New product failure rates are notoriously hard to quantify, but empirical research suggests about 43% of all new industrial products fail. (Capital goods have the lowest failure rates, at 35%. Consumer goods and consumer services are the highest, at 45%.) 1
There are many reasons why industrial products fail, of course. But in our experience, a common reason is failing to build a product or service that meets your customers’ needs. Instead, companies focus on what their competition is doing, think only of their top customers, or rely too heavily on their company’s own insiders. None of these strategies are inherently bad. The problem comes from concentrating *only* on these strategies, without understanding how they align with your customers’ perspectives.
Here are 3 innovation mistakes that are especially common in industrial markets and how to avoid them.
Mistake #1: Building "me-too" products by copying your competitors
The lesson: Figure out why your customers’ products are successful. What underlying needs do they address? Focus on those.
Last year, AMS worked with an industrial service management company that was losing market share. Things got worse when their primary competitor developed a new customer dashboard, which displayed up-to-the-hour usage stats on slick-looking charts and graphs. Our client’s own dashboard was outdated and provided customers with limited information. Seeing the success of their competitor, many at our client’s company pushed for a new dashboard, thinking it would lead to more sales.
Our client spent millions building a beautiful, cutting-edge dashboard that outperformed the competition by a wide margin. Unfortunately, few companies bought it.
Why? Few customers cared about the dashboard itself. It was a nice-to-have, but it wasn’t worth paying a premium for. What customers really wanted was advice tailored to their specific service usage profile. The competition offered this as part of their dashboard package, and at a much lower price.
By making a “me-too” product without understanding their customers’ unmet needs, our client over-engineered their product, and it ultimately failed.
Mistake #2: Building a new product based only around the needs of your top customers
The lesson: Carefully consider whether your top customers have the same needs as all your customers
In 2017, we worked with an industrial machinery company that was moving full steam ahead on a new, taller piece of equipment. Their top customer needed it for a new product they were launching the next year. It wasn't easy for our client to develop the machinery, but they were confident that other companies would purchase it, too.
Unfortunately, they were wrong, and very few people purchased the new product.
Why? It’s true that the new equipment would have been helpful for many of their customers. However, most said it wasn’t worth the extra expense; they were happy to keep using a work-around the couple times a year when their equipment was too short.
Of course, sometimes it makes sense to build a new capability for your top customers. But the decision should be a considered one that doesn’t just assume that others will buy the product, too.
Mistake #3: Listening only to your salespeople or engineers
The lesson: Don't ignore company insiders, but listen harder to your customers
In industrial products, salespeople and engineers work especially close with their customers. They have deep expertise in complex systems, and they understand the pros and cons of their own product. Company’s insiders can provide a valuable perspective into what's working with their product and what’s not. The problem comes when companies develop products based only on their expertise.
A few years ago, we worked with a compressor company that developed a new remote monitoring system based on advice from their salespeople. Customers had been complaining that their maintenance engineers were spending hours a week walking around their plant checking on each compressor. To decreasing monitoring time, our client developed a remote system that allowed customers to monitor their compressors from anywhere in the building.
Because the product would drastically reduce the amount of time spend on monitoring, our client was sure it would be a success. Unfortunately, they were wrong.
Why? Customers wanted their compressors to be monitored manually. While maintenance staff were walking around the plant, they’d sometimes noticed problems with other equipment. Most customers didn’t want to change this maintenance strategy.
What they really needed was better advice on how often to monitor each compressor and how to cut down on the time it took to complete each monitoring task. Companies were okay with maintenance staff visiting each compressor – but they didn’t want them to spend 30 minutes at each machine.
By listening only to the voice of the salesperson, the company missed valuable information about the true underlying need.
If these mistakes sound all too familiar, or you’re afraid of falling into these problems, it’s never too late to start the Voice of the Customer (VOC) process. VOC research is especially well-suited for industrial companies. We’ll help you uncover and prioritize your customers’ unmet needs, so you don’t spend time, money, and effort on a product that ultimately fails.
Our seasoned market research practitioners offer in-depth public workshops to help you accelerate innovation in your business. You'll learn how to apply proven market research techniques to your organization to increase your innovation success.
- How Can Companies in B2B Industries Become Serial Innovators?
- Industrial Innovation in the Age of Big Data
- Voice of the Customer for Successful Innovation in Commoditized Markets
- Creating Markets: Succeeding in the Industrial Internet of Things
- Embracing Change: Listening to the Voice of the Customer in a Post-Pandemic World
- Voice of the Customer Research: Fact vs Fiction
Tags: Chemicals, Coating and Additives , Engineered Products and Components , Heavy Equipment , Manufacturing , Building Materials and Durables , Voice of the Customer