Our work in innovation and change brings us in touch with teams from a variety of organisations – cosmetics manufacturers to local councils to insurance firms. We might be helping them through a restructure, or refreshing their strategy, or designing a new product or service – but one thing they all have in common is this: the most important person guiding the decisions they need to make is their customer.
Historically the preferences of customers were not considered to be very important at all. In 1908 the first Model T Ford rolled off (what was then a brand new innovation), the assembly line. Henry Ford is considered to be the father of mass production, and the Model T was the first affordable car, opening travel to the average middle-class American. Ford is famously quoted as saying “Any customer can have a car painted any colour that he wants so long as it is black”.
Somewhere between 1908 and today, things changed. Mass production, globalisation and the internet have all contributed to a massive increase in competition and a subsequent increase in customer choice – the amount of choice customers have today is mind boggling. The range of options offered on a RangeRover are pretty normal by today’s standards. But add them all up and you are offered over 745,000 possible variations on just one model.
I think customer choice is a great thing – it drives fantastic behaviour in switched on companies. Because to stay in business today you have to be excellent, you have to be continually improving and innovating. And you have to know your customers exceptionally well or risk designing a product or service that they don’t choose to buy.
For this reason, companies today are involving customers more and more in their product development processes – a practice we call customer led innovation. Like most toy firms, Lego used to be highly secretive and protective of its intellectual property. However, in 2006, in an attempt to turn around flagging sales, Lego took the risk of recruiting and involving customers, a group of super users, as co-designers of its next generation Mindstorms robotics – and very early in its product development cycle too – 18 months before the product would be sold in shops. Lego also launched a programme to spend more time with children and involve them more in the design of future Lego products. As a result Lego is enjoying a wave of fresh popularity.
There’s a saying at Lego: “If you want to know how a lion hunts, don’t go to the zoo, go to the jungle.”
So the first question we like to challenge teams with is this: Who are your target customers? Do you know who you want to be selling to? Which customer groups are most profitable for you? It is easy to group customers neatly into boxes according to characteristics such as their age, gender, income and where they live. But the reality is that people don’t fit so neatly into boxes. You only have to look at the city accountant who puts on leathers and rides with the Harley club on the weekends, or the mother of four running a multi-national business to see that.
It’s important to get behind the demographics and understand what customers really value. By doing this you can develop your product or service to better meet their needs, and later design advertising and promotions that really spark their interest. The second challenge is, then: How well do you know your customers? Have you thought about how they buy products or services like yours? What triggers them to buy them? What is really important to them? How do they find out about products and services like yours? How do they use them?
The secret is getting to know your customers well enough to really get under the skin of it. If your value factors are quality, price and convenience you haven’t dug deep enough. Rating yourself and your competitors or industry against customer value factors will reveal potential areas of strength and weakness, and also opportunities to stand out from your competitors, or differentiate.
A closing thought: I’ve worked with and studied a number of entrepreneurs and innovators over the years, and they seem to share a common trait which I really admire. They set their standards very high, and then keep raising the bar. They are never satisfied! I think this spurs them and their teams on to innovate and achieve excellence. So I encourage you to develop your ability to be dissatisfied. Be bold, push yourselves to find better solutions, better products, and better services – and of course, I mean better for your customers.
(Extract from presentation at Brighton College Entrepreneurship Day, 7 October 2010)
