Market Segmentation: The Business Case

Transcription

1 Concentrate on your most profitable customers for greater returns an more effective use of your limite resources uthor: José Campos This is the first in a series of articles about the value, implementation an business reasons for market segmentation

2 Executive Summary Concentrate all your thoughts upon the work at han. The sun s rays o not burn until brought to a focus. lexaner Graham Bell These are ifficult times ue to the worlwie competition, limite bugets, an the relentless nee to eliver constant profits an sustaine growth. How can you increase revenues, ecrease costs an reuce risk using your existing resources? The way to o it all is to focus on market segments selecting the istinct subsets of customers that offer the highest profit an growth potential, an then focusing on capitalizing on those opportunities. This also requires that you avoi customer groups that a to costs, istract your employees an rain your promotional buget while elivering little or no profit. Market segmentation will: Increase revenues by helping you focus on more complete, high-value offerings, where the margins are more attractive an avoiing segements where margins are low an the cost of selling is high. Decrease R&D costs by focusing your R&D resources on value creation for targete customers eager to procure the right solutions an cutting waste from prouct evelopment by eliminating features an services not value by your chosen customers. Reuce sales owntime by avoiing the many sales calls it takes to force-fit a prouct into the wrong segment an instea focusing on customer groups that fin your solutions exceptionally valuable. Reuce risks by giving you a eeper unerstaning of your targete customers than your competitors. Focusing market-research efforts on targete segments will make this unerstaning possible. Most market segmentation failures result not from the inaequate ivision of a market into subsets, but from the failure to plan, execute an monitor consistently base on the selecte segments, in short lack of tenacity. Success is achieve through a persistent focus, aily an monthly, on target segments not simply by iviing a market into slices of the pie on a flip chart at the annual strategic planning retreat. This paper explains the no-nonsense steps to apply segmentation principles an maximize their benefits. Case Stuy The Challenge Harware an software company MSC Inc. introuce a family of mini-supercomputers to be use by scientists an engineers for complex computer simulations. Revenues were not ramping up as fast as esire, an sales costs were high. situational analysis showe that, although they were traine on the computer features an supplie with sales tools, salespeople ha been given little irection or support as to which market segments to pursue an which customers to call first. Unfortunately, the initial marketing communications programs were also ineffective at generating sales leas because they were too generic an lacke focus. This case stuy is base on a real-worl situation; although, the name of the company has been change

3 The salespeople prospecte for anyone in their territory who neee high-performance computing, but this was an inefficient use of sales time, as every situation ha to be customize an supporte from scratch. It was also very expensive to evaluate each prospect s software to prove the computer s spee, as a team of analysts ha to work with each customer s software to convert, optimize an benchmark it. Solution MSC ivie the scientific an engineering computing market into segments an focuse on a few key targets. To implement the program for the first targete segment, computational chemistry, the company: Conucte market research to unerstan the segment in etail, an esigne a strategy to capitalize on the opportunity. Wrote a computational chemistry sales guie that inclue the terminology use by the targete customers, relevant concepts, customer value propositions an competitive information. The sales guie also ha a clear profile of the types of companies in this business, the titles of the iniviuals who mae the purchase ecisions an even the initial premise for the sales call with known problems they were trying to aress. Create as, brochures an presentations specifically for computational chemists. The message was written in the chemist s language, an more important, it focuse on the types of problems they were trying to solve an inclue value propositions targete to their emotions. Optimize well-known computational chemistry software programs for MSC computers an mae them available to researchers, which create aitional value an emonstrate the computational power of the new prouct in a relevant way to the targete auience. Sponsore a North tlantic Treaty Organization computational chemistry conference attene by leaing researchers from aroun the worl. Results The salespeople s time was more prouctive an the cost of sales ecrease because: The sales team ha a list of qualifie prospects to contact to better manage their territory an avoi targetting prospects where there was little potential for success. Salespeople ha a carafully targette an package presentation an support material so they in t have to research an create sales tools themselves. Salespeople were able to communicate more effectively because they knew the challenges the prospects were facing an coul articulate the value of investing in MSC mini-supercomputers. The company in t have to benchmark software for each unique sales situation. The R&D team was not istracte with questions from segments that were not selecte, so they coul focus on creating new value. Marketing evelope better ways to unerstan the segments, an acquire a eeper unerstaning of the selecte customer groupings. Revenue increase because: Networking an cross-referencing within the computational chemistry community generate highly qualifie sales leas for prospects preispose to purchase; this was ue to the high relevancy of the messaging an the solutions MSC ha create.

4 MSC ha more creibility because it was mentione on reference sites an in ocumente results from users in the targette segement. MSC offere a more complete solution than competitors because public omain computational chemistry coes ha been converte an optimize to run on the company s computers; which coul not be one using the general purpose strategy, i.e., allthings-to-all-people. Sales growth was rapi, thanks to increase awareness, more effective sales, a whole prouct an references for ae creibility. In just three years, this an similar market evelopment programs helpe MSC multiply the prouct line revenues by 0. Without the multiplying effect of becoming a well-known supplier in a small, wellefine segment, MSC woul have continue to struggle with expensive, isolate sales situations. Segmentation provie the focus neee to grow quickly using existing resources. Review of Segmentation Basics Segmentation is the ivision of a market into istinct subsets of customers an the use of those subsets, or segments, in ecision-making. It s the grouping of customer types, base on a clear an verifiable set of criteria, to unerstan nees, trens, biases, opportunities an threats. Deciing which segments to target shoul guie every function in a company, from marketing communications to sales an service, an from engineering to manufacturing. It shoul be consiere at every level of activity, from long-range strategic an operational planning to aily tactical ecision-making an historical reporting. ll functions an levels of the company shoul focus on those target segments an eemphasize the others. For ecision-making, companies can use market segmentation to: High -level Segmentation Process Define your business objectives Research the market an perform opportunity analysis Formulate initial segementation valiate against business objectives to reuce risk Communicate target segments to everyone Focus everyone on serving the target segments with passion pply segmentation to all planning an analysis activities Upate research an actualize your segmentation yearly. Prioritize new prouct evelopment efforts with corresponing prouct roamaps base on an approve segmentation. Which ensures that you optimize your limite resources to the areas of highest potential an avoi marginal segements. Frame the business case for all new prouct evelopment aroun the targete segments that provie the right gross margin while avoiing the risk of trying to be all things to all people. Measure against business objectives The above iagram shows a conceptual moel of the process to evelop an eploy a segmentation strategy. Note the focus on measuring against business objectives. lso the nee for research an valiation

5 . opt a price-for-value strategy by concentrating on those segments that provie the right level of gross margin an are willing to procure the right solution to their problems.. Develop customize marketing programs that optimize promotional bugets by focusing on the most profitable segments an avoiing marginal groupings of customers that simply rain the buget an prouce little, if any, profit.. Optimize R&D an increase innovation by eveloping only prouct features value by targete customers an not eveloping capabilities for segments that can t provie the right gross margin.. Establish appropriate service options targete to the habits of targete segments.. Design a istribution strategy to optimize sales ollars. Click here for aitional areas where segmentation is critical: ppenix What Level of Certainty? The enuring question in segmentation is the level of confience you nee to make business ecisions. For example, coul you make a critical business ecision with 0 percent certainty? How about 0 percent certainty? The answer epens on whether you re a risk-taker or riskaverse. We suggest that any confience level above 0 percent is sufficient to rive ecisions. But you may feel that 0 percent is too risky an you woul be right, assuming you are risk-averse. The key is to unerstan your comfort zone in making ecisions. The level of certainty in segmentation can be manage. It is riven by four factors: The breath an epth of research you perform to create an sustain your segmentation. The valiity of the ata you use. The level of risk management you implement in your moel. Segmentation is Not Just a Marketing Thing Market segmentation helps you optimize all your corporate resources. It allows R&D to focus innovation on the valuable an most critical segments. It improves your business moels by proviing more resolution an clarity to your financial moels. It allows for more focuse training of your istribution channels by avoiing seconary segments where the cost-of-selling woul be too high while focusing on segments where rapi sales are possible. Your messaging can be more targete an relevant because it is focuse on segments that value your offering The frequency with which you upate the segmentation to keep it realistic an relevant. Generally, the more research you o, the higher the level of certainty assuming your research follows inustry guielines for accuracy, iscipline, integrity, etc. Common Mistakes in Segmentation Few woul argue against the concept or goals of segmentation, as it clearly has benefits to offer a company. s with so many management practices, failures in segmentation usually happen not because of flaws in the concept, but because of shortcomings in its execution. Here are some of the common mistakes an how to avoi them: Continue

6 Corporate ritual. This is segmentation as an exercise in ata collection an segment efinition, usually as part of an annual strategic planning process. The isconnect occurs when the segments aren t use for subsequent planning an ecision-making. s a senior manager, you must use the target segments as a guie to planning an actions throughout the year an throughout the company. Unsupporte segmentation. With ealines staring them in the face, many teams rush into segment efinitions an ecisions without proper research. They ecie how to ivie the market base on their personal experiences an base their assessment of the opportunities in each segment on anecotes. s the iniviual responsible for elivering results in the form of profits an growing market share, you shoul challenge the segmentation process, asking to see the ata. Too many or too few targets. Once they come up with a segmentation scheme, companies often make the mistake of targeting all the segments. If you o that, you ll en up with ilute, ineffectual programs some aime at segments that are not particularly attractive. Other companies overcorrect an focus on too few target segments to meet their financial goals. The solution is a mile groun: targeting a range of segments broa enough to have the potential to meet your business objectives an specific enough to facilitate tailoring a superior marketing mix. Too many segmentation frameworks. In some cases, the concept of segmentation is so attractive that each epartment creates its own segmentation scheme. Sales groups use variables that are important to the selling process; marketing communications groups use variables that are important to avertising, public relations an promotion. R&D probably has a prouct-centric scheme. While each scheme may be useful for its epartment, multiple segmentation schemes on t provie the focus an clarity neee to serve the company as a whole. There shoul be a single master segmentation, an all other schemes must serve it. The Business Case for Market Segmentation Can you think of a management tool that has the potential to increase revenues, ecrease costs an reuce risk all at the same time, even in view of tight bugets? Most management tools force a traeoff between these three variables. For example, a prouct extension strategy may offer increase revenue, but in the short term, it will increase costs an risk. The reason market segmentation has the potential to yiel positive results in all three imensions increase revenue, ecrease costs, reuce risk is that it iminishes the waste an uncertainty that come with trying to pursue too many opportunities at once. ll too often, companies try to cast too broa a net, assuming the broaer the aresse market, the more potential revenue. Research shows this is not the case (Click here for aitional business benefits of segmentation: ppenix B) Strategic Planning Institute stuy of the profit impact of marketing strategies (PIMS) showe that firms with market shares over 0 percent average a return on investment (ROI). times higher than that of firms with market shares uner 0 percent, an increasing market share by 0 percent as a percent increase in ROI. The message: Don t enter a new market unless you can capture percent to 0 percent market share in a few years. Focus on a few niche segments an become a big fish in those pons. Continue

7 Leaing the Segmentation Strategy: the Challenge for Executives Four essential ingreients to lea a segmentation strategy effectively:. Champion the strategy by continually reinforcing its importance, relevance to your business plans, an expectations that everyone will apply it. The vivi support of an executive is an inispensable ingreient for segmentation to work. Make sure the necessary research is complete, an vali. This research is relentless as the nee to actualize the information oes not go away. Over time, given rigorous research, your moel will gain certainty an your ecisions will be more efensible.. Make ecisions that align with the segmentation strategy an your company s capabilities an resources. This inclues requiring that all prouct proposals emonstrate the fit of the new prouct to specific segements. lso, Prouct Marketing Managers shoul emonstrate that their prouct roamaps for growth is base on soli ata from the targette segements. R&D is confient that they are eploying their resources base on the priority set by your segementation strategy. Hol each epartment accountable; you must continually reinforce focusing on targete segments in planning an operations. Segmentation must be part of the KPI s of mangers as well as their performance reviews. If your company has never been through a formal segmentation initiative, a great time to o it woul be before your next strategic planning session. The initiative will provie information an focus that will make many of your strategic an resource allocation ecisions much easier. Markets change faster than ever, so if you have segmente your market in the past, it s probably time to review the criteria for segmenting, upate the opportunity analysis an revisit the target-market ecisions. Participate in the Dialog Click here if you have questions, comments or suggestions. The author welcomes your participation in this important topic. Do your prouct proposals ientify the segments that will provie the most revenue for the new prouct? Does your Strategic Plan ientify the growth segments, exit segments an their relationship to your competitors? Does your R&D prioritize the roamap by importance to specific segments? Is the sales training for your istribution channels centere aroun specific segments? Is your messaging finely targete to specific segments where your value will be compelling? Continue to aitional Resources

8 Jose Campos Principal Consultant an Founer, Rapiinnovation Jose an his team of seasone consultants collaborate with BB companies aroun the worl on the methos, tools an cultural shifts neee to rapily an consistently eliver superior value to customers. He has spent his career working to efine an eliver innovative proucts to market. For 0 years he has passionately focuse on eveloping new methos an approaches to iscover an eliver customer value in the tumultuous worl of high-tech. Jose has written several acclaime books, incluing Voice of the Customer for Prouct Development, a methoology for iscovering, prioritizing an using customer requirements to create clearly ifferentiate proucts faster than the competition, an Risk Management for Prouct Development, which inclues strategies an methos to reuce the impact of uncertainty on your investment. Jose was also co-author of Project Management Toolbox in collaboration with Dr. Dragan Milosevic. Their focus on high-tech an their technical backgroun allow Jose an his team of seasone consultants to provie meaningful an practical coaching to technology professionals. They have travele the worl to help R&D an Marketing teams improve their ability to create innovative proucts customers love. Contact Jose: jose@rapiinnovation.com bout Rapiinnovation, LLC. few of the critical questions we have helpe answer: How can we get closer to our customers in orer to create more profitable proucts? What market segments are profitable, not-profitable, growing an where shoul we invest our R&D an Marketing Dollars? How o we grow beyon our core? How can we reuce time-to-market an shorten time-to-profit? How can we make gile work for us? How o we make our scheules more preictable? We work with our customers by focusing on the high-leverage areas of the company: R&D an Marketing where we collaborate, train, coach an facilitate every aspect of prouct evelopment, innovation, an profitability. We also work with Senior Staff to evelop measurable growth management strategies an then help in the clear execution. We have been serving the high-technology community aroun the worl for the last years. Our ability to concentrate on technology, BB companies has given us a unique insight into the ynamics of the fastest-moving markets aroun. Every one of our Business Consultants is a seasone veteran of corporate life in high-tech companies. ll have engineering egrees with avance egrees in business plus years of experience helping technology companies achieve their business goals creentials that are brought to bear to solve our customers challenges. Our list of satisfie customers inclues some of the leaing global technology companies. Contact us to help you solve the most thorny problems confronting you. Visit us at: itional Resources

9 ppenix reas Where Segmentation Can be pplie Market Segmentation: The Business Case Segmentation can be use in many ifferent ways to ensure profitable growth in a prouct evelopment organization. Traitionally, market segmentation is viewe as a tool the marketing team uses. This sells short the benefits an applications of segmentation. It has a place in strategic planning to focus strategies on very clearly efine areas of the marketplace, thus optimizing resources an creating strategic alignment. It can also be use by R&D to obtain an use requirements from very specific customer groups, where value creation will have maximum impact on profitable an fast-growing segments. The following table shows a few of the application areas. The table is not an exhaustive list, but simply a showcase of possible application. pplication rea Description Context Strategic planning Growth management strategies Inclue the segmentation as an integral part of the strategic planning process to influence business ecisions Integral means that it will be a centerpiece of your perioic, strategic planning processes:. ll strategic initiatives will be evaluate against the segmentation.. Strategic ecisions will be mae with reference to the segmentation.. Strategic planning will revolve aroun the segmentation. Use segmentation to make informe an consistent growth management ecisions. RETURN TO RTICLE Enable focus an strategic alignment by proviing a clear efinition of the targete customers. Optimize resources by avoiing proucts aime at segments that o not provie sufficient ROI. Provie a clear framework for all strategic planning by efining parameters, targete metrics an a close-loop approach to strategic planning. Ientify specific areas of growth by iscovering segments that offer opportunities for value creation. Use the segmentation to help evaluate an make ecisions about merger an acquisition investments to aress specific segments. pply the segmentation to ientify areas that will not be aresse, or segments you must exit. Improve communication an clarity in the executive team by creating a clear framework of reference. Continue

10 ppenix reas Where Segmentation Can be pplie pplication rea Description Context Competitiveness pply the segmentation to evelop Create efensible market positions effective competitive strategies an by ientifying existing areas worth moves. efening an targeting new ones worthy of efense. Portfolio management (Prouct roa maps) Distribution management pply the segmentation to rive the prouct roa map an prouct evelopment strategies, where all new proucts are evaluate against the segmentation an specifically the attractiveness of each segment as measure against your business objectives. Prouct roa maps will be matche against the segmentation by ientifying specific segments that will be aresse an those that will not. Focus your istribution strategy on esirable segments while avoiing marginal ones. Provie better harmony by minimizing channel conflict. Discover the corporate strategy of your competitors by segment, an be able to preict their next strategic moves by stuying their behavior in each segment. Prepare market-share comparisons base on specific segments to provie more realistic an actionable information. Provie a consistent an customercentric approach to allocating newprouct evelopment investments. Create a common language centere aroun customers an not proucts. Enable clarity in communication among executives, marketing an R&D by having a common point of reference. Focus limite resources to value creation in areas that offer the best ROI. Use segmentation to irect your sales force to the areas for which the new prouct is intene; thus, optimizing sales up time Help your sales team avoi segments where proucts woul be a force fit an consequently ifficult to sell an consuming to much sales effort. itional Resources RETURN TO RTICLE 0

11 pplication rea Description Context Organizational Optimize the functional chart by Use segmentation to shape the evelopment focusing resources on optimal organization an evelop personnel segments. for selecte roles an responsibilities (engineering, marketing, istribution, etc.) Ientify an prepare iniviuals to assume responsibly for specific segments with specific business objectives. itional Resources RETURN TO RTICLE

12 ppenix B: Three major areas of benefit from Segmentation Dimension Factor Comment Increase revenue More complete, higher-value proucts The prouct an service offerings can be refine to meet the high-priority unmet nees of a efine set of intene customers. Your target segment will immeiately ientify with the value proposition More compelling messaging an lea generation Stronger competitive position Higher customer satisfaction Your marketing programs will resonate with prospects because they will speak irectly to their unmet nees an connect with the goals they are striving to achieve an not a one-size-fits-all message You ll win more competitive sales because of the higher value you re proviing while leaving low-return segments to the competition Satisfie customers will buy from you again an will mention your company to other prospects ue to the higher value proposition you provie Continue RETURN TO RTICLE

13 Three major areas of benefit from Segmentation Dimension Factor Comment Decrease cost Fewer R&D resources require R&D expenitures can be focuse on the highest-priority, maximum-value projects for the targete segments rather than on builing a large generic portfolio in hopes that a few proucts will be big winners. You ll avoi eveloping features that customers o not fin relevant or valuable. More focuse marketing communication More effective sales with shorter sales cycles Reuce risk Deeper unerstaning of intene customer Fewer prouct failures Targeting highly resonant messages to a well-efine group is much more cost effective than broacasting generic messages far an wie. With targete messages, proucts an programs, sales cycles are shorter. That means more times at bat an more hits in the same amount of time. Your sales training will be more effective ue to the clarity of the chosen segments, which will help your sales force prospect more effectively an eliver a more compelling message Learning the latent an incipient nees of targete groups of customers provies the opportunity to anticipate trens, innovate game-changing proucts an leapfrog the competition. By limiting your segments to the most promising an growing areas, your Prouct Managers will be able to focus their efforts to unerstan requirements Prouct risk is ramatically reuce if you unerstan the prouct-market pair thoroughly before evelopment starts rather than creating the next bright, shiny thing an trying to fin people who will buy it. Please see ppenix for the areas where segmentation can be applie Continue RETURN TO RTICLE

14 Market Segmentation: The Business Case itional Resources Rapiinnovation has publishe a series of books on prouct evelopment. They were written by experience prouct evelopers for those who must implement critical business processes in prouct evelopment environments. ls ate an str s es eets h y ce rks full pro Step : Organize temt woyour Visits t Unerstan What sse -illu Customers pla Detaile Process:Discussion Guie T. Ensure that the objectives for the customer visits are ocumente an nal. Circulate the objectives bility to aress existing an any other relevant Ben/Tech an anticipate technical material to the members of your team an any other relevant stakeholer. Rating Score Rating Score (-0) (-0). CLL BRINSTORMING MEETING Subsegment % % % Positive experience with the Ben/Emo at least three0. hours. This. may reuce attenance, company. You nee to. be the BEST in satisfying RIORITIZE TOPICS thepmost.. important FOR THE MEETING In stepcustomer # (Brainstorm), you are efi ning an prioritizing Drivers. the topics of conversation.. (CVDs). % Ease of operating an maintaining the system Ben/Tech Secure a conference 0.. room.0 all the questions they wish Increase asset utilization. Ben/Eco. 0 % Ease of integration into company processes an % but quality is more important than quantity. with ample space. Ben/Oper Cost/ Money % Cost of ownership (CoO). % Impact on the organization Cost/Risk if something goes wrong. BRINSTORM..0 Future customers. That is, customers in new markets, new companies, new applications, etc. Scheule the meeting for r Why COMPRBLE to competitors in the secon tier of CVDs. in satisfying INTERVIEWER: Why is that important to you? CUSTOMER: The one we have now oes 0 pages/min an it is too slow. INTERVIEWER: In what circumstances is it too slow? CUSTOMER: In particular when we have a queue of ocuments with heavy graphics. n Why Purchase price. INTERVIEWER: Tell me more. CUSTOMER: We often have to print 0-00 page reports at the last minute before a presentation, an these reports contain lots of graphics. It is not atypical to have - users printing reports at the same time. r Why Prouct Inex INTERVIEWER: What about ocuments with text only? CUSTOMER: No problem there. It is only when we have these heavy graphics reports an when - users are queueing. From feature to problem i.e., on t stop probing until the customer voices the problem. CONTINUED Î to a target segment, you can etermine how the offering of one company ranks compare to that of another company. The PVI is calculate by first multiplying the Importance percentage (item ) by the Rating (item ) this generates the Score (item ) for each CVD an then totalling the Scores to create the PVI (item ). 0 th Eition Debriefs an Postmortems for Prouct Development Your illustrate guie to improving performance through lessons learne ate an s str es tes eet Unerstan What ss -illu Customers pla rksh lly oce ls temt Example:tProuct woyour Visits oo Inex fu pr Step : Organize ex Step : Organize Your Visits T Example: Customer rchetypes Detaile Process:Discussion Guie Subsegments an B are there to provie one aitional level of segmentation. For example, you might make the U.S. an B Europe or you can make Managers an B Technicians. You nee not use both an B in your sample selection; it s your choice. Types of Customers Rank No.. Customer Drivers Competitor Competitor SET THE FOUNDTION in Orer of Importance Category B. Ensure that the objectives for the customer visits are ocumente an nal. Circulate the objectives Rating Score Rating Score (-0) (-0). CLL BRINSTORMING MEETING bility to aress existing an any other relevant Ben/Tech. 0 an anticipate technical Decie who nees to material to the members of % % relevant stakeholer. Positive experience with the Ben/Emo person s. ability.to prouct. contribute. % Positive experience with the Ben/Emo at least three0. hours. This. may reuce attenance, company. % Ease of operating an maintaining the system your team an any other atten base on the objectives an each Scheule the meeting for Ben/Tech but quality is more important than quantity. 0.. Secure a conference room with ample space. Customers who have stoppe buying from you. That is, you have not lost them, but they have not bought from you in some time. Different than Item above. % Increase asset utilization. Ben/Eco % Ease of integration into company processes an Ben/Oper % Cost of ownership (CoO). Cost/ Money % Impact on the organization Cost/Risk if something goes wrong. BRINSTORM 0. INFERIOR Ben/Tech Secure a conference 0.. room.0 all the questions they wish Increase asset utilization. Ben/Eco p am. 0 % % Ease of integration into company processes an with ample space. Ben/Oper Cost/ Money % Cost of ownership (CoO). % Impact on the organization Cost/Risk if something goes wrong. BRINSTORM % 0 % 00% Purchase price INTERVIEWER: Tell me more? CUSTOMER: The menu system is not intuitive. INTERVIEWER: Tell me why it s not intuitive? CUSTOMER: I get lost all the time. n Why Customers who are buying much less from you. Those who, in the last six, or months have shown a rastic reuction in purchases. r Why Customers who are buying much more from you. goo way to start the brainstorm is to ask your team members to write own For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com to ask their customers (use Yellow Sticky Notes) to competitors in the secon tier of CVDs. COMPRBLE in satisfying INFERIOR INTERVIEWER: Why o you think you get lost using the menu? CUSTOMER: Well, there are too many layers an no way to get back. ROOT MESSGE: The menu system has too many layers an no way to get back, which makes customers feel that the prouct is too if cult to use. INTERVIEWER: Tell me about your printing nees. CUSTOMER: I want a printer that prints at more than 0 pages per minute, an 0 woul be better. st Why Use the f nity Diagram CVDs that metho Ben/Eco or any other are the least formal framework for important, brainstorming. Generally, you will provie your Brainstorm Cost/all possible 0. neeone hour 0.0to performance topics.money cover three topics, or perhapsis still fewer. Remember that you Organize the topics or nee to allow the customer questions...0 to talk, an this takes time. Consoliate the topics. It is not a survey, it is a Prioritize the topics. conversation where you nee to probe an let the customer You shoul en up with talk an think. no more than three to ve topics. Prioritize base on importance to the objectives an using a clear criteria selection. The Prouct Inex (PVI) is a numerical expression offor value. By quantifying the value that a prouct represents % Increase revenue/ throughput. 0 % Purchase price. 00% INTERVIEWER: Why is that important to you? CUSTOMER: The one we have now oes 0 pages/min an it is too slow. r Why INTERVIEWER: Tell me more. CUSTOMER: We often have to print 0-00 page reports at the last minute before a presentation, an these reports contain lots of graphics. It is not atypical to have - users printing reports at the same time. INTERVIEWER: What about ocuments with text only? CUSTOMER: No problem there. It is only when we have these heavy graphics reports an when - users are queueing. From feature to problem i.e., on t stop probing until the customer voices the problem. CONTINUED Î to a target segment, you can etermine how the offering of one company ranks compare to that of another company. The PVI is calculate by first multiplying the Importance percentage (item ) by the Rating (item ) this generates the Score (item ) for each CVD an then totalling the Scores to create the PVI (item ). INTERVIEWER: In what circumstances is it too slow? CUSTOMER: In particular when we have a queue of ocuments with heavy graphics. n Why Prouct Inex 0 For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com In prouct evelopment, the imperative to reuce time-to-market is always present an risks can cause catastrophic elays. What if you coul preict an manage risks, so they on t interfere with your time-tomarket goals? This step-by-step guie aresses every aspect of ientifying, prioritizing an mitigating prouct evelopment risks. It s written by veteran prouct evelopers who unerstan the pressures of creating innovative proucts faster than your competitors. les Step : Interview Your Customers Why Prouct Inex CONTINUED Î to a target segment, you can etermine how the offering of one company ranks compare to that of another company. The PVI is calculate by first multiplying the Importance percentage (item ) by the Rating (item ) this generates the Score (item ) for each CVD an then totalling the Scores to create the PVI (item ). Rating Score Rating Score (-0) (-0). CLL BRINSTORMING MEETING % % % Positive experience with the Ben/Emo at least three0. hours. This. may reuce attenance, company. You nee to. be the BEST in satisfying RIORITIZE TOPICS thepmost.. important FOR THE MEETING In stepcustomer # (Brainstorm), you are efi ning an prioritizing Drivers. the topics of conversation.. (CVDs). % Ease of operating an maintaining the system Ben/Tech Secure a conference 0.. room.0 all the questions they wish Increase asset utilization. Ben/Eco Decie who nees to atten base on the objectives an each % but quality is more important than quantity. with ample space. Ease of integration into company processes an Ben/Oper Cost/ Money % Cost of ownership (CoO). % Impact on the organization Cost/Risk if something goes wrong. BRINSTORM..0 Future customers. That is, customers in new markets, new companies, new applications, etc. Scheule the meeting for in satisfying % % 00% Increase revenue/ throughput. From feature to problem i.e., on t stop probing until the customer voices the problem. For comments, or aitional copies please the authors: VOC@rapiinnovation.com For comments, questions or aitional copies questions please the authors: VOC@rapiinnovation.com 0 For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com Designe for prouct evelopers who are tire of traitional project management approaches that on t account for the real-worl intricacies an challenges of prouct evelopment. The step-by-step esign of this guiebook makes it a valuable reference for you an your evelopment team for years to come. ctionable Metrics for Prouct Development Your illustrate guie to eveloping an using metrics to improve prouct margins an reuce time-to-market too ls ate an str s es eets h y ce rks full pro Step : Organize temt woyour Visits t Unerstan What sse -illu Customers pla Example: Prouct Inex No. T Subsegments an B are there to provie one aitional level of segmentation. For example, you might make the U.S. an B Europe or you can make Managers an B Technicians. You nee not use both an B in your sample selection; it s your choice. Types of Customers Rank. Ensure that the objectives for the customer visits are ocumente an nal. Circulate the objectives bility to aress existing an any other relevant Ben/Tech an anticipate technical material to the members of your team an any other relevant stakeholer. a ex Step : Organize Your Visits Example: Customer rchetypes Detaile Process:Discussion Guie Customer Drivers Competitor Competitor SET THE FOUNDTION in Orer of Importance Category B. Rating Score Rating Score (-0) (-0). CLL BRINSTORMING MEETING Subsegment Customers who have stoppe buying from you. That is, you have not lost them, but they have not bought from you in some time. Different than Item above..0 all the questions they wish % Increase asset utilization. Ben/Eco % Ease of integration into company processes an % Cost of ownership (CoO). % Impact on the organization Cost/Risk if something goes wrong. BRINSTORM 0 Decie who nees to atten base on the objectives an each.0 but quality is more important than quantity. with ample space. Note the root message i.e., actionable input from the customer. to ask their customers (use Yellow Sticky Notes). 0. Ben/Oper Cost/ Money COMPRBLE to competitors in the secon tier of CVDs. in satisfying CVDs that are the least important, Generally, you will provie your 0. neeone hour 0.0to performance cover three topics, or perhapsis still For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com INFERIOR % % 00% Increase revenue/ throughput. Purchase price. ROOT MESSGE: The menu system has too many layers an no way to get back, which makes customers feel that the prouct is too if cult to use. Note the root message i.e., actionable input from the customer. INTERVIEWER: Tell me about your printing nees. CUSTOMER: I want a printer that prints at more than 0 pages per minute, an 0 woul be better. Why Use the f nity Diagram metho Ben/Eco or any other formal framework for brainstorming. Brainstorm Cost/all possible topics.money fewer. Remember that you Organize the topics or nee to allow the customer questions...0 to talk, an this takes time. Consoliate the topics. It is not a survey, it is a Prioritize the topics. conversation where you nee to probe an let the customer You shoul en up with talk an think. no more than three to ve topics. Prioritize base on importance to the objectives an using a clear criteria selection. The Prouct Inex (PVI) is a numerical expression offor value. By quantifying the value that a prouct represents 0 INTERVIEWER: Why o you think you get lost using the menu? CUSTOMER: Well, there are too many layers an no way to get back. Example : The Why s ctionable Metrics for Prouct Development ll INTERVIEWER: Tell me why it s not intuitive? CUSTOMER: I get lost all the time. r Why Customers who are buying much more from you. 0. Step : Interview Your Customers INTERVIEWER: Tell me more? CUSTOMER: The menu system is not intuitive. n Why Customers who are buying much less from you. Those who, in the last six, or months have shown a rastic reuction in purchases. goo way to start the brainstorm is to ask your team members to write own les INTERVIEWER: How o you feel about this software prouct? CUSTOMER: It is very if cult to use. st Why Future customers. That is, customers in new markets, new companies, new applications, etc. Scheule the meeting for Customers you never ha. That is, customers who ought to have bought from you, but never i. You nee to. be the BEST in satisfying RIORITIZE TOPICS thepmost.. important FOR THE MEETING In stepcustomer # (Brainstorm), you are efi ning an prioritizing Drivers. the topics of conversation.. (CVDs).. Positive experience with the Ben/Emo person s. ability.to prouct. contribute. mp Example : The Why s Subsegment B Customers you have lost. That is, customers who no longer buy from you for a negative reason. Ben/Tech Secure a conference 0.. room From feature to problem i.e., on t stop probing until the customer voices the problem. th Eition INTERVIEWER: What about ocuments with text only? CUSTOMER: No problem there. It is only when we have these heavy graphics reports an when - users are queueing. CONTINUED Î to a target segment, you can etermine how the offering of one company ranks compare to that of another company. The PVI is calculate by first multiplying the Importance percentage (item ) by the Rating (item ) this generates the Score (item ) for each CVD an then totalling the Scores to create the PVI (item ). Ease of operating an maintaining the system INTERVIEWER: Tell me more. CUSTOMER: We often have to print 0-00 page reports at the last minute before a presentation, an these reports contain lots of graphics. It is not atypical to have - users printing reports at the same time. r Why Positive experience with the Ben/Emo at least three0. hours. This. may reuce attenance, company. INTERVIEWER: What about ocuments with text only? CUSTOMER: No problem there. It is only when we have these heavy graphics reports an when - users are queueing. INTERVIEWER: In what circumstances is it too slow? CUSTOMER: In particular when we have a queue of ocuments with heavy graphics. n Why Purchase price. Prouct Inex % INTERVIEWER: Tell me more. CUSTOMER: We often have to print 0-00 page reports at the last minute before a presentation, an these reports contain lots of graphics. It is not atypical to have - users printing reports at the same time. Note the root message i.e., actionable input from the customer. INTERVIEWER: Why is that important to you? CUSTOMER: The one we have now oes 0 pages/min an it is too slow. st Why INFERIOR Use the f nity Diagram CVDs that metho Ben/Eco or any other are the least formal framework for important, brainstorming. Generally, you will provie your Brainstorm Cost/all possible 0. neeone hour 0.0to performance topics.money cover three topics, or perhapsis still fewer. Remember that you Organize the topics or nee to allow the customer questions...0 to talk, an this takes time. Consoliate the topics. It is not a survey, it is a Prioritize the topics. conversation where you nee to probe an let the customer You shoul en up with talk an think. no more than three to ve topics. Prioritize base on importance to the objectives an using a clear criteria selection. The Prouct Inex (PVI) is a numerical expression offor value. By quantifying the value that a prouct represents 0 ll % INTERVIEWER: In what circumstances is it too slow? CUSTOMER: In particular when we have a queue of ocuments with heavy graphics. ROOT MESSGE: The menu system has too many layers an no way to get back, which makes customers feel that the prouct is too if cult to use. INTERVIEWER: Tell me about your printing nees. CUSTOMER: I want a printer that prints at more than 0 pages per minute, an 0 woul be better. Flexible Project Management for Prouct Development % r Why Example : The Why s % n Why INTERVIEWER: Why o you think you get lost using the menu? CUSTOMER: Well, there are too many layers an no way to get back. r Why For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com INTERVIEWER: Why is that important to you? CUSTOMER: The one we have now oes 0 pages/min an it is too slow. INTERVIEWER: Tell me why it s not intuitive? CUSTOMER: I get lost all the time. n Why Customers who are buying much more from you. to ask their customers (use Yellow Sticky Notes). 0.0 Step : Interview Your Customers INTERVIEWER: Tell me more? CUSTOMER: The menu system is not intuitive. Customers who are buying much less from you. Those who, in the last six, or months have shown a rastic reuction in purchases. goo way to start the brainstorm is to ask your team members to write own COMPRBLE to competitors in the secon tier of CVDs. les INTERVIEWER: How o you feel about this software prouct? CUSTOMER: It is very if cult to use. st Why Customers who have stoppe buying from you. That is, you have not lost them, but they have not bought from you in some time. Different than Item above. Positive experience with the Ben/Emo person s. ability.to prouct. contribute. Customers you have lost. That is, customers who no longer buy from you for a negative reason. mp Example : The Why s Subsegment B Customers you never ha. That is, customers who ought to have bought from you, but never i. ROOT MESSGE: The menu system has too many layers an no way to get back, which makes customers feel that the prouct is too if cult to use. INTERVIEWER: Tell me about your printing nees. CUSTOMER: I want a printer that prints at more than 0 pages per minute, an 0 woul be better. st. Ensure that the objectives for the customer visits are ocumente an nal. Circulate the objectives bility to aress existing an any other relevant Ben/Tech an anticipate technical material to the members of your team an any other relevant stakeholer. Subsegment INTERVIEWER: Why o you think you get lost using the menu? CUSTOMER: Well, there are too many layers an no way to get back. Example : The Why s T Subsegments an B are there to provie one aitional level of segmentation. For example, you might make the U.S. an B Europe or you can make Managers an B Technicians. You nee not use both an B in your sample selection; it s your choice. Types of Customers % a ex Step : Organize Your Visits Example: Customer rchetypes Detaile Process:Discussion Guie 0 For comments, or aitional copies please the authors: VOC@rapiinnovation.com For comments, questions or aitional copies questions please the authors: VOC@rapiinnovation.com ate an str s es eets h y ce rks full pro Step : Organize temt woyour Visits t Unerstan What sse -illu Customers pla Customer Drivers Competitor Competitor SET THE FOUNDTION in Orer of Importance Category B. Rank No. Example : The Why s ls Note the root message i.e., actionable input from the customer. Risk Management an FME for Prouct Development ll INTERVIEWER: How o you feel about this software prouct? CUSTOMER: It is very if cult to use. st Why Future customers. That is, customers in new markets, new companies, new applications, etc. but quality is more important than quantity. Debriefs an Postmortems for Prouct Development ll Decie who nees to atten base on the objectives an each too Example: Prouct Inex Use the f nity Diagram metho Ben/Eco or any other formal framework for brainstorming. Brainstorm Cost/all possible topics.money fewer. Remember that you Organize the topics or nee to allow the customer questions...0 to talk, an this takes time. Consoliate the topics. It is not a survey, it is a Prioritize the topics. conversation where you nee to probe an let the customer You shoul en up with talk an think. no more than three to ve topics. Prioritize base on importance to the objectives an using a clear criteria selection. The Prouct Inex (PVI) is a numerical expression offor value. By quantifying the value that a prouct represents Increase revenue/ throughput. You nee to. be the BEST in satisfying RIORITIZE TOPICS thepmost.. important FOR THE MEETING In stepcustomer # (Brainstorm), you are efi ning an prioritizing Drivers. the topics of conversation.. (CVDs). Ease of operating an maintaining the system Step : Interview Your Customers INTERVIEWER: Tell me why it s not intuitive? CUSTOMER: I get lost all the time. r Why For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com in satisfying CVDs that are the least important, Generally, you will provie your 0. neeone hour 0.0to performance cover three topics, or perhapsis still Positive experience with the Ben/Emo at least three0. hours. This. may reuce attenance, company. % les INTERVIEWER: Tell me more? CUSTOMER: The menu system is not intuitive. n Why Customers who are buying much less from you. Those who, in the last six, or months have shown a rastic reuction in purchases. Customers who are buying much more from you. COMPRBLE to competitors in the secon tier of CVDs. % INTERVIEWER: How o you feel about this software prouct? CUSTOMER: It is very if cult to use. st Why Future customers. That is, customers in new markets, new companies, new applications, etc. goo way to start the brainstorm is to ask your team members to write own.0 all the questions they wish to ask their customers (use Yellow Sticky Notes). 0. Customers you have lost. That is, customers who no longer buy from you for a negative reason. Customers you never ha. That is, customers who ought to have bought from you, but never i. % for Prouct Development Your illustrate guie to making project management work in tumultuous evelopment Example : The Why s Subsegment B You nee to. be the BEST in satisfying RIORITIZE TOPICS thepmost.. important FOR THE MEETING In stepcustomer # (Brainstorm), you are efi ning an prioritizing Drivers. the topics of conversation.. (CVDs)..0 Subsegment % Positive experience with the Ben/Emo person s. ability.to prouct. contribute. Customers you have lost. That is, customers who no longer buy from you for a negative reason. Customers who have stoppe buying from you. That is, you have not lost them, but they have not bought from you in some time. Different than Item above. mp Example : The Why s Subsegment B Customers you never ha. That is, customers who ought to have bought from you, but never i. For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com It s a step-by-step guie to every aspect of obtaining, processing an applying knowlege of your customers so you can create a steay flow of winning proucts. Rating Score Rating Score (-0) (-0). CLL BRINSTORMING MEETING 0 0. Customer Drivers Competitor Competitor SET THE FOUNDTION in Orer of Importance Category B. Subsegment For comments, or aitional copies please the authors: VOC@rapiinnovation.com For comments, questions or aitional copies questions please the authors: VOC@rapiinnovation.com This VOC guiebook aresses the pressure to obtain customer requirements rapily an shows you how to turn this knowlege into innovative proucts faster an better than your competitors. T Subsegments an B are there to provie one aitional level of segmentation. For example, you might make the U.S. an B Europe or you can make Managers an B Technicians. You nee not use both an B in your sample selection; it s your choice. Types of Customers Scheule the meeting for INTERVIEWER: Tell me about your printing nees. CUSTOMER: I want a printer that prints at more than 0 pages per minute, an 0 woul be better. st Why INFERIOR Increase revenue/ throughput. % % 00% Detaile Process:Discussion Guie Ensure that the objectives for the customer visits are ocumente an nal. Circulate the objectives bility to aress existing an any other relevant Ben/Tech an anticipate technical material to the members of your team an any other relevant stakeholer. a ex Step : Organize Your Visits Example: Customer rchetypes Note the root message i.e., actionable input from the customer. Use the f nity Diagram CVDs that metho Ben/Eco or any other are the least formal framework for important, brainstorming. Generally, you will provie your Brainstorm Cost/all possible 0. neeone hour 0.0to performance topics.money cover three topics, or perhapsis still fewer. Remember that you Organize the topics or nee to allow the customer questions...0 to talk, an this takes time. Consoliate the topics. It is not a survey, it is a Prioritize the topics. conversation where you nee to probe an let the customer You shoul en up with talk an think. no more than three to ve topics. Prioritize base on importance to the objectives an using a clear criteria selection. The Prouct Inex (PVI) is a numerical expression offor value. By quantifying the value that a prouct represents 0 ate an str s es eets h y ce rks full pro Step : Organize temt woyour Visits t Unerstan What sse -illu Customers pla Rank Example : The Why s No. ROOT MESSGE: The menu system has too many layers an no way to get back, which makes customers feel that the prouct is too if cult to use. The Voice of the Customer for Prouct Development ll INTERVIEWER: Why o you think you get lost using the menu? CUSTOMER: Well, there are too many layers an no way to get back. For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com ls Example: Prouct Inex INTERVIEWER: Tell me why it s not intuitive? CUSTOMER: I get lost all the time. n Why Customers who are buying much more from you. to ask their customers (use Yellow Sticky Notes). 0.0 too Step : Interview Your Customers INTERVIEWER: Tell me more? CUSTOMER: The menu system is not intuitive. Customers who are buying much less from you. Those who, in the last six, or months have shown a rastic reuction in purchases. goo way to start the brainstorm is to ask your team members to write own 0. les INTERVIEWER: How o you feel about this software prouct? CUSTOMER: It is very if cult to use. st Why Customers who have stoppe buying from you. That is, you have not lost them, but they have not bought from you in some time. Different than Item above. Decie who nees to atten base on the objectives an each Customers you have lost. That is, customers who no longer buy from you for a negative reason. Positive experience with the Ben/Emo person s. ability.to prouct. contribute. Subsegment B Customers you never ha. That is, customers who ought to have bought from you, but never i. mp Example : The Why s Subsegments an B are there to provie one aitional level of segmentation. For example, you might make the U.S. an B Europe or you can make Managers an B Technicians. You nee not use both an B in your sample selection; it s your choice. Types of Customers Customer Drivers Competitor Competitor SET THE FOUNDTION in Orer of Importance Category B. Rank No. a ex Step : Organize Your Visits Example: Customer rchetypes for Prouct Development Your illustrate guie to reucing time-to-market through risk management an FME th Eition too Flexible Project Management th Eition for Prouct Development Your illustrate guie to obtaining, prioritizing an using customer requirements an creating winning proucts Example: Prouct Inex Risk Management an FME th Eition The Voice of the Customer Prouct Inex CONTINUED Î to a target segment, you can etermine how the offering of one company ranks compare to that of another company. The PVI is calculate by first multiplying the Importance percentage (item ) by the Rating (item ) this generates the Score (item ) for each CVD an then totalling the Scores to create the PVI (item ). st INTERVIEWER: Why is that important to you? CUSTOMER: The one we have now oes 0 pages/min an it is too slow. n Why INTERVIEWER: In what circumstances is it too slow? CUSTOMER: In particular when we have a queue of ocuments with heavy graphics. r Why INTERVIEWER: Tell me more. CUSTOMER: We often have to print 0-00 page reports at the last minute before a presentation, an these reports contain lots of graphics. It is not atypical to have - users printing reports at the same time. INTERVIEWER: What about ocuments with text only? CUSTOMER: No problem there. It is only when we have these heavy graphics reports an when - users are queueing. From feature to problem i.e., on t stop probing until the customer voices the problem. Debriefs are the most effective way to improve 0 evelopment-team performance an that translates to shorter time-to-market an more rewaring innovation evelopment. What gets measure gets one says the 0 refrain. This is particularly true in prouct evelopment ue to the many competing priorities, from time-to-market, to gross margin to time-to-profit an many more. This step-by-step guie covers every aspect of postmortems, ientifying what to o-more-of an what to o-less-of to improve future prouctevelopment performance. It s written by veteran prouct evelopers who unerstan how to obtain the right input from your team, an how to apply it to future projects. This book will guie you through an assessment of your current metrics an their impact on the bottom line to escribing the critical metrics use by prouct evelopment organizations Coming soon 0 For comments, or aitional copies please the authors: VOC@rapiinnovation.com For comments, questions or aitional copies questions please the authors: VOC@rapiinnovation.com For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com 0 For comments, or aitional copies please the authors: VOC@rapiinnovation.com For comments, questions or aitional copies questions please the authors: VOC@rapiinnovation.com For comments, questions or aitional copies please the authors: VOC@rapiinnovation.com For questions an comments: info@rapiinnovation.com