Awkward Reality #385

Is your pricing supplier-focused, competitor-focused, or customer-focused?

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Your pricing could be supplier-focused, competitor-focused, or customer-focused. 1) Supplier-focused pricing is cost-plus pricing. It’s inside-out, leaves money on the table and only indicates your pricing floor. 2) Competitor-focused emphasizes unit pricing, and is only useful for me-too products and gauging initial price reaction. 3) Customer-focused pricing reflects the economic impact on customers. It’s outside-in and does require more work for you. But if you want to maximize value capture, it’s the only way.

More in 2-minute video, Use value calculators to establish pricing

Awkward Reality #384

Have you separated your “farm animals” from your “jungle animals”?

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If you ran a zoo, you’d keep your jungle animals and farm animals in separate enclosures, right? Your technology development projects are untamed, jungle animals: You don’t completely understand them, and you’re not sure what they’ll do or where they’ll go next. Your product development projects are predictable farm animals. You know what they’re supposed to do, and who they’re supposed to do it for.

When you commercialize technology, you are “domesticating” wild animals for productive purposes. As a first step, you must be crystal clear which type of project your scientists or engineers are working on at any point in time. Remember, technology development turns money into knowledge; product development turns knowledge back into money. You can learn more from this white paper, Commercialize technology in 6 foolproof steps.

More in this 2-minute video, How to pursue transformational projects

Awkward Reality #383

Want to engage B2B customers? Here are 10 ways.

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If you sell into a concentrated B2B market (one with just a few customers), your voice-of-customer interviews should have two goals: “insight” plus “engagement.” The latter is important: You want these big customers to be impressed and eager to work with you, not your competitors.

These 10 approaches help you engage your customers when interviewing them to understand their needs: 1) Kill the questionnaire. 2) Let customers lead the interview. 3) Discuss their job-to-be-done. 4) Project your notes so they can see them. 5) Focus on customer outcomes. 6) Learn how to probe deeply. 7) Don’t sell or solve. 8) Get quantitative in your VOC. 9) Use triggers to generate fresh ideas. 10) Use B2B-optimized interview tools. (See the 2-minute video, Engage your B2B customers.)

These are explained in the article, The Missing Objective in Voice of Customer Interviews

Awkward Reality #382

Are you taking advantage of these 7 Design Thinking benefits?

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If you haven’t explored Design Thinking for your product development yet, I highly recommend you do. It brings seven important benefits: 1) stronger value propositions, 2) rapid customer insight, 3) improved customer engagement, 4) potential for transformational innovation, 5) less squandered R&D, 6) reduced commercial risk, and 7) the erosion of functional silos.

But if you’re a B2B company, don’t simply use Design Thinking as it’s taught in design schools. You can optimize it for B2B, especially the first two steps, “empathize” and “design”… using B2B-optimized Discovery and Preference interviews.

More in white paper, Design Thinking Optimized for B2B

Awkward Reality #381

When should you use “hired guns” for customer interviews? Consider 4 factors.

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Are there times when you should use an outside firm—”a hired gun”—to conduct your interviews? Consider 4 factors: 1) Hired guns work well if you have a big budget and success is all about this very large product launch. 2) If you have millions of prospects, outside expertise can manage the sophisticated surveys and statistics needed. 3) If you don’t need to gain deep, first-hand insights, a marketing firm’s report is fine. 4) If you’re not already spending much direct face-time with customers, let a marketing firm conduct this market research.

In general, though, when you’re serious about bringing real innovation to a targeted market segment, your people should do the heavy lifting. Understanding market needs is a competitive advantage you shouldn’t try to outsource.

For more, see 2-minute video, When to use “hired guns” for VOC

Awkward Reality #380

Beware the “Faster Horse” fallacy.

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Henry Ford is often cited for a reason to not interview customers: “If I’d asked my customers what they wanted, they would have told me a faster horse.” But this is flawed thinking for B2B markets. There are indeed B2C cases where customers can’t tell you much about their needs. Ask me what I want in a video game, men’s suit, or snack food, and I’ll probably need to see a prototype. Then I can play with it, try it on, or taste it (hopefully in that order).

Besides, B2C company employees are end-consumers themselves… so they’ve already got a good idea what consumers want. Bottom line: Your B2B customer can absolutely tell you the outcomes they want (desired end results). Once you know the “what,” it’s up to you to figure out the “how” (your new product solution).

For more, see 2-minute video, Avoid the faster horse fallacy

Awkward Reality #378

Have your observed first-domino fixation and first-domino amnesia?

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When you change a system, you always have a second-order effect. You can’t tip just one domino. Freeze discretionary spending this quarter and you’ll slow dozens of projects, as teams wait to run outside lab tests, hire technicians, interview customers, etc. Product launches are pushed back, delaying future growth. Otherwise-bright business leaders suffer from first-domino fixation over and over.

And most don’t learn from it. How often have you heard, “Well, our growth problem is all those crazy spending freezes the last few years”? Never? Yeah, that’s what I thought. I call this first-domino amnesia.

More in 2-minute video, Avoid the pitfalls of 2nd order effects