Customer-Centric Product Development - Tips & Benefits

What is customer-centric new product development, and what are its benefits?

Customer-centricity is not a new concept. It has even been mentioned in the business literature of the 20th century. Yet, it became crucial only recently due to inevitable changes in the market. But, what exactly does being customer-centric mean in relation to product development? Let us take a look at how it is defined by scholars:

Customer-centric new product development (CC-NPD) can be defined as a multidisciplinary innovation process that puts customers’ needs and expectations at the heart of the NPD process. CC-NPD provides a methodological approach for modeling, quantifying and implementing added-value features in (new) products or services that customers perceive as valuable and are willing to pay for. (Romero & Molina, 2015)

It is crucial to mention that the customers in this process might be both individuals (users) and organizations (acquirers). Customer-centric product development must, therefore, be adjusted to the needs of both these groups. You cannot achieve that without proper, polished communication between product developers, acquirers and users. This puts the development teams at the center – they need to gather information from marketing, sales and finance departments to fully comprehend the needs of the customers to be able to fulfill them.

What are the benefits of customer-centric product development?

Customer-centric product development has a plethora of advantages if done properly. This is a strategy that fits the current market and adopting it will give you an edge over your competitors. The main reason why this is so, is due to its potential to increase your revenue – companies which are customer-centric perform significantly better in financial terms than those which are not. (Forbes, 2019) This is a result of improvements in several key business areas that are enhanced through the customer-centric approach. Let’s look at the particular advantages related to product development.

Better market fit

Customer-centric product development lets your company create a product that will truly fit the market. Listening to customers’ feedback and implementing changes based on that is the key to success. People don’t buy products because they are great, but rather because they can satisfy their needs and expectations. Creating such products is possible only through customer-centricity, but it pays off in the long run.

Enhanced customer retention

Customer acquisition is more expensive than ever before, so it is beneficial for companies to invest in customer retention instead. Customer-centric product development is one way of doing that. By crafting products based on feedback and the known pain points of acquirers or users, it is possible to keep them on board. Hardly anyone will go to your competitors if they feel that their needs are being addressed.

Less time and fewer resources wasted on unwanted implementations

Proper communication leads to better understanding. Understanding leads to knowledge. Knowledge leads to creation. With customer-centric product development, the case is simple – you comprehend your customers’ needs and attempt to prepare a product that suits them. Even if at first it is not ideal, such a product will be more market-accurate than one created with a different approach. As a result, your team spends less time on developing features and improvements that don’t improve the user experience and have a smaller impact on the product’s business efficiency.

Faster new product development

If you know what you are doing, you do it more quickly. This is exactly the case with customer-centric new product development. The development teams understand what they should create, so it takes less time for them to complete a project. Time is crucial for B2B transactions, thus this is an important advantage.

Tips for customer-centric product development – how to do this effectively?

Combining business goals with user needs is not easy – we know this all too well since this is exactly what we do at Boldare. Yet, this has also been the key to building a customer-driven company. The expectations of both the acquirer and the users have to be met, but how to do that? Here are some customer-centric product development tips that should help:

Put customer experience at the center

Usually, companies build the customer experience around a product or a service. With customer-centric product development, it is the other way around. The features of the product need to be adjusted to what customers desire, and what they feel. Consider customers’ pain points before your product is introduced – how do the users feel about currently existing similar products? Perhaps they don’t like something about them or they miss a certain feature? The answers to these questions should be the basis for your new product development.

When building new products (or improving existing ones) at Boldare we put huge emphasis on user research. We treat it like an investment in the future success of the product and its positive impact on the customers’ business through user experience.

How do we do it? We involve a diverse set of roles in the user research process, including product designers, developers and product strategists. Depending on the hypothesis we create, we use appropriately matched methods and tools.\ \ Here’s an example: our client, an online printing firm, had acquired a license for a digital design tool. This tool enabled users to create their own promotional materials such as flyers, business cards, or booklets. They intended to integrate this digital tool into their primary printing platform, presuming it was a necessity for their customers.

Through comprehensive interviews with their existing customers, our team found that the tool wasn’t a solution that customers would utilize and appreciate. In fact, the hypothesis validation process concluded negatively. We recommended the client not to invest in it to avoid a potential waste of resources. You can read the entire case study dedicated to this client here.

As you can see, this approach is equally beneficial for our clients and for us - we always learn something during such research and can apply that knowledge to other products.

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Establish excellent communication

If your company cooperates with the acquirer, not the user, be sure to establish regular, efficient communication channels. You have to be able to obtain as much data as possible from them, and your product’s users – otherwise, the product will simply fail, and your company will lose customers. Discussing their needs on a regular basis will help your development team create a better-fit final product and secure the client for future collaborations.

Keep up with your competitors … but wisely

Customer-centric product development is not about the product itself, but about its acquirers and users. So, while it might be tempting, do not try to fill your product with all the features that are offered by your competitors. This is a common trap that might lead to failure.

Systematic and constant monitoring of competitors’ activity has many benefits. However, it is necessary to distinguish (e.g. through user research) between those things that will bring benefits and those that are just a waste of resources.

Final thoughts

Adopting a customer-centric product development approach is a must in the current market situation. And, even if it wasn’t, better market fit, higher customer retention and faster processes would always be an advantage. By putting customers and their experience at the center of your development process, your company is bound to grow.

Did you find this article useful? Consider reading: Starting app development efficiently - how to do it?

Bibliography:

Romero, David & Molina, Arturo. (2015). A Multidisciplinary Framework and Toolkit to Innovate Customer-Centric New Product Development. 10.1109/ICE.2015.7438638.