Hearing your customers

Are You Hearing
Your Customers’
Voices?
It takes more than interviews
by marketing staff to inform
your product development
organization with customer
requirements.

Although product development teams
have used Voice of the Customer
(VoC) techniques since the early
1990s, getting product requirements right
is still a challenge for many companies.
Translating customers’ voices into winning
products goes well beyond simply asking
customers what they want. At its best, capturing
requirements is a comprehensive,
structured process that begins by listening
closely to what customers say for clues to
their underlying needs.
Those clues then need to be translated
into clear statements of the needs, issues,
or problems that must be solved. These
clearly articulated customer requirements
drive the development of innovative solutions.
Once you’ve identified the optimal
solution for any given opportunity, you can
create the product requirements and define
more precise product specifications.
This article presents the findings of a
survey conducted in 2003 by The
Performance Measurement Group, LLC
(PMG), PRTM’s benchmarking subsidiary.
The purpose of the survey was to discover
to what extent companies are incorporating
customer input and customer requirements
into their product development processes.
We’ll also provide an overview of how VoC
techniques can help your company develop
better customer requirements—and in turn,
more winning products.
Assessing Customer Requirements
PMG conducted its Voice of the
Customer Input and Requirements Process
Survey from October 2002 through June
2003. Survey participants represented 80
companies in a wide range of industries,
including telecommunications, computers,
services, electronics equipment, consumer
goods, automotive, and chemicals. More
than half of the respondents were large
companies with 2001 revenues in excess
of $1 billion.
We assessed each company’s requirements
process against PRTM’s Customer
Requirements Maturity Model (see Figure
1) by asking participants how often they
use various requirements practices. We
then calculated the overall maturity level
of each company based on its average score
on requirements identification and requirements
management.
Requirements identification refers to the
collection and interpretation of customer
needs. Requirements management refers to
how these needs are dealt with during the
product development process. We distinguish
between two different approaches to
requirements identification—targeted and
routine. Targeted approaches capture actual
customer voices first-hand by gathering
information on a particular issue, target
market, or opportunity. Routine approaches
capture surrogate, second-hand voices in
the form of feedback from customer-facing
employees, phone calls, or website visits
(see Figure 2).
The requirements identification and management
practices in use reflect a company’s
relative level of maturity. For example, quantitative
surveys are absent at Level 0 but used at Level 1, and so forth. “Mature” companies’
average requirements development
practices scored between Level 2 and Level
3. “Immature” companies’ average requirements
development practices scored
between Level 0 and Level 1.
Survey Findings
We found that while overall practice
maturity is low at most companies, scores
are generally better for requirements management.
In fact, participants are a full stage
more mature in requirements management
than requirements identification. The
most mature companies are very advanced
in conventional requirements management,
but virtually no survey participant
is advanced in its requirements identification.
Though some companies are
effectively applying the requirements data
they collect, the information captured may
not fully and accurately reflect customer
needs.
Also participants score better on the traditional
or “routine” forms of requirements
identification, such as feedback from sales,
call centers, and service departments. Few
are consistent in applying approaches such
as focused customer interviews, customer
immersion and observation, and in-depth
qualitative surveys. Only 17% of mature
and 3% of immature companies report that
they consistently collect customer requirements
and use them for continuous
improvement throughout the product lifecycle use a product development process that
integrates requirements, but only about
50% distinguish “customer requirements”
from “product requirements and specifications.”
A key finding is that companies
with mature practices in this area have better
overall business performance. Immature
companies have lower revenue growth and
a smaller market share.
The findings also indicate that companies
using advanced requirements management
practices have better bottom-line performance.
Evidently, they benefit from a better understanding
of customer needs during the
pre-launch product design phase (when costs
are lower), and avoid the costly, post-launch
redesign and rework that negatively affect
operating profit.
Key Challenges
The survey shows that most companies
incorporate some sort of customer feedback
into their product development
process. However, this feedback is often
inconsistently applied to product development
and is seldom applied throughout
the product lifecycle.
Our experience shows that companies
struggle to successfully incorporate customer
requirements into their development
process for the following reasons:
• Don’t see the value—Product developers
sometimes assume that customers don’t
know what they need, and therefore don’t
bother to engage them. Other developers
misunderstand that requirements
are what customers ask for at a specific
point in time; if such feedback were to be
used as a primary input to product development,
then a company risks making
“yesterday’s products.”
• Lack of process maturity—The requirements
development process is
sometimes oversimplified, and leaves
out key phases of requirements development.
For example, a company may
simply ask customers what they want—
an approach that may not fully capture
unspoken needs.
• Sub-optimized processes—A requirements
management process is in place,
but it’s not optimized. For example,
customer data are captured initially,
but additional customer input is not
used in the rest of the development
process. Often, customer data are collected
superficially or the company uses only
secondary sources instead of collecting
direct customer data. In other cases,
only marketing staff participates in the
requirements part of the process. This
increases the risk of important details
becoming lost or misunderstood when
handed off to other groups like engineering
or R&D.
• Backwards approach—Companies
often begin with idea generation, develop
product concepts, and then push
the products out to the market.
Consumer feedback isn’t gathered until
after the product launch, when requirements
that were not addressed become
apparent.
• Limited customer sample—Some companies
listen to only one major
customer’s solution or specification,
or give too much weight to a market
“guru,” such as a physician or professor.
While not always a faulty strategy, this can
make it hard to adapt a product beyond the
one customer for whom it was designed—
thereby limiting additional growth and
revenue opportunities.
Using the Voice of the Customer
Approach
Many leading companies are overcoming
their requirements management roadblocks
by applying VoC techniques in order to
conduct customer interviews, capture customers’
voices verbatim, and gain valuable
insights. These insights serve as a basis
for creating better customer requirements,
and in turn, more on-target products and
services that truly meet your customers’
often unspoken needs.
In this approach, a cross-functional product
development team is charged with defining
the bounds of their exploration, including
identifying a diverse set of about 20 customers.
In cross-functional pairs, they will
then visit these representative individuals,
interviewing them and (where appropriate)
observing their behaviors as they engage
in activities of interest. Once the team has
completed their visits, they will first analyze
the context of product use, using Language
Processing®, a tool developed by the
Center for Quality of Management, to gain insight into their customers’ world. Next,
they will translate their customers’ voices—
and some of their observations—into
numerous customer requirements.
After identifying their “opportunity set” of
requirements, the team will usually validate
these using a quantitative survey. Ultimately,
they will generate concepts that solve their
identified customers’ needs, and finally,
screen the concepts, determining how well
they meet both the customer requirements
and company requirements.
VoC helps you:
• Clarify the “fuzzy front end” of identifying
new market opportunities and
developing new products or services
• Ensure that your people ground their
internal viewpoints with external realities
• Identify both explicit and latent customer
needs
• Ensure disciplined, focused thinking
• Tap the intuitive knowledge of your
experienced people
• Thoroughly explore potential solutions
that you create in response to clearly
articulated needs
• Align diverse individual perspectives
to a common view
Most importantly, the VoC approach to
requirements development can boost your
company’s market share and gross margins
by allowing you to develop products
that address your customers’ real needs
and expectations.