Helping Customers Achieve Competitive Advantage

By Ken Westray, PE, NPDP

Helping customers achieve competitive advantage - How do you do it? A few months ago, we covered the idea of collaborating with customers in the new product development process. The main idea was to consider using "lead customers."

While the above approach seems intuitive, we discussed how its implementation is not and some of the pitfalls to anticipate. This column reconsiders interacting with customers in new product development and how to be rewarded for your efforts.

New product developers must understand their organization's problem solving capabilities and limitations. Be prepared to answer clearly, succinctly and convincingly, "What types of customer problems do we best solve?"

With answers to the above question in mind, consider two overall strategies. One is to help customers achieve operational improvement and the other is to supercharge a customer's revenue. Operational improvement focuses on helping your customer to produce more output or do it more efficiently. You can achieve results using a combination of some or all of the following ways:

• Benchmark your customer's manufacturing/production process for areas of improvement
• Using Six Sigma or lean techniques focus on how you can reduce error and waste for better cost point
• Improve internal processes for integration with your customer
• Re-evaluate all features and specifications of your product/service for current relevance

Our experience suggests that you need to achieve a 5-10% economic improvement to make any difference in your customer's "buying motivation equation." Put directly, it's very unlikely that your customer will pay current prices for a productivity increase less than 5%. Productivity "new products" must deliver real customer value of in the customer's measurement framework.

Increasingly, more companies are finding ways to deliver more value to their customers in new product development in a different manner. They are partnering with their customers to understand the end users. Consider performing any or a combination of these steps:

• Satisfaction surveys
• Market needs assessment
• Market segmentation studies
• Other approaches like competitive research, helping your customer develop their strategic marketing plan, pricing research, etc.

Which one makes sense for you? Look to what you do best and you'll have a good indication of which strategy is more feasible for your organization.