Monday, February 23, 2015

Role of Customer in New Product Development

In my previous article: First Steps in Developing New Software products,  I had made a reference to a stage of defining product features. There are many ways to identify product features and functionality. One of the ways is to involve a potential customer in the early stage of new product development.

The key advantage of involving customers at an early stage is to minimize the risk of developing features & functions - which are of no value to customers. It also helps in taking active customer feedback at the time of product definition and that helps in a BIG way to minimize risks of product failure.

Improve the Odds By working with the Customer

I had good fortune to work at both a large technology company in Santa Clara, and also at a startup and also in a very large technology company. All through my experience, I have been involved in product development, from both technology side and business side. Based on my experience, I seen the value of customer involvement at an early stage of product definition.

Normally, all new product development goes through cycles of  "IDEA" -> "Build Product" -> "Measure Customer Response" -> "Learn from Customer Data" -> "New Idea".

Involving customers at an early stage of product development has several benefits.

  1. It will help avoid mistakes and it allows the developer to explore and iterate during the cheapest phase of development - before any code is written, and when the product is still in the mockup stage. Customers can give valuable inputs and validates the initial assumptions.
  2. It also gives a clearer picture of  customer needs and competitive alternatives. Talking to customer gives a much deeper insight into actual customer usage models and needs - there are invaluable for defining new product features/functions. In my past experience, we had a case where got so impressed with the product idea that they were willing to invest and co-develop the product. Customer, being a Fortune-500 company, thus ensured the product was an overnight success.
  3. It also helps to uncover new opportunities for differentiation from competition, and helps in clear market positioning and helps develop the product launch, and product marketing plans.
  4. It will reduce or eliminate unnecessary features, thus it will reduce the amount of product that needed to be built, and speeds up time to market!
  5. It is always better to be first in the market - even with minimum viable product. This reduces cost of development and time to market.

Customers are eager to help 

It is surprising to know that most customers are eager to help and talk about their needs - even to companions that don't even have a product.

During my interactions with customers, I have noticed that customer often tend to request features that are far more ambitious than their current needs and usage, but are willing to accept a product that meets their minimum needs.  As a result, we were able to release new product in months - and without many features which was initially planned.

Customer are also willing to give time for additional features - which helps in product road map definition. Just asking for customer priority of features helps in identifying the time scales for subsequent product releases and this also helps shape the future direction of the product.

Customer Involvement is actually an opportunity to build stronger relationships with some of our customers. We'll choose those most likely to be receptive, and we'll set expectations appropriately.

However, customer involvement does not mean building a custom product - which meets the needs of only one customer.  Its a process for gathering information, and it will require a skilled product manager to prioritize that information and figure out what and how we respond to it - and help product management do their jobs more effectively.

Customer involvement gives information on how individual customers behave and buy. This type of insights cannot be captured from market research or from usability testing. Market research and usability testing are still very imprint and customer involvement does not eliminate it.

Customer involvement is the best way to validate assumptions on who the customer is, what he needs and what he'll buy.

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