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  • 1. Until You Ask the Customer… You’re Just Guessing Deborah Hensley Noveon, Inc. CDMA – April 19, 2006© The Lubrizol Corporation 2006, all rights reserved
  • 2. Until You Ask the Customer…You’re Just Guessing! Have you ever wondered how we put a man on the moon before we thought about putting wheels on luggage? Why should we ask the customer? Mechanics of customer interviewing The Industry Satisfaction Gap Examples of market-driven product developments© The Lubrizol Corporation 2006, all rights reserved
  • 3. Collaboration and Engagement:The Benefits of Customer Interviews Background: Hewlett-Packard has been a leader in developing and using these customer interview best practices. Over 200 HP practitioners responded to a survey as follows… This Program… Has been valuable 96%Directly impacted products offered to customers 90% Led to greater customer satisfaction 88% Led to unexpected or surprising info 76% 0% 20% 40% 60% 80% 100% Yes No Source: Edward McQuarrie, Customer Visits, 1998; HP study was conducted in 1990 by Corporate Marketing Education
  • 4. Value of Up-Front Definition: Causes of New Product FailuresHigh quality up-front work is critical to understanding customer needs & responding to them. Frequency Factor Was Cited as Reason for Failure 0% 10% 20% 30% 40% 50% Inadequate Market Analysis 45% Product Problems or Defects 29% Lack of Focused Marketing Effort 25% Higher Costs than Anticipated 19% Competitive Strength or Reaction 17% Poor Timing of Introduction 14% Technical or Production Problems 12% All Other Causes 24%Source: The Conference Board, Adapted by Robert S. Cooper, Winning at New Products, from D. S. Hopkins & E. L. Bailey, “New Product Pressures”
  • 5. New Product Roadmapping Building a Better Business Case…Assess Segment Understand Segment Plan Offering Build Business Case Product (Multi-client studies, (Preliminary interviews, (New Product (Justify heavy spending Develop- internet…) industry experts…) Roadmapping) typical of development) ment New Product Roadmapping Overview - Combines customer interviews with competitive benchmarking - Forms basis of strong business case for product development - Provides “roadmap” of next 1-3 Noveon product introductions Customer Interviews - 8-12 Interviews of customers & prospects by 2-man Noveon team - Captures relative importance of top 10 desired properties - Captures current level of dissatisfaction for each property Competitive Benchmarking - Noveon tests its polymers vs customers’ favorites - Noveon tests the customers’ desired properties - Noveon uses customers’ preferred test procedures© The Lubrizol Corporation 2006, all rights reserved
  • 6. 8-Step Process New Product Roadmapping 1. Set scope of product develop. project 1st Team st Meeting 2. Develop customer survey Customer 3. Gather customer data using survey Interviews 4. Plan side-by-side competitive lab study 2nd Team nd Meeting 5. Gather competitive data from labwork Lab 6. Analyze customer & competitive data Studies 7. Develop a roadmap for product dev. 3rd Team rd 8. Create a plan to develop products Meeting© The Lubrizol Corporation 2006, all rights reserved
  • 7. Customer Interviews The Industrial Analogue to the Focus Group… Similarities to a Focus Group Questions prepared prior to session Phone call & confirmation note used to set up Strong moderator skills required Significant probing employed Moderator does not have primary note-taking responsibility Rigorous post-session debriefing used Contrasts to a Focus Group You often have a prior relationship with participants Participants are usually in competition with each other Smaller groups (typically 8-10 for focus groups) Session conducted at customer’s site No one-way mirrors, audio-taping or video-taping
  • 8. Who Should Conduct Customer Interviews? Technical-Marketing Team Provides These Advantages Buy-in by your cross-functional team… Evidence acquired firsthand is much more compelling Clarity of purpose… If a sales person leads the effort, it may be confused for a sales call Richer content… Inquiry is more productive with technical experts interacting and probing Customer willingness… They are often eager to talk to technical experts who speak the same language Better accuracy…More than one set of ears to capture the dialogue and interpret the commentary
  • 9. Basic Interviewing Skills Dont ask customers for solutions Dont talk too much. Probe customer answers. Use visual aids. Paraphrase. Accept criticism gratefully. Don’t be arrogant. Be patient. Avoid peer group pressures. Allow some rambling.
  • 10. Who Should You Interview? Visit demanding customers & harsh environments that “push the envelope” Don’t keep going back to the same “comfortable” group of favorite customers The market leader is not necessarily the “innovator” Consider going downstream to talk to your customer’s customer Interview multiple buying influences at each customer location… ▪ Management ▪ Technical ▪ Marketing ▪ Manufacturing ▪ Purchasing ▪ Product Users
  • 11. Five Parts of the Roadmapping Interview1. Feedback on 10 attributes These are the most important questions. “How important is this attribute to you?” “How satisfied are you with what you can get today in this attribute?” “What test procedure do you recommend to measure this attribute?” “What test result would make you totally satisfied?” “What test result would you consider to be barely acceptable?”2. “Did we miss any attributes?”3. More feedback on top 3 attributes “If we could totally satisfy you in any three, which would you pick?” “What is the primary benefit you would get from this?” “How aggressively should we pursue each of these top three?”4. “What products should we test against?”5. Anything else we should know before starting?”
  • 12. Noveon New Product Roadmapping Survey--Overview For Customers UseThank you for helping us with this survey. Wed like to Product Offering; Polymers for CWFsask you 5 questions on 10 properties below… Market Segment: Floor Finishes Region: N. America & Global 1. How important is this property to you? 1 = Not important at all (does not matter how we do on this property at all) 3 = Not too important (nice property to have, but not too important to customers) 5 = Moderately important (most customers look for this property) 7 = Very important (this property is seen as very important by our customers) 10 = Critical (among a few absolutely essential properties) 2. How satisfied are you with your existing products performance on this property? 1 = Totally unsatisfied (our performance here is seen as a major deficiency) 3 = Unsatisfied (our performance here is seen as deficient) 5 = Barely acceptable (barely meeting most customers expectations) 7 = Good (meeting most customers expectations) 10 = Totally satisfied (if we were any better on this property, it wouldnt do us any good) What existing products are you using as a reference? 3. What test procedure do you recommend using to measure this property? 4. Using this test, what result would make you "totally satisfied"? 5. What test result would you consider to be the "barely acceptable" level? 1 2 3 4 5 Importance Satisfaction Test Result Needed to Make "Barely Acceptable" Test # Property (1-10 scale) (1-10 scale) Recommended Test Procedure You "Totally Satisfied" Result 1 Dry Film Appearance 2 Clarity/Color 3 Adhesion 4 Wear Resistance 5 Recoat & Dry Time 6 Fluid Resistance 7 COF 8 VOC 9 Low-Temp Coalescence10 Gloss/SheenAny Others? For our lab benchmarking, can you tell us which products come the closest today to meeting your needs? Producer Product Tradename & # Comments… What I like and dont like about this product© The Lubrizol Corporation 2006, all rights reserved
  • 13. Attribute Importance vs. Current Satisfaction High Important need not now Important need already being met (Opportunity!) being met (Threshold)Importance Low customer interest Low Low Satisfaction High
  • 14. Measuring the Satisfaction Gap Satisfaction Gap used Satisfaction Gap* Industry to measure customer eagerness Market Satisfaction Gap* for improvement in an attribute Scrub Resistance 22% It Hiding Poweryou to pinpoint attributes that are important to helps 38% the customer that are not being satisfied Brushability 28% Satisfaction Gap = Importance times “Dissatisfaction” Fading Resistance 25% Stain Resistance 22% SG = (Avg. Importance Rating) x (10 – Avg. Satisfaction Rating) 24-Hour Window Stick 27% Example: Sprayability 25% Customers rate an attribute 32%9 in Importance and 6 in Factory Mix Time as Satisfaction on14% Brushmark Leveling average SG = 9 x (10 – 6) 16% Crayon Removal = 36% 0% 5% 10% 15% 20% 25% 30% 35% 40% Ratings > 30% generally indicateDissatisfaction *Importance times high eagerness (100% = Totally Dissatisfied on a Critical Attribute)
  • 15. Satisfactio w C rren S p ly n ith u t u p Importance of Property W ea W 0 5 10 th ea er th 0 5 10 in g er in Di g rt Di Pi rt ck Pi -U ck p -U Ef flo Ef p flo re El reEl sc on sc on en ga en ga ce tio ce tio n n @ @ Br Br ea ea k k Ti nt Ti nt Re Re te te H2 nt io nt io O n H2 n Ab O so Ab rp so Al tio ka n (5 = "Nice-to-Have"; rp li Al tio Re ka n si (5 = "Barely Acceptable"; li st Re an si Te ce st an ns ce ile Te El St ns re Current Industry Satisfaction ile as ss tic St Re El re as ss co tic Fl ve ex ry Re ib co ili ve ty Fl ry @ 10 = "Critical" Property) ex -2 ib 0 ili 10 = "Totally Satisfied") ty @ -2 0 Importance of Properties to Customers Mean (Most Important on Left) "-1 Sigma" "+1 Sigma" Mean "-1 Sigma" "+1 Sigma"
  • 16. New Product Roadmapping Output ExampleArchitectural Specialties; Vertical Masonry Industry Satisfaction Gap (Importance x Dissatisfaction) (100% = Totally Unsatisfied on a "Critical" Property) 40% Initial Product Development Target Area Satisfaction Gap 30% 20% 33% 10% 22% 21% 19% 19% 20% 13% 12% 12% 13% 0% ce -20 ss p n ing ce n k ry ea -U tio tio ve an re en er y@ Br ck rp ten St co ist sc th Pi so n@ Re ile es ea Re re lit rt Ab flo ibi ns li R W Di tic nt tio ex Ef Te O Ti as ka ga H2 Fl El Al on El© The Lubrizol Corporation 2006, all rights reserved
  • 17. Road Mapping ConclusionsArchitectural Specialties:Vertical MasonrySatisfaction Gap Dirt Pick-Up WeatheringHigh Interest in a “Thin Film Coating” Semi-Elastomeric (8 mil DFT) Less elasticity than “true elastomeric” Long-lasting clean, appearance Application over higher alkaline materials Crack bridging performance
  • 18. Road Map…then Benchmark Commercial products available in the marketplace Competitive products Products from your current product offering and experimental products if you have them Evaluate the products using the parameters and performance standards revealed in the road mapping
  • 19. Identify Product Development Objectives Dirt Pick-Up Resistance Weathering and Yellowing Resistance Tint Retention Efflorescence & Alkali Resistance Water Resistance Quick Dry to Prevent Blotching Due to Early Rain Elongation & Elasticity Low Film Formation Temperature – 0oC Binding Power for Fillers & Pigments
  • 20. Translate Satisfaction Gap to Value Proposition Noveon Waterborne Carboset® Acrylic and Styrene Acrylic Semi- elastomeric polymers for High Performance Masonry Coatings Carboset® AE-960 & Carboset® SA-860 offer the complete combination of performance properties: Clean, long-lasting coatings Consistent coating appearance and color Application flexibility Crack bridging performance In-can stability Carboset® is a registered trademark of The Lubrizol Corporation
  • 21. Use Satisfaction Gap to Develop Selling Tools Carboset® AE-960 and Carboset® SA-860 Outstanding Dirt Pickup Resistance Commercial Competitive Carboset ® Coating Polymer SA-860 Carboset ® AE-960
  • 22. Additional Case StudyClear Wood Finishes:High performance floor coatings
  • 23. Understanding Customers Emerging NeedsClear Wood Finishes: High performance floor coatings Industry Satisfaction Gap(Importance x Dissatisfaction) New Product Roadmapping New Product Roadmapping (100% = Totally Unsatisfied on a "Critical" Property) 30% Surveyed 16 global Satisfaction Gap leaders 20% Queried on 10 properties 10% 20% 18% 23% 22% Satisfaction 14% 12% 8% 12% 12% 3% Importance 0% Test Procedure or F C e en e n e ce ce nc CO im nc VO sio ol he an en ta yT ta /C he s/S ar sc sis sis ity Dr Desired test results Ad pe ale os Re ar Re Ap & Cl Gl Co r at d ea ilm ui co p Top competitors W Fl m yF Re Te Dr w- Lo Higher solids and lower VOC for formulation and polymer usage versatility Lower color development, high gloss capability and better in-can stability Rapid early hardness development
  • 24. Road Map…then Benchmark Comparison with Commercial Benchmarks Solution Color VOC Solids, 120°F Early Hardness WB OMU Polymers WB OMU Polymers after 4 wk. in 120°F wt. % Stability Development g/L Oven Commercial Excellent 31 Yellow/Amber Excellent 250 WB OMU - A (No change in visc.) Commercial Poor, Visc. 33 Light Yellow/Amber Poor 200 WB OMU - B Increase Excellent No change, Milky Sancure® OM-945 45 Excellent <130 (No change in visc.) White SANCURE ® SANCURE® COMMERCIAL COMMERCIAL COMMERCIAL COMMERCIAL OM -945 OM-945 WB OMU - A WB OMU - B CWF - 1 CWF - 2 NOVEON WB OMU LEADING COMMERCIAL WB OMU BASED ON COMMERCIAL WB OMU Sancure® is a registered trademark of The Lubrizol Corporation
  • 25. Translate Satisfaction Gap into Value PropositionSancure® OM-945Waterborne Oil-Modified Urethane Dispersion Outstanding durability in a waterborne one-component Ideal for both DIY and Contractor markets Higher solids excellent pigment compatibility – suitable for line-marking paints and specialty enamel Lower VOC’s and reduced worker exposure Excellent in-can color stability and non-yellowingSancure® OM-933Waterborne Oil-Modified Urethane Dispersion Traditional solids level Quick drying, early mar and water resistance
  • 26. Benefits & Expected Results New Product Roadmapping Benefits - Promotes “outside-In” thinking over internal thinking - Quickly focuses team on product development objectives - Avoids project scope creep & second-guessing - Engages customers & prospects at 3 points: • Initial survey • Feedback on industry survey results • Prototype offering based on customer input - Builds customer confidence Expected Results - Faster time to market - Reduced development costs - Higher hit rate - Faster shelving of unattractive projects© The Lubrizol Corporation 2006, all rights reserved