Many executives are becoming frustrated in the attempt to keep up with customer needs, which are changing at increasingly higher speed. And service companies are by nature of their work close to their customers and traditionally focus on the good customer experience.
For that reason, it is tempting to imagine that the service companies are front runners when it comes to being customer oriented and including the customers in the development of new services, and this should enable a faster time to market and higher success rates for the launched services. But somewhat surprisingly, Valcon’s latest Growth Survey shows that a relatively higher number of service companies experience challenges when launching new services. Some of the primary causes mentioned include a lack of thoroughness and testing of the concept in the development phase as well as a lack of relevance of the new service. Both causes would seem to indicate that the customers and customer insights are not included to a sufficiently high extent in the development phase.
Experience shows that time to market is optimised, and that the chance of success with the new service or product is improved if it is made clear as soon as possible what truly adds value to the customers. In other words, what the customers are willing to pay for.
Simply put, there is no company today regardless of industry that can afford to not include their customers in the development of new products or services. Customer focus is a critical competitive parameter across sectors and industries.
Originally published in Børsen Ledelse.
Customer insight remains a success factor
My claim is supported by the latest Growth Survey, which shows that two factors remain constant among those companies that have been successful in achieving their sales targets within the first year of launching a new product or service:
- Their innovation process is focused on customer feedback and customer insights
- Their organisational structure enable cross-functional teams to cooperate on driving a customer-oriented launch all the way from R&D to after-sales activities
One example of a service company which has been successful in maintaining focus on the customer in their development of new services is BC Hospitality Group, which is one of Denmark’s largest companies within hotels, conferences, fairs and hospitality. Frederik Mohr is Group Director of Business Strategy in the group, and he offers his suggestion for how to handle this challenge: “In the service sector, we live and breathe to ensure the good customer experience for the customer, and it is therefore critical to frequently pause and reflect on how we can best accommodate the changing needs. In BC Hospitality Group, we always seek to provide our customers with the unique experience as we know that we are hosts to a moment that is important to the customer. At the same time, we modularise and standardise individual elements, which can be combined in numerous ways, to thus ensure that we provide the customised customer experience. This means that we do not have to reinvent the wheel each and every time but can instead focus on increasing quality while becoming even more flexible.”
Go slow to go fast
”Go slow to go fast” is a useful mantra to remember if you want to achieve fast time to market combined with a successful launch of a new product or service.
BC Hospitality Group are proponents of that mantra. Frederik Mohr recognises the general tendency in the service sector to not sufficiently emphasise the need to be thorough in the development phase. “We have learnt that it makes good business sense to be thorough when developing ideas and to listen to the customers. For example, we use idea sourcing via social media, where we among other things encourage our customers to come up with suggestions for new fairs, etc., and our employees are similarly encouraged to present ideas via various forms of dialogue channels. We also use brainstorming in the idea development phase much more than before, and we typically identify four times as many influencing variables in that way. This means that we are now able to make our decisions on a far more nuanced and informed basis.”
Remember the customer throughout the entire value chain
Customer insights and involvement throughout the entire value chain is a necessary success factor for both service and production companies, and service companies have an edge in the form of their close contact with their customers and their tradition of focusing on the good customer experience.
If I am to leave you with three specific recommendations for how to ensure fast time to market and a successful launch of a new product or service, it would have to be the following:
- Involve your customers as much as possible throughout the development phase to ensure that they are actually interested in the new product or service. There are many ways to include the customers, such as focus groups, via social media and a general assessment of existing products and services
- Organise your company to enable cross-functional teamwork Knowledge-sharing and cooperation across the company is crucial to ensure that you realise the synergistic benefits of the good ideas. This could be achieved by creating cross-functional teams or by using digital knowledge-sharing platforms
- Do your homework Experience and the result of Valcon’s latest Growth Survey show that being thorough in your R&D phase as well as consistently using customer insights will lead to an optimised time to market and a greater chance of success with your launched product or service
Originally published in Børsen Ledelse.