Identifying Customer Needs

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Chapter 4

• Identifying Customer Needs

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Why identify customer needs?

• Ensure that the product customer-focused and no
  critical needs are missed or forgotten
• Identify latent (hidden) and explicit needs
• Fact base for justifying the product specs.
• Archival record of the customer needs
• Develop a common understanding of customer needs
  among members of the development team

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Concept Development Plan
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Subtle Distinction Needs Product Specs.

• Needs are largely independent of any particular
  product we might develop a team should be able
  to identify customer needs without knowing if or
  how it will eventually address those needs.
• Specifications do depend on the concept we
  select. The specifications for the product we
  finally choose to develop will depend on what is
  technically and economically feasible and on what
  our competitors offer in the marketplace, as well
  as on customer needs.

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Similar Terms

• Other terms used for Customer Needs in industrial
  practice
• Customer attributes
• Customer requirements

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Five-Step method to Identify Customer Needs

• Gather raw data from customers
• Interpret the raw data in terms of customer needs
• Organize the needs into a hierarchy of primary,
  secondary, and (if necessary) tertiary needs
• Establish the relative importance of needs
• Reflect on the results and the process

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Mission Statement
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Step 1 Gather Raw Data from Customers

• Interviews
• Focus groups
• Observing the product in use

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1.Interviews

• Development team members discuss needs with a
  single customer.
• Interviews usually conducted in the customers
  environment and typically last 1-2 hours.

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2. Focus Groups

• A moderator (a team member or a professional
  market researcher) facilitates a two-hour
  discussion with a group of 8 to 12 customers
• Typically conducted in a special room equipped
  with 2-way mirror and videotaped
• Participants are usually paid a modest fee (50
  to 100 each) total cost about 2500
• Firms that recruit participants, moderate focus
  groups an/or rent facilities are listed in the
  telephone book under market research

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3. Observing the Product in Use

• Reveals important details about customer behavior
• For example, a customer painting a house may use
  a screwdriver to open paint cans in addition to
  driving screws.
• Observation may be completely passive, without
  any direct interaction with the customer, or may
  involve working side by side with a customer,
  allowing members of the team to develop firsthand
  experience using the product

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3. Observing the Product in Use

• For some products such as do-it-yourself tools,
  actually using the products is simple and natural
  
• For others, such as surgical instruments, the
  team may have to use the products on surrogate
  tasks (e.g., cutting fruit instead of human
  tissue when developing a new scalpel)

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Choosing Customers

• Griffin and Hauser estimated that 90 percent of
  the customer needs for picnic coolers were
  revealed after 30 interviews.
• In another case study , they estimated that 98
  percent of the customer needs for a piece of
  office equipment were revealed after 25 hours of
  data collection in both focus groups and
  interviews.
• As a practical guideline for most products,
  conducting fewer than 10 interviews is probably
  inadequate and 50 interviews are probably too
  many.

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Interview Logistics

• For example, if a 10-person team is divided into
  five pairs and each pair conducts 6 interviews,
  the team conducts 30 interviews in total

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Lead Users

• Needs can be identified more efficiently by
  interviewing a class of customers called lead
  users.
• Lead users are customers who experience needs
  months or years ahead of the majority of the
  market and stand to benefit substantially from
  product innovations.

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Lead Users

• These customers are particularly useful sources
  of data for two reasons
• They are often able to articulate their emerging
  needs, because they have had to struggle with the
  inadequacies of existing products.
• They may have already invented solutions to meet
  their needs.

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Which customer to select?

• The choice of which customers to interview is
  complicated when several different groups of
  people can be considered the customer.
• For many products, one person (the buyer) makes
  the buying decision and another person (the user)
  actually uses the product.
• A good approach is to gather data from the end
  user of the product in all situations, and in
  case where other types of customers and
  stakeholders are clearly important, to gather
  data from these people as well.

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Customer Selection Matrix
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The Art of eliciting Customer Needs Data

• Gathering needs data is very different from a
  sales call the goal is to elicit an honest
  expression of needs, not to convince a customer
  of what he or she needs.

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Interview Questions

• When and why do you use this type of product?
• Walk us through a typical session using the
  product
• What do you like about the existing products?
• What do you dislike about the existing products?
• What issues do you consider when purchasing the
  product?
• What improvements would you make to the product?

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General Hints for Effective Interaction with
Customers

• Go with the flow.
• Use visual stimuli and props.
• Suppress preconceived hypotheses about the
  product technology.
• Have the customer demonstrate the product and/or
  typical tasks related to the product.
• Be alert for surprises and the expression of
  latent needs.
• Watch for nonverbal information.

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Documenting interactions with Customers

• Audio recording
• Notes
• Video recording
• Still photography

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Audio Recording

• Making an audio recording of the interview is
  very easy.
• Transcribing the recording into text is very time
  consuming, and it can be expensive to hire
  someone to do it.
• Could be intimidating to some customers

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Notes

• Most common method for documenting
• Designate one person as the primary note-taker
  and have the other person concentrate on
  effective questioning.
• Notetaker should strive to capture some of the
  wording of every customer statement verbatim.
• Transcribe notes immediately after the interview
  to create a description of the interview that is
  very close to an actual transcript sharing of
  insights between the interviewers.

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Video Recording

• Almost always used to document a focus group
  session.
• Useful for documenting observations of the
  customer in the use equipment and/or using
  existing products.
• Useful for bringing new team members up to
  speed and as raw material for presentations to
  upper management.
• Multiple viewings of video recordings of
  customers in action often facilitate the
  identification of latent customer needs.

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Still Photography

• Taking photographs provides many of the benefits
  of video recording.
• The primary advantages of still photography are
  ease of display of the photos, excellent imagine
  quality, and readily available equipment.

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Final Result of Data Gathering Phase

• A set of raw data, usually in the form of
  customer statements but frequently supplemented
  by video recordings or photographs.
• Please remember to write thank-you notes to the
  customers involved in the data gathering process.

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Step 2 Interpret Raw Data in terms of Customer
Needs
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Customer Data Template
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Step 3 Organize the Needs into a Hierarchy

• The result of step 1 and 2 should be a list of 50
  to 300 need statements.
• The goal of step 3 is to organize these needs
  into a hierarchical list
• Primary needs
• Secondary needs
• Tertiary needs
• Organizing the needs into hierarchical list is
  intuitive

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Needs Organization Procedure

• Print or write each need statement on a separate
  card or self-stick note.
• Eliminate redundant statements.
• Group the cards according to the similarity of
  the needs they express.
• For each group, choose a label.
• Consider creating super groups consisting of two
  to five groups.
• Review and edit the organized needs statements.

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Hierarchical List
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Step 4 Establish the Relative Importance of the
Needs

• Useful in making trade-off decisions
• Assign numerical importance weights for needs
• Two basic approaches to the task
• Consensus of the team members based on their
  experience with customers
• Importance assessment based on further customer
  surveys

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Importance Weights Consensus or Customer
Survey?

• Obvious trade-off between the two approaches is
  cost and speed versus accuracy.
• Few customer will respond to a survey asking them
  to evaluate the importance of 100 needs.
• Typically the team will work with only subset of
  the needs. A practical limit on how many needs
  can be addressed in a customer survey is about
  50.

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Example
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Step 5 Reflect on the Results and the Process

• Some question to ask include
• Have we interacted with all of the important
  types of customers in our target market?
• Are we able to see beyond needs related only to
  existing products in order to capture the latent
  needs of our target customers?
• Are there areas of inquiry we should pursue in
  follow-up interviews or surveys?
• Which of the customers we spoke would be good
  participants in our on-going development efforts?

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Step 5 Reflect on the Results and the Process

• Some question to ask include
• What do we know now that we didnt know when we
  started? Are we surprised by any of the needs?
• Did we involve everyone within our organization
  who needs to deeply understand customer needs?
• How might we improve the process in future
  efforts?