Did you know that the global success rate of new product launches is 4%? A whopping 96% of anything new that’s offered on the market flops – either immediately or over time (and usually it’s the former).
Based on what I’ve seen in the last 10 years, one of the biggest reasons this happens is that companies get excited about a new concept or product, get into R&D mode to produce it, and then launch it. This is ESPECIALLY true of small and mid-sized companies – the big guys have learned that they have to be methodical with new product launches. They spend months researching customers, channels, competitors – all to make sure they have an intimate knowledge of how customers buy, what the competitors aren’t doing that customers want, and what they pitfalls and perils are that will potentially derail them. Then, once they’ve had a team of people review the data, and only then, do they make the decision to launch, or not.
I want small and mid-sized companies to be as good about market research before they leap into new products and markets. The most important thing they can do is to engage buyers in the product development and go-to-market planning process. It’s not hard - maybe it’s a bit intimidating because it isn’t ‘business as usual’ for many companies - but it needs to be done to reduce the number of failed launches and wasted R&D investments.
How do companies get a deep understanding of buyer behavior? By talking to them! Or rather, by asking them questions, and LISTENING to the answers. The basic things companies need to know about in buyer behavior are:
– who is involved in making the decision to buy the product / service (is it a single person, a committee, an informal group?);
– what is the process used to make buying decisions (is it ad-hoc, RFP?);
– what are the criteria used for selecting a vendor (reputation, technical specs, relationships?);
– what is the typical timeline for making the decision (1 day, 1 week, 1 month, 1 year?).
But don’t stop there. Getting answers to the questions above isn’t hard. But it’s getting true INSIGHT that matters. Getting insight means getting the whole truth from customers – not just pat answers to these questions. You need to have rapport with your interviewee and the ability to get ‘the dirt’. Because beyond the basics, there are many nuanced items that will make or break a new product. For example, sometimes a competitor is so entrenched in a company’s other business lines that they can’t be bumped even if one or two or their products are shoddy. So a new company that thinks it has something great will quickly learn that building a better mousetrap doesn’t always mean business success.
Having a deep understanding of buyer behavior will make your new product or service much more saleable. It will also help you plan the right sales and marketing activities to ensure the launch is successful and that you spend the right dollars in the right places, from day one.
Here’s how to action this: when you’re planning your R&D budget, add a line item for market research and marketing planning. Take 5 - 8% of what you’re going to spend on materials and engineers, and slot it in for Market Research. I predict your success rate will more than triple.