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Voice of the Customer for Successful Innovation in Commoditized Markets

By John Burns

In some industries, where the pace of product change is slow, products undergo little to no functional change over many years or even decades.  Examples of these industries include bearings, standardized chemicals and gasses, such as epoxy or hydrogen,  and building materials, such as fasteners and bolts.

With every provider essentially offering the same functional product, little differentiation exists between suppliers in these markets.  The product becomes a commodity, and winning becomes a race to the lowest price.  Some companies in these industries perceive innovation efforts as interesting but largely ineffective.  The reality is that companies in these markets can create meaningful innovation opportunities, but they must look beyond the core product to do so.

Voice of the Customer is a research method that can help companies in commoditized markets explore innovation opportunities and differentiate themselves from the competition beyond the core product.  Let’s look at four distinct areas where this is the case:

Services

Customers view product and service as part of the same total experience of working with your company.  As a result, improving service delivery is often an effective area for companies in commoditized markets to focus their innovation efforts.  By way of example, one of our industrial equipment clients utilized Voice of the Customer research to uncover a customer need in the area of ongoing maintenance. With this information, the company created an easy-to-use online repair-and-maintenance scheduling tool, which they provided free of charge to customers.

Processes

Evaluating how your processes make working with you easier or more difficult can provide opportunities for innovation that could differentiate you from competitors.  One of our clients used Voice of the Customer techniques and uncovered that their billing system clashed with the processes used by some of their biggest accounts. By thoroughly understanding the needs of their customers in this area, our client redesigned their billing process, thoroughly integrating it with that of their customers.  This fixed the problem.  It increased customer confidence in the company and eliminated what had become an important barrier to sales.

Delivery

Developing innovative solutions to meet key project timing deadlines can offer a potentially important area for innovation.  One of our engineered component clients recently used Voice of the Customer research to identify a need for ever-increasing speed of delivery.  Therefore, they developed a new way of manufacturing a key industrial component. This change enabled our client to deliver the component faster than the competition.

Pricing Models

Although their overall price was the same as that of the competition, another client of ours  discovered that customers believed their prices were higher.  The reason for this was that shipping costs were sometimes included in the product price; other times they were not.  Voice of the Customer research revealed that pricing was unclear to customers.  As a result, our client created an innovative way to manage shipping costs regardless of where in the world they would ship the product from.  This created a simplified pricing system for the customer where shipping costs no longer varied.  This innovation removed this barrier to purchase and encouraged clients to choose the company.

Opportunities for creating unique customer experiences exist at all the various touch points you have with the customer.  By using Voice of the Customer, companies can look beyond the core product, identify innovation opportunities, and deliver value-added benefits other than price.

Want to learn more about Voice of the Customer? Read the groundbreaking article that coined the term "Voice of the Customer" and was named one of the top 25 most influential articles in the field of Marketing Science by the Journal of Marketing Science

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Voice of the Customer

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