Innovation Insight: Ally with sales to gain access to customer insights

The history of innovation is a littered with failure. Studies regularly find that more than 90% of new products fail to meet expectations. For every Tesla in the market, there are a dozen Zeos, Edsels and LeEcos. Big ideas, smart people, and deep pockets are not enough to realize success. Innovators must gain a deep understanding of their customers.

True customer insight is as close to magic as it comes in business. Why is that?

• It allows you to understand the pains customers seek to fix, and the gains they seek to achieve.
• Once a concept is formed, feedback helps to prioritize the most important features and functionalities before you invest in building them.
• Customers may even introduce entirely new opportunities to explore that were previously hidden by a lack of awareness.
• Critical input will also highlight weaknesses in the solution so they can be addressed at an early stage. 

A recent survey by VentureBeat found that 85% of companies identified “listening to customers” as the most important way to fuel innovation. Clearly speaking to customers is a no brainer. Yet in our experience, B2B companies regularly fail to involve their customers in innovation projects.

If customer input is so important, why is it so often excluded until the product is ready for the market and millions of dollars have been invested? There are two primary challenges. First, account managers from the sales team lack incentives to support innovation activities. And second, when feedback is obtained, it is often framed as a request for a specific function and is biased towards the needs of a few customers. 

The first bottleneck is sales. Of course, account managers are well intentioned people. They don’t try to be a bottleneck. The difficult reality is that there is little to no incentive for them to support innovation initiatives, while there is a meaningful amount of risk.

Think about it. Are the commissions, bonuses, or promotions of your sales leads linked in any way to innovation success? Few are. And what about the risks? No sales lead wants to give their customer the expectation that a new product will be available until they are confident in the final offering. Innovation is all risk and no reward. To successfully mine the fortune that exits in your customers’ minds, innovators must incentivize their colleagues in sales to introduce customers, while minimizing the risk of any disruption to existing trust and relationships.

The second reason that customer engagement fails is quite simple. Customers should not be trusted to think of solutions. They lack insight into the range of technical possibilities that are available. That’s what your R&D team is for. Instead, customers should be asked about the outcomes they seek. What do they want a new product or service to do for them? What metrics are they managing? This is true value of customer input.

A related danger arises in the practice of listening to a narrow group of customers, such as “lead users” who have an advanced understanding of a product. It’s easier to speak with three highly engaged customers than with thirty ‘follower’ customers. Yet small sample sizes introduce heavy bias. And when a sample is made of the most sophisticated users, their input is likely to lead towards problems that are only felt by a small proportion of customers.

Solutions to these challenges will be well illustrated by our recent work with a large coatings company that serves the automotive OEM market. A couple dozen customers comprise the majority of their revenue in this market, so their account managers are naturally highly protective of customer relationships. Below we highlight how we set them up for success.

Step 1: Build trust and collaboration with account managers
We can approach the challenge of engaging sales teams from two angles, top-down and bottom-up. The top-down approach can be highly effective, but it requires strong organizational commitment. About 20% of the people reading this will not recognize this problem. They’ll be thinking, “but our sales team naturally collects customer input and has a great working relationship with our innovation team”. This is because they have built processes, incentives, and a culture that support collaboration. This is a long journey and will require disrupting the status quo, for example by restructuring sales incentives to include identification of new customer needs. In this article we will focus on the bottom-up approach since it yields quicker results and can be acted on without involving senior executives.

Innovation leaders cannot directly impact sales processes, incentives, or culture. However, they can make it easy and low risk to engage customers. This is a question of tactics, not organizational strategy or structure.

In our automotive coatings case study, we built innovation processes designed to yield insights that an account manager cares about. For example, they wanted to understand their customers’ strategic goals so they can improve how to communicate the sustainability value proposition of premium paint lines. At the same time, it was important to identify and mitigate perceived risks. This meant avoiding discussion of solutions in early-stage meetings and focusing entirely on customer pains and goals. This reduced the fear that a customer will hold them responsible to deliver a solution that was discussed.

Step 2: Plan customer interviews to capture wanted outcomes
Successful customer interviews deconstruct the processes associated with the product or service. Once you define the process, carefully select interviewees who are directly involved. If you interview too broad a group, you will be distracted by superfluous information that can complicate the innovation effort. Yet it’s also important to select a diverse set of customers to reduce bias and gain a more complete understanding of wanted outcomes. In our automotive case, interviewees included people from procurement and paint shop operations. We held workshops with a range of companies – international leaders, state-owned champions, domestic EV challengers – in order to prioritize challenges that are common across the industry. Additionally, this also allows you to map needs of different customers segments to enable customization of solutions or value propositions in the future.

Set expectations clearly at this early stage so customers understand that you are not presenting new solution ideas but are seeking to understand their needs. This is important to avoid misunderstandings both during the workshop or interview process, and with follow up deliverables. The last thing you want is a customer expecting you to deliver a solution that you are not planning to build.

Step 3: Moderate interviews to identify desired outcomes
A trained moderator can distinguish outcomes from solutions and can discard irrelevant comments like vague statements and anecdotes. Moderators dig beneath the surface by clarifying and validating statements to ensure participants consider the process or activity holistically. Customers often suggest solutions. Whenever this occurs, an effective moderator forces him or her to explain the underlying process and challenges that would require the solution. For example, our moderators first asked participants to describe the process of monitoring energy consumption in an OEM paint shop. They then explored the difficulties that operators encountered when seeking to reduce consumption. The moderator dug into topics like ‘errors in data collection’ to identify root causes and potential impacts on end results.

Step 4: Organize outcomes into clusters
Customers are not accustomed to discussing the outcomes they seek. As a result, interviews often begin with participants sharing loose ideas or brainstorming solutions. Yet behind each idea or solution there is generally a wanted outcome. After the moderator captures several of these statements, he or she should work with the customer to translate them into desired outcomes. A well-formatted outcome contains the type of improvement required (inform, minimize, increase) and a unit of measure (number, percentage, time) so that the outcome statement can be validated later via benchmarking surveys.

Once interviews are complete, the list of collected outcomes should be organized. This means removing duplicates and grouping the outcomes by process step, highlighting the number of mentions, the urgency level, and other details. We categorized the outcomes sought by automotive OEMs into three clusters related to managing energy and carbon consumption: establishing targets, tracking metrics accurately, and implementing changes to reduce waste in production processes. Each of these clusters had its own process with related outcomes.

Step 5: Rate outcomes by importance and current satisfaction
After you categorize a list of outcomes, it is useful to conduct a quantitative survey to rate the desired outcomes among different customer segments. Ask survey participants to rate each outcome by its importance and the degree to which the outcome is currently satisfied. These ratings are fed into a formula to reveal the relative attractiveness of each opportunity. This process helps to validate findings and reduces potential bias from the initial participants and the research team.

Step 6: Use the outcomes to direct and accelerate innovation
The final step entails using the data to uncover opportunity areas for product development, business model innovation, and market segmentation. Using the results of the outcome analysis, the coatings manufacturer identified several new software and service opportunities to augment their current value proposition by helping OEMs to understand and optimize energy consumption in their paint shops. They also were able to refine their innovation scope and avoid wasting effort on solutions that were unlikely to be adopted.

The survey results highlighted different goals and requirements between market segments. For example, some automotive OEMs have top-down carbon reduction targets that are viewed as a strategic imperative, while others are primarily motivated by direct cost savings related to energy consumption.

Step 7 (optional): Systematize customer engagement
Innovation teams can consider creating a Customer Advisory Board made up of current customers. This structure formalizes the process of engaging customers and may make them more comfortable. It also helps account managers introduce the process since it becomes ‘participation in a program’ rather than a one-off discussion. The advisory board can provide input throughout the innovation process, from initial prioritization of outcomes through prototype testing. Advisory boards are not suitable for all situations and should generally be used when customers have an interest in collaborating to guide future solution development.

Regardless of whether customer engagement is done ad hoc or systematically, it is the most crucial driver of innovation for B2B companies. When done well, workshops and interviews will allow you to understand customers pains and gains, prioritize features and functionalities, gain insight into entirely new opportunities, and identify potential weaknesses before a solution is invested in.

In the race to build the next great thing, innovators that run fastest and farthest will be those that ally with account managers and customers to gain true insight into the customer journey.