waste project dollars, resources and time, will ultimately result in delivering products and services that are seen as innovations in the space.
This is where the voice of the customer and online communities come in. In a perfect world, new product and marketing ideas, new processes, and other innovation projects, have been thoroughly vetted before they are placed on a development and launch path. However, economic factors, technology changes, competitive activities, and other factors are always present and can impact a new product’s development before launch. An online community made up of key customers, subject matter experts and in some cases supply chain executives, can help maintain a pulse on these variables, and provide business stakeholders with real time data to assist in product development decision making, and give them ways to ‘fail out’ of a project before its potential failure.
Replacing Gut Decisions. I recently met with a process development executive for a Top 50 Consumer Packaged Goods company, and he shared some frustration over his inability to gather data fast enough to help support one of his business unit’s desire to launch a new version of a product under a flagship brand. In this case, the stakeholders did some upfront research, and after receiving positive feedback, concluded that the introduction of a line extension of one of its top sellers would provide a revenue lift for the brand. When they pre-launched, sales were strong, and that gave them the confidence to aggressively pursue the launch. This was where my client got frustrated. He had no mechanism to identify where the additional sales came from. Competition vs. cannibalization assessment, new market analysis, channel differentiation and shopper insights. This created an uncomfortable risk environment that was masked by strong sales numbers. While the business unit acknowledged that these factors were unknown, they moved ahead anyway, and did not commission a study to find out why. Two factors drove this decision
- The time to get results (estimated 6 weeks), made them worry they would miss out on their first to market window of opportunity
- It was thought that the money needed to conduct focus groups, interviews and surveys within a 1 week turnaround could be spent in other areas
Sadly, the overall sales for this brand did not meet the revised forecast and while new product sales are up, they have not made up for flat and declining sales in other areas.
An online voice of the customer community would be able to help provide better data for my client, and it would have allowed the business unit to conduct follow on discussions, surveys and online focus groups to help tweak the product and marketing messaging to leverage demographic and channel subtleties. One of our customers was able to realize an additional $85 million in true incremental revenue by injecting the voice of the customer into the back end of the innovation process.
There is a strong case to be made for using online communities to gather feedback from customers, vendors and subject matter experts through all stages of the innovation process, not just the front end. Deterrents to gathering this feedback have been time to deliver, budget and the lack of a process in place to systematically deliver these insights. Online communities, when run by the right partner, give brands a platform and process that can deliver insights and ideas at the pace of business In addition, they give innovation and marketing leaders the real-time metrics necessary to reduce gut decision making and make sound decisions. So does tapping the voice of the customer sound like something Back End Innovators can rely on? It does to me.