Focus on consumers is key to success
FIRMS THAT SEEK INPUT BEFORE LAUNCH GET IT RIGHT
Each year about 30,000 new consumer products hit the market; 95 per cent of the launches fail. That stat, from Harvard Business School professor and disruptive-innovation expert Clayton Christensen, is both alarming and has been increasing over the years, says Steve Mast, president and chief innovation officer of Toronto-based automated market-research platform Methodify and its parent company, Delvinia.
Why? A few key reasons, Mast says.
More than ever, customers are in control. They want options and they want them now, leaving companies to push out product faster than ever. “Companies are in hyper competition mode and there just seems to be more bad decisions being made,” Mast says, pointing to a growing list of tone-deaf advertising campaigns from companies such as Pepsi, Nivea and Heineken as examples that resulted in swift consumer backlash on social media.
“In many cases, these decisions are symptoms of a lack of real understanding of culture and consumer wants inside boardrooms, largely because decision-makers are relying on research that was done at the start of the development process 12 months before. By the time that idea gets into development, the consumer changes or their thinking has changed or the original objective gets lost along the way,” Mast says. “The same thing happens with products.”
While some big traditional brands seem to be missing the mark, some startup consumer-product companies are hitting the target. Look no further than razor/ grooming supply company Dollar Shave Club, which Unilever scooped up for US$1 billion; e-commerce men’s apparel company Bonobos, which Walmart acquired for US$310 million; and mattress startup Purple, which went public for almost US$900 million.
So what are startup brands doing that traditional brands aren’t? They are more consumer-centric, more agile, ready to pivot — and they take an iterative approach to launching products, tweaking and improving based on consumer feedback before they enter the market in a big way. “These are all best practices large brands are now trying to adopt,” Mast says.
“Lego was heading toward failure (in 2004) when it brought in a new CEO (Jorgen Vig Knudstorp), who went to customers and said, tell us what you need. It was a 180-degree turnaround from just pumping out new products, which it had been doing to that point,” Mast says. Vig Knudstorp went so far as to put creative control into the hands of hardcore fans. Lego’s turnaround has been ranked among the greatest in corporate history.
Adidas is another example of a big brand that made a fundamental mindshift to focus on the customer, Mast says. “Adidas struggled in North America, with Nike and Under Armour eating its lunch. It couldn’t seem to break out of its connection to soccer until it put its consumer insight group at the heart of the business and established ongoing feedback loops to hear from customers in real time.”
The result: Adidas is cool again and revenue and market share are up. Adidas was able to tap into cultural trends that have brought the company closer to millennials, their target market. For example, the company forged designer collaborations with Stella McCartney, Kanye West and Yohji Yamamoto of Y3 designs.
“Their partnership integration strategy is smart. The celebrity becomes the brand versus the brand becoming the celebrity,” Mast says. It is also adopting the same iterative approach many Silicon Valley startups employ, forgoing wide distribution in favour of smaller test releases, carefully listening and adjusting.
Bank of Montreal is doing something similar.
“It has created a humancentric design group where all new products, programs and campaigns come,” Mast says. “The bank is using Methodify tools to listen to their customers and to iterate the design process.”
BMO is not alone. Red Bull, Harley-Davidson, Trader Joe’s, Amazon and RitzCarlton have all developed consumer insight groups that are central to everything they do, Mast says.
Ritz-Carlton, for example, is using a number of staff touchpoints to gather information about how the customer is feeling in real time as well as direct feedback channels with the customer in the form of mobile apps. “All of this information is then presented in almost real time to managers who can relay it back to the people on the ground who can act on it,” Mast says.
Labatt, which is working with Methodify as it relaunches existing brands, runs experiential initiatives at various events. In order to get real-time feedback in context, Methodify sends people to the events and they digitally record their experience in the moment. “They are not answering 15 questions after the fact. We’ve run a number of these research studies now and they are very powerful,” Mast says.
Mast offers his best advice on how to become customercentric:
Define what it means to be customer-centric in your organization, what that looks like and cascade the information through the company;
Create a group focused on understanding the customer and make it a strategic partner in decision making;
Adopt more iterative processes: test, refine, repeat. Slowly build and grow new products. “We’ve been preconditioned with the idea that leaders of great brands never listened to the customer. They just knew what they wanted,” Mast says. “That’s certainly been said about Steve Jobs, but it’s not true. He had a research group that did nothing but listen to customers.”
THEIR (ADIDAS’) PARTNERSHIP INTEGRATION STRATEGY IS SMART.