Refreshing Your Innovation Plan for Industrial Markets

By Andrea Ruttenberg, Ph.D.

In my last blog post, I talked about 3 innovation mistakes that are common in industrial markets: building me-too products, focusing only on top customers, and listening to company salespeople or engineers over customers. As I described in the last post, none of these strategies are inherently wrong. The trouble comes from companies taking these approaches without also considering how they meet their customers’ underlying needs.  Today’s blog post will focus on using our Voice of the Customer (VOC) method to get innovation right for industrial markets. What is VOC? It’s using research to develop a complete set of customer needs expressed in the customers’ own words, organized by customers, and prioritized by customers. This definition comes from the seminal article “Voice of the Customer”, which was published in 1993 in Marketing Science by John Hauser, our co-founder, of MIT, and Abbie Griffin, now of the University of Utah.  

A typical VOC study has three phases:  

1. Qualitative Research to Identify a Comprehensive List of Customer Needs 

The first phase of VOC research requires talking with your current and prospective customers about their experiences with products and services like yours. The main objective here is to understand what’s working well for them, what’s working poorly, and why.   

We suggest having these conversations during one-on-one interviews, rather than focus groups, so that you can probe into each person’s individual experiences. In industrial markets, these conversations will likely cover several topics, including the purchasing and decision-making process, installation, usage, maintenance / monitoring, and trends, among other things. Sometimes, our industrial projects also include site visits or ethnographies, where we watch people work to understand their latent or unstated needs. (And, if your customers are talking about you or your product category online, you could also use our machine learning offering to make sense of what everyone’s saying.) 

The key thing to remember is that, as the interviewer, you’re just there to listen and learn – this is not the time to offer solutions to a problem or provide a sales pitch. This can be especially difficult in complex industrial projects, where it’s common for some customers to misunderstand important aspects of working with your product or service.  You must focus only on understanding the respondent’s experiences and frustrations, though, even if their problems have easy fixes.  

We recommend that you record all your interviews, then transcribe them verbatim. This is particularly important in industrial markets, where the topics are often complex; it’s easy to lose details if you’re only taking notes. Once you get the transcripts back, highlight them for needs. We use a proprietary software for this stage, but there are other programs that can help, too. Depending on the number of people you interviewed, you’ll likely end up with several hundred highlighted needs. Before finishing Phase 1, winnow the needs down to something more manageable by removing duplicates and needs that are out of scope. In the end, you should end up with a comprehensive list of 80-130 customer needs.  

What kinds of needs might you uncover during an industrial project? Here are a few masked examples from a recent industrial project:  

 
2. Affinitize the Needs into Groups that Go Together 

The second phase is a short one – it typically takes only a few days. However, it directly affects the third phase, so it’s important to get it right.  

The goal of the third phase is to prioritize the needs you uncovered during the qualitative interviews. However, if we ask survey respondents to prioritize 80-130 needs, many will get tired of completing the survey and they’ll drop off. Plus, product managers and engineers may become overwhelmed if they must consider that many needs when they’re developing their next product or service.  

During this phase – affinitization -- we affinitize the 80-130 needs, or bucket them into groups that go together. We call these groups “Secondary Needs”. When AMS is leading a project, we typically affinitize the needs ourselves, run them by our client, and then – and this is most important – we confirm the affinitization with a few customers. Your customers may perceive your product category differently than you do, and we want to preserve their understanding, not your company’s. This is particularly important in our industrial projects. Because the products and services are so complex, your company make think about and organize the needs much differently than your customers, causing you to miss out on key insights.  

In the end, we’ll have 25-30 secondary needs. We feed these into our phase three quantitative survey.  

How does affinitization work? Using the same masked example, we’d could bucket those six needs original needs into two secondary needs:  
 

3. Prioritize Your Needs  

During this final phase, we ask customers to rate how important each need is, and how well those needs are being satisfied by your company and others’ in the marketplace. The goal is to identify focus area needs – those that are very important, but not well satisfied by the options currently available.  

Sticking with our example, we may find that:  

In this case, we’d recommend our client put more energy into finding a solution for “Product is ready to be put into my equipment right when it arrives” rather than the other one.  

The nice thing about prioritization for industrial markets it that it’s accurate for several years. For consumer work, or in more fast-paced industries, we’d likely need to repeat the prioritization every year or so. For industrial projects, where innovation is often slower and more incremental, prioritization will probably last closer to 3-5 years.  

Wrapping it all up 

It takes time to get innovation right. Although it’s tempting to take short cuts like the ones I outlined in my last post, by using our VOC method, you can make sure you’re developing products and services that meet your customers underlying needs. VOC is especially well suited for industrial projects because you can explore several different topics and understand the perspectives of people up and down the value chain. By spending the time doing things right, you’re more likely to ensure that your new products and services succeed.  

To learn more about market research for B2B markets, read our comprehensive guide: