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Strategy, Reliability And Service

Mon, 12/17/2012 - 8:25am
Alan Nicol, Executive Member, AlanNicolSolutions

Do you have a product strategy? What is it? Does everyone taking part in its development know what it is? Answering these questions can be the key to brand reputation and business success in an era of fickle customers.

In the last few months, I’ve been talking with peers and business leaders about improving innovation, design, and development lead times. I’ve also be talking about increasing productivity. These topics seem to be the “hot buttons” of current times. However, if we forget about the quality and reputation of our products and our brand, all the innovation, speed, and productivity in the world won’t make us successful.

In several instances, I’ve found opportunities to redirect leaders’ attention to their own data reflecting sales volume. Sales numbers, in these cases, had been falling. Naturally, the discussion turned to examining why.

The general slow-down of the economy is the first victim of blame, but when we challenged whether that was truly the cause it was difficult to match the numbers. It is difficult because we cannot truly know how our customers are going to change their buying decisions when they tighten their belts. When when we opened up the discussion to examine other possible causes, we found some interesting data-based and anecdotal information.

In most cases, when we asked the question: “How is your product’s quality or performance perceived compared to the competition,” we didn’t have a data sheet to which we could point; we didn’t know. A quick inquiry with Sales personnel, cutting through the loyalty message and talking straight, indicated that customer perceptions of products were not strong compared to years past. In short, people weren’t buying the products because they didn’t like them.

The bad news was that people didn’t like the product as much as we did. The good news is that such is a problem much easier to address than the national or global economy.

In almost every case in my recent experience and conversations, the anecdotal information pointed to a perception that the quality or performance of the product did not differentiate it, or it was poorer than the competition’s. In one case, the product was meeting customer demands for one new demand very well, but at the cost of others, which also happened to be important to win sales.

When customers tighten their belts, the importance for companies to beat the competition, increases. When the market shrinks, the only way to keep from shrinking ourselves is to capture a greater share. We do that with better products and services. So, what is your strategy to capture more market share?

The obvious strategy is to reduce cost and to make your product more affordable to a customer base with less money to spend. But, that same strategy is foremost on everyone’s mind. It won’t win more market share unless you can drastically undercut your competition.

By all means, continue to dig deep and focus on efficient productivity; however, don’t leave behind the other elements of your product that are important to customers or that differentiate your product. Don’t think for a minute that customers don’t still consider quality and reliability important, or the cost of maintenance in their purchase decisions. In fact, when spending money reluctantly, those factors weigh all the more on the decision.

There is another important thing to consider. When we went looking to see what customers thought about products, to answer the questions mentioned above, and to challenge the assumption that the economy was causing sales to drop, where do you think we found the most useful information the fastest?

In less time that it took to dig data out of sales survey results or other systems, we found numerous sources of detailed information and opinions on the Internet.

Coincidentally, we were reading the same information that concerned customers were reading before making a purchase decision. What was the lesson here? In these cases, the customers knew more about the product’s performance than the company leaders, because they were reading on-line critiques and opinions that the business leaders were not.

We must also understand that one vocal person’s opinion about our product can quickly become everyone’s perception, unless there are numerous accounts to the contrary. I’ll give you an example of my sons’ own shopping experience for a $50 item.

My two sons wanted a particular toy for Christmas, and to show us what they were talking about they showed us a YouTube video, which showed a customer opening a brand new sample of the toy and assembling it herself, then trying it out. The performance was disappointing. Not only did it not live up to the expectations in terms of performance, it was rapidly getting scratched and losing luster with just a hand-full of operations during the video. We decided to put something else on the boys’ Christmas list.

OK, so what do we do to win in such a public environment? There is a big behavioral difference between businesses that grow in spite of economic conditions and those who shrink in spite of economic strength. The behavior is a product strategy.

When I asked my peers in the examples above about their product strategy, there was not an immediately coherent response. It wasn’t a well-known or often-discussed element, or it didn’t exist. In some cases, my colleagues began to list some of the high-level requirements. Requirements are not the strategy. The strategy is what feeds the requirements.

Pull out your cell phone. What do you suppose the product strategy for your cell phone is or was? There are a great many considerations that could have been a part of it, but let’s keep it simple for now. In fact, there’s no reason not to always keep any strategy discussion relatively simple.

What was the competitive edge for your cell phone? It might have been appearance, simplicity, or versatility; more functions, and of-course price. I know that some of the readers chose their phone because they first chose a cellular service provider and then selected from the phones offered. I know too that other readers selected the cellular service because it was the one compatible with the phones they chose.

I stated earlier that innovation is a big hot button, and the discussion of defining how one product competes with another converges unavoidably on the topic of innovation. Let me steer us back to the elements we seem to be forgetting with regard to product strategy. In particular, I want to talk about reliability and service, along with the importance of defining our product strategy and communicating it to everyone involved in its development.

An essential piece of a product strategy must be quality, reliability, and service. For the sake of the remainder of this discussion, let’s limit the definition of service to that which is required to keep the product operating.

Your cell phone is probably not meant to be serviced. At best, you might have the option of replacing its battery or touch screen, but many must be replaced in whole if one of those components goes bad. Your car, on the other hand, is meant to be serviced; however, it is no longer the trend to expect customers to perform their own service, but for that service to be performed by technicians. Service is even part of the sales and business strategy for many automobile dealerships in the U.S.

Will your product last longer than the customer’s interest in it, like some cell phones? Or, will your product require maintenance or repairs over the course of the customer’s experience with it? What will be the best answer to compel your customers to speak positively of it on the Internet to other potential customers?

I have witnessed that when we increase our focus on innovation and/or productivity, we tend to lose focus on quality, reliability, and lifetime cost. In today’s era of immediate official and unofficial consumer reports on our products, losing focus on those elements can be a critical mistake. Do not make that mistake. I don’t mean to say that every product must be of highest quality. I do mean to communicate that our products’ quality and reliability must be appropriate, and must be part of our competitive strategy.

If we don’t expect customers to hold on to our product for more than two years before buying a new one, we would be foolish to design it for ten years of flawless operation. Contrarily, if our business’ reputation is based on quality and reliability, it would be self-destruction to sacrifice reliability to shave a few dollars in production.

At a minimum, our product strategy should include two elements:

  1. How will we influence the customer’s decision to purchase our product?
  2. How will we ensure the customer’s happiness with his/her decision?

If we focus solely on the first element, we leave ourselves vulnerable to public ridicule born of buyer’s remorse. Instead, build your strategy around both elements and ensure that there is more praise than condemnation for your product on the Internet.

When we do answer the above questions, and we write it down as our product strategy, the best thing we can do is communicate that strategy to everyone inside our business, particularly those involved in the product’s development. Do not just write up some requirements and expect your development teams to properly interpret the success of the product.

I know it’s easy to assume that if the requirements are properly set, as long as they are met, the strategy should also be fulfilled. Probably, yes, but that’s a big “if” for many of us. It also leaves out the potential for your greatest creative and problem-solving minds to help you improve the product toward that strategy.

Suppose that your strategy is to build the product to last two years and then be obsolete. Product service is not a consideration. The requirements are set accordingly.
Imagine the design team that is told, “Build this, don’t ask questions,” and is given the requirements. They will do what they are told and you will get what you required. So be it.

If the design team understands the strategy and why the decisions and direction for the reliability are made as they are, then there is the possibility for better options. What if the design team observes that they can reduce the manufacturing and assembly cost by making a somewhat vulnerable part easy to replace? Think about the screen on your cell phone.

Suppose that it can be designed to last more than two years as directed, but can also be easily serviced. Suppose that the same attribute that makes it easy to service also makes it easy to assemble in production and can reduce production cost. Here is an opportunity to improve the product’s reputation with those fewer customers that hold onto it longer than two years or who abuse it more. It also opens the door for revenue from replacement parts or more reason for customers to visit the store, either on line or in person, and see other products available.

The discussion is enabled because the team understands the strategy and can infer that while the possibility is not required, it might make an opportunity to increase satisfaction with the product. This is much better than deliberately designing it out because a requirement made it clear the product should not be serviceable.

We might get the same opportunity by luck from the “does what it’s told” design team, but they might just as quickly design it out. Why not be an intelligent organization, by giving everyone in it the resources to satisfy the strategy? Tell them what the strategy is and you might get better ideas to meet it that the requirements team anticipated.

Throughout your product’s development and production, people inside your organization will be making decisions. If all of those people know and understand the product strategy, they are better prepared to make decisions that will enable that strategy. If we have no strategy, or if we don’t know it, we can’t fulfill it except by accident. Don’t leave your product’s success to accident!

Thus, I will sum up by re-writing two important points in the discussion above. These points could be the difference between shrinking and growing sales:

Point 1:

Be deliberate in the determination of your product strategy. Know how your product will win sales and how it will also ensure your customers’ happiness with their purchase decision. Make sure that your reliability and service plan is part of your product strategy.

Point 2:

Make your strategy clear, write it down, and communicate it to everyone involved in the product. Knowing the strategy will affect everyone’s decisions about what is right or wrong for the product. It is much more powerful than simply listing requirements.

I worked for several years for a diversified corporation that, while I was an employee, purchased another business with a very strong brand name, but falling profits. The plan was to leverage the greater corporation’s assets and knowledge to improve productivity and, therefore, have both the strongest brand and the best performance for a competitive price, leading to a takeover in market share.

This week I had cause to investigate the purchase of one of these products for my own home, and having personally reviewed competitive teardown and comparison data years ago, I was certain that I would purchase one of my former employer’s products. Consumer data on the Internet, ironically, advised me to the contrary.

To satisfy the focus on productivity, design changes and manufacturing locations (and, therefore, knowledge sets) were changed. The consumer perception of quality and reliability has fallen drastically since, coincidentally, the larger corporation bought the brand and the focus for the product was shifted. Instead, a competitor has taken the greater share of the market because the competitor products are perceived to be more reliable and less expensive to service.

The brand always competed on a reputation of superior quality and reliability. Without those bragging rights, the competitive price is not enough. What was a strategy so intensely focused on quality and reliability that production and cost could not compete has swung the other way, and an intense focus on productivity has left the competitive attributes of the brand to falter. I believe that the product strategy was forgotten in the quest to improve productivity. Don’t let that happen to you.

It’s very important to improve productivity and to focus on innovation. Do not sacrifice quality or reliability to do so. Be sure that the latter remain part of your product strategy. Be sure that you have a product strategy and that your teams involved with the product know what it is.

Take a good look at your products in development. Do you have or do you know that product’s strategy? Does everyone know it? If you are a leader, write down and communicate the strategy. If you are on the development team, ask for it. If you are on the production team, do the same. Empower everyone to make intelligent decisions to fulfill what will, or does, make the product successful.

Stay wise, friends.

If you like what you just read, find more of Alan’s thoughts at www.bizwizwithin.com.

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