Old Dog Learns New Tricks

A decade or so ago, Customer Satisfaction and Conjoint Analysis studies were all the rage. Virtually every company was carrying out these surveys on an annual or bi-annual basis. The fire was stoked by the necessity to conduct these surveys in order to obtain and maintain ISO certification. Chemical companies who had previously never performed these exercises found themselves using consumer industry type techniques to learn more about customers’ satisfaction levels. The questions were often general in nature and rather unspecific in direction. To make filling out forms easier, suppliers found ways of making them “fun” – scores were collected by moving smiles on a cartoon face or sliding a petrol pump gauge over from empty to full. Sometimes companies commissioned the studies because they thought they had to, but often the results were put in a drawer and forgotten.

However, since then, reports of the death of the Customer Satisfaction/Customer Retention/Customer Needs studies have been greatly exaggerated. They have simply come back in a more focused and useful form. Kline has been able to use these well-known techniques to explore new objectives.

Now Kline finds itself using these techniques to answer such focused questions as:

  • Which of my customers wants the lowest price for our products, but no technical service? Which customers need our active help?
  • What kind of collaboration do they need (if any) in R&D and innovation?
  • How closely do they wish to work with us in joint development projects?
  • What services are they interested in that they currently do not receive? Would they be prepared to pay for these extra services?
  • We have a new product-will potential clients like it and buy it?

So, rather than the general surveys, these studies have moved to the very specific and actionable. Let’s look at four examples.

Product Concept Testing Makes Client Rethink Pre-launch

Kline was asked by a client to test a product concept – pre-launch – by using Customer Needs Analysis type techniques. Basically, this means measuring what features were appreciated about the incumbent product and supplier and what features needed to be improved. The attractiveness of the “new” technology’s features was also addressed on a like-to-have and must-have scale. Some questions were similar to Conjoint Analysis/Trade-Off techniques, where respondents were asked to make a choice between several features, thus making trade-off choices increasingly rigorous until only the most valued key features remained. From this, we learned that the incumbent technology and supplier were well-established and would be very difficult for our client to displace. Our client had originally thought that its new technology was worth a considerable premium in price and that it would gradually take over the market. Our analysis showed them that – at best – the new technology was not eagerly anticipated, potential clients were fairly neutral about the new features, they would have to compete on price, and even then it would prove difficult to break into the market. Certainly, this type of information is better to know up front.

Conjoint Analysis Prevents Failure

On the purely Conjoint Analysis side, a Kline client had virtually written its business plan on the back of an envelope and moved its Managing Director and his whole family from the United States to Germany to spearhead the launch of a new product. At the eleventh hour, the client decided to cross-check the key parameters of its business plan: the target volume to be sold and the price. The product was a construction material made up into a “sandwich” of glass or polycarbonate, which could be used principally in roofing materials (for example, in public swimming pools or sports arenas). The main selling points were its opacity and its heating insulation properties. Kline’s investigative work identified several similar products that were already on the market which our client did not know. Interestingly, one of the principal features of potential client interest, not even mentioned in our client’s technical literature, was its acoustic insulation properties.

Our client’s original plan had been to target construction contractors. Our work showed that the key decision makers were actually at the architect/specifier level, which is several stages up-stream. Therefore, targeting construction companies would have been too late in the process. Given the strong competition of similar products already on the market, we mathematically proved that our client would miss its volume target of X square meters of this product by orders of magnitude, and that the price the market was prepared to pay was approximately half of what our client had expected. Without the Conjoint Analysis to bring some rigor to the process, the original enterprise would have been doomed to failure. Our client confessed that he had not liked our conclusions, but had been immensely glad that we had brought him down to earth before he invested any further.

Should We Acquire New Technology or Not?

One of Kline’s clients had been offered a novel technology by a university research department. The department knew what the technology did, but were not quite sure what the potential industrial applications could be. Our client asked us to find out in what applications the technology would likely be used and which sectors would be early adopters. Our brief was to answer the questions:

  • Should we acquire this new technology?
  • Where can it be used?
  • Where is the low-hanging fruit?
  • Can we see a revenue stream after no more than two years?

By executing a potential customer needs survey in sectors where analogous technologies were used, we were able to gauge levels of satisfaction with current technologies in various segments and to learn where the limits of the current technologies created problems. What were the unmet needs and would key features X, Y, and Z be of interest? Would the customers switch to the new technology? How urgent was the need to switch, etc.? From this analysis, Kline was able to construct a business plan consisting of short-, medium-, and long-term opportunities and potential volumes. Encouraged by this knowledge, our client decided to acquire the technology.

Build It and They Will Come

Kline’s client was a major corporation totally committed to the research and innovation model of satisfying and retaining clients through breakthrough technology. It spent huge amounts of resources on maintaining this position. However, it had noticed that a smaller company, which had actually sold off its technology portfolio and had little or no R&D, was making serious in-roads into its businesses and taking away its key clients. Our brief was to find out how and why. Using both closed and open-ended Customer Retention type questions, we were able to establish that the competitor had developed a highly effective customer intimacy model. Its solutions were rarely breakthrough technologies or even original, mainly consisting of savvy reformulations of established products which would do the job perfectly. The competitor was very flexible and satisfied most of its clients’ day-to-day needs for reasonable costs. Our client was seen as arrogant and distant (“We have the technology. You must come to us.”) and response times to problems were very long, given the “original” nature of how it approached issues. The findings challenged our client’s deep-seated belief in its technology-thrust business model, but allowed it to make some modifications in order to win back previously lost clients and retain those who were at the point of leaving.

As these examples have shown, using even well-known techniques in a creative way can be an extremely useful tool in gauging and anticipating what clients might value and want.

Please contact Kline’s Custom Research team for more information or to discuss a potential request for proposal.

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