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The Importance of Customer Focus


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The Importance of Customer Focus - Creating Products that Customers by
Geoffrey Huckleberry at SVPMA Monthly Event September 2003

Published in: Business, Technology
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The Importance of Customer Focus

  1. 1. Customer-Focused Product Management Geoff Huckleberry September 3, 2003DRAFT V0.3
  2. 2. Discussion Topics  My Profile  Value of Customer Research  Key Success Factors – How to Get Most Value Out of Research You Do?DRAFT V0.3
  3. 3. My Profile  11 Years of Product Management Experience with Software Products and Services  15+ Years of High Tech Experience  Blend of Fortune 500 Experience (Intuit, CCH Incorporated, American Express) and Startup Experience (ChemConnect, Instill)  Success Launching New Products and Driving Revenue Growth (566% growth in 18 mos. at Intuit, 200% growth in 12 mos. at ChemConnect)  MBA (UCLA Anderson) + BSEE (UC San Diego)DRAFT V0.3
  4. 4. Product Manager Profile  Lots of Accountability but No Authority  Must Convince People with Lots of Authority but Limited Accountability to Support Your Decisions  Accountability Includes: – Product Success (# Customers, Customer Satisfaction, Revenue, P&L) – Making Important Tradeoff Decisions with Incomplete Information – Translating Customer Needs into Executable RequirementsDRAFT V0.3
  5. 5. Customer Knowledge is Product Manager’s Key Success Factor The Better Your Customer Knowledge, the Better You Can:  Focus Development on Product Attributes that Will Most Significantly Impact Product Success  Convince Others of Your Product Decisions  Predict Product Performance  Identify New Product Opportunities  Stay Ahead of CompetitionDRAFT V0.3
  6. 6. You Have Deep Customer Knowledge When…  You Can Consistently Predict What Target Customers Will Say Before They Do How to Develop Customer Knowledge:  Understand User Profile – Function (What Trying to Accomplish) – Education Level – Affinity for Technology – Prioritization of Activities, Benefits – Pain Points (General and Related to Your Product) – Environment  Understand How Product or Substitute is Being Used Today – What Works/ Doesn’t Work and WhyDRAFT V0.3
  7. 7. Key Success Factor #1: Begin with the End in Mind  Create Customer Research Plan Including: – Objective (Key Findings) – Decisions to Be Made Based on Research – Target Profile and Sample Size – Methodology – Key Questions to be Asked  Benefits Include: – Clarity of Goals, Target, Decisions Leads to Superior Results – Buy-in from Peers, Execs  Cost of Not Doing It: – Trite or Useless FeedbackDRAFT V0.3
  8. 8. Key Success Factor #2A: Plan for Research Even Under Tight Deadlines  Benefits: – Greatly Increases Chance of Success (small percent of new products succeed) – Improved Customer Response to Launch – Focus Development on Key Value Drivers  Cost of Not Doing It – Increased Likelihood of Product Failure ≈ 90% of Effort Follows Definition Phase and is Potentially Wasted – Opportunity Cost of Mis-applying Resources – Support and Training CostsDRAFT V0.3
  9. 9. Product Development Timeline – Errors in Definition are Multiplied Range of Possible Error Range of Possible Error True Customer Definition Development Testing Sales/Marketing Implementation Need Needs Assessment -Usability Testing Rollout & Support -Beta Testing Concept Testing Product Launch/Re-launch is Expensive (Time/Money/Opportunity Cost)DRAFT V0.3
  10. 10. Key Success Factor #2B: Avoid Relying on 2nd Hand Feedback in Place of Research  Benefits: – Your Decisions Are Not Exclusively Based on Other People’s Interpretations – You Can Directly Translate Customer Need to Engineering Requirement – You Are Capable of Detailed Tradeoff Analysis Because You Experienced Customer Need and Prioritization of Needs – Role Bias – Client Services, Sales, Support will bias data based on their perspective/filter  Cost of Not Doing This: – Suspect Information. 2nd Party Probably Was Not Aware or Diligent about seeking right targets and asking the questions in proper context. – Loss of Control  Case Study: AnyDRAFT V0.3
  11. 11. When Using 2nd Hand Research Always Ask…  What is profile of interviewee. Are they part of the target?  How many people actually requested this? Recent mentions often get over-stated so best to be clear. This is especially true of Support, Client Services, and Sales.  What specifically did they say?  How did you specifically state the question?DRAFT V0.3
  12. 12. Key Success Factor #3A: Tightly Define Your Target  Benefits: – Useful Feedback That’s Predictive of Market Response to Product – Opportunity to Correlate Feedback  Cost of Not Doing This: – Irrelevant Feedback – Product Failure (impossible to optimize for unknown customer)  Case Study: CCHDRAFT V0.3
  13. 13. Key Success Factor #3B: Include Target User in Research  Benefits: – Greatly Increases Likelihood of Product Being Used – Increases Customer Satisfaction  Cost of Not Doing This: – Focus on Irrelevant Issues (purchaser/influencer often doesn’t know user issues) – Poor Penetration of User Community – Negative Impact on Renewal Rate and Pricing Power  Case Study: InstillDRAFT V0.3
  14. 14. Key Success Factor #4: Focus on Delivering Value Not Technology  Benefits: – Higher Likelihood of Product Success Since That’s Often All Customer Cares About – More Intuitive Solution  Costs: – Poor Usage and Customer Satisfaction  Case Study: InstillDRAFT V0.3
  15. 15. Key Success Factor #5: Focus on “Lowest Cost Denominator” User, Then Power User  Benefits: – Broader Market Penetration and Appeal – Superior Financial Performance – Usually Satisfies 80% of Needs With 20% of Effort  Cost of Not Doing This: – Developing product that misses broader market – Poor financial performance  Case Study: CCHDRAFT V0.3
  16. 16. Key Success Factor #6: Don’t Get Defensive -Seek Actionable Learnings!  Benefits: – Opportunity for Significant Product and Financial Improvement – Negative Vocal Leaders Can Become Best Advocates  Cost of Not Doing This: – Lost Opportunity to Improve Product – Vocal Leader Getting More Negative Resulting in Lost Customers and Negative Press  Case Study: InstillDRAFT V0.3
  17. 17. Key Success Factor #7: Be Customer Focused Not Customer Compelled  Benefits: – Understand Customer Needs and Priorities so can Optimize Solution for Maximum Customer and Company Benefit. – Financial and Customer Satisfaction Improves.  Cost of Not Doing This: – Sacrificing your company’s needs for customer’s desires. – Inferior solution and financial performance. Replacing your team’s expertise in applying technology to solve problems with that of someone less skilled (customer).  Case Study: Southwest Air, IntuitDRAFT V0.3
  18. 18. Successful Products Satisfy the Value Proposition Triangle Customer Objectives Company Delivery Team Objectives ObjectivesDRAFT V0.3
  19. 19. Key Success Factor #8: Include Your Competitor’s Customers  Benefit: – Understand Your Perceived Weaknesses Relative to Competition and How to Overcome – Understand Your Competitor’s Weaknesses and How to Position or Build Product to Exploit Them  Cost of Not Doing This: – Miss Valueable Perspective – Susceptibility to Competitor Product  Case Study: CCHDRAFT V0.3
  20. 20. Additional Research Techniques  If Possible, Avoid Bringing Sales, Client Services or Anyone Who Might Want to Cover Weaknesses (you want the dirt!)  Disarm Participant by flagging the discussion as being research, to get them to open up  Define Questions in Advance that Meet Your Objectives  Ask them to prioritize, rate and quantify where possible and explain answersDRAFT V0.3
  21. 21. Unique Application #1: Using Customer Research to Improve Product Sales  Case Study: IntuitDRAFT V0.3