Voice of the Customer for Capital Equipment Companies

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To ensure the commercial success of your products, you must constantly validate your strategy with your target market. You need the voice of the customer, and you need a process to get it. For capital equipment markets, voice-of-the-customer market validation has two distinct processes. The first is buying-behavior validation, and the second is new-product validation.

Buying-behavior validation is a never-ending, iterative process. that informs your company’s market and product strategy. It produces product roadmaps that, in turn, trigger product development programs.  Each product-development program requires a much more detailed market-validation process to ensure that it has set the right targets, addressed them with the right design, and produced the right implementation of that design. The figure below summarizes the framework for capital equipment, voice-of-the-customer market validation.

Graphic showing the voice-of-the-customer, market validation framework for capital equipment companies
Graphic showing the voice-of-the-customer market validation framework for capital equipment companies

If you’re worried about burdening your customers with your voice of the customer efforts, stop. Your customers and potential customers want you to share your strategy so that they can

  • be sure that you’ll be able to meet their requirements,
  • understand their options for addressing their issues, and
  • be aware of profit and growth opportunities.

Sharing your strategy also helps you build credibility and improve your customer relationships.  It demonstrates a genuine desire to understand their business and contribute to their success. It can elevate your relationship from supplier to partner.

Buying Behavior

Buying behavior validation is where you engage a set of potential customers to determine and validate

  • market opportunity
  • market segments,
  • buying decision drivers,
  • application requirements, and
  • value models.

Your customers and potential customers must be willing to share sensitive, intimate details about their businesses. These details are often non-public, proprietary, and competition sensitive. Getting them to share these details with you is likely to require a little quid pro quo. You’ll need to give to get.

If you share your strategy with your customers, they will be more likely to share theirs.  The best way to do this is to capture your strategy in a market-facing presentation. Then share it with participants in your target markets for their feedback.  Your presentation may contain your view of any number of the following:

  • Market size and outlook
  • Industry roadmap
  • Customer’s process flows
  • Competitive landscape
  • Technology trends
  • Industry challenges
  • Your undertandng of the customer problem and unmet needs
  • Application requirements
  • Your solutions roadmap
  • Value drivers
  • Economic value of your solutions and/or alternative solutions
  • Solution buying-decision drivers
  • Anything else that you need to validate to understand your customers’ buying behavior better.

To determine what to include from the list above, choose content that will help you with

  • questions you need to answer,
  • decisions you need to make, and
  • risks you need to mitigate.

Buying-behavior validation is a never-ending, iterative process. It’s never one-and-done. To be successful, it must become a habit, just like any other continuous improvement process. It’s the only way you can ensure that your product roadmaps define a path to commercial success.

Right Targets

Your validated product roadmap will spawn the need to develop a Market Requirements Document (MRD) to make a business case and outline targets for a specific new product. To ensure that you’ve set targets that will meet customer requirements and win their business, you must test them long before you begin cutting metal. In this step, you must get very specific about product requirements, vision for value, and introduction timing. When you are validating targets in your MRD, you are essentially asking the customer, “If I built a product that did these things by this time, would you buy it from me at this price?”

To prepare for the right-targets validation step, you’ll need

  • A customer-facing version of the MRD,
  • A critical-questions questionnaire, and
  • Conjoint-analysis tools

The customer-facing version of your MRD will take the form of a presentation that you’ll use to facilitate your right-targets, voice-of-the-customer meetings. It contains the critical elements of your MRD, including your vision for value and pricing. You will use this presentation to facilitate your voice-of-the-customer meeting and elicit feedback about your assumptions and plans.

The critical-questions questionnaire contains the questions you need to answer to ensure that your MRD will put you on a winning path. You will ask these questions during your voice-of-the-customer meetings. Creating this questionnaire should be a formal process that involves the key stakeholders on the product team. Question categories might include:

  • Application
  • Product requirements
  • Competition
  • Value and pricing
  • Timing

The final item in the toolkit is the conjoint-analysis tool.

If you have an engineering or scientific background, you may be familiar with a branch of applied statistics called Design of Experiments (DOE). DOE allows for multiple input factors to be manipulated to determine their effect on the desired output. You can think of conjoint analysis as DOE for product managers. Product managers use conjoint analysis to determine which product attributes (inputs) have the most influence on a customer’s buying decision (output).

You can use choice-based conjoint analysis to identify how a customer values combinations of product attributes. For example, you could ask customers to choose between two product attributes, such as

  • Is throughput more important than yield?
  • Is yield more important than price?
  • Is price more important than throughput?

You could also ask customers to decide which of two product configurations they would buy. See the example in the table below

AttributeProduct Choice AProduct Choice B
Maximum Resolution15µm10 µm
Throughput100 Units/hour100 Units/Hour
Price$50,000$60,000

In both attribute or product choice-based conjoint analysis, you present the customer with a series of binary choices. You design the choice series to reveal the product attributes that are the most important to the customer’s buying decision.

Right Design

Once the MRD is validated and signed off, engineering will create designs to address the product requirements. As soon as concept drawings, mock-ups, animations, and the like are available, show them to a subset of the customers who saw your MRD. Your objective is to make sure that your customers will embrace engineering’s product requirements implementation.  Right-design validation is also an excellent time to review the alternatives and performance trade-offs your team is considering. Ask your customers what they would choose and why. Their answers will help you make market-informed decisions.

You’re looking for what customers like and don’t like about your design concept and why. After completing this step, decide what design changes make sense to improve market acceptance and adjust your plans accordingly.

Right Implementation

Of course, the product’s ability to deliver on your value proposition in the customers’ environment is paramount. In this voice of the customer step, ship a pre-production or beta system to select customers for evaluation and feedback before full-production shipments begin. Beta-system validation is a time, people, and cash-consuming step, so keep the number of customer engagements small.

For each beta-site evaluation, establish a formal agreement for:

  • Qualification testing
  • Data sharing
  • Design changes
  • Success criteria
  • Terms for purchase

As with all steps, incorporate beta-site feedback into your product design and marketing as appropriate.

Whom to Talk to

To get the data you need, you need to talk to the right people at the right customers in each market-validation step.

In the early stages of buying-behavior validation, you explore market segment boundaries, assess growth opportunities, and test your strategy. Here it makes sense to talk to the broadest range of potential customers. You may also include your customers’ customers and suppliers. The target customer population tends to narrow as your near new product introduction. For example, for right-implementation market validation, you might limit your voice of the customer efforts to one or two lead customers.

You also need to make sure that you target the right people in your customers’ organizations. You can think of these people in terms of three different buying personas – economic, technical, and user.  The economic buyer is the person or group of people that make the final decision to buy. The technical buyer determines if your equipment can perform the required task and sets the technical buying specifications. And finally, the user buyers are those in the organization that will use the equipment once it is purchased, such as operators and maintenance engineers.

VOC PhasePotential Customer PopulationBuying Person Focus
Buying BehaviorA broad range of potential customers
Adjacent markets, suppliers, and customers’ customers as appropriate
Economic Buyer
Technical Buyer
Right TargetsSignificant buyers in your market with experience with your product typeEconomic buyer
Technical buyer
Right DesignA small group in the target market with a well-developed relationship and reputation for respecting confidentiality
Your users (i.e., service engineers)
User buyer
Right
Implementation
One or two lead customers
Your users (i.e., service engineers)
User buyer

How to Talk about Future Products

In voice-of-the-customer market validation, you will be talking to your customers and likely your sales force about products that are not yet for sale. If you mishandle voice-of-the-customer conversations, you can

  • Delay sales of your current products,
  • Tip your hand to competitors, or
  • Over commit your company

To manage expectations with sales and customers during voice-of-the-customer market validation:

  • Make sure that everyone involved understands that roadmaps and MRDs represent intentions, not commitments.
  • Know where you are in the buying cycle with each customer that you meet. Adjust your approach as needed to ensure that you don’t discourage a customer from buying a current product.
  • Keep voice-of-the-customer visits separate from sales calls.
  • Never include any product-cost information. What a product cost you to make has nothing to do with whether a customer will buy it or the price that they’ll pay.
  • Play it safe. Add a multi-month buffer on all future product release dates.

Whenever you talk about future products, you are sharing the essence of your strategy, and there is always the risk that someone will leak it to your competitors. It’s always a balancing act to share enough to get meaningful feedback, and at the same time, keep the information from the competition. To minimize that risk:

  • Assume that information will be leaked to competitors. Review all materials to make sure that you’re hitting the right balance between sharing and protecting information.
  • Make sure that non-disclosure agreements are in place.
  • Present and share, but never distribute materials containing your strategy details outside of your company.
  • Seek customers with a reputation for respecting confidentiality when disclosing your most sensitive information.

How to Get Customers to Share

Finally, in each voice-of-the-customer meeting, you are trying to obtain detailed, accurate information that will help you produce a product that customers will buy, at your price, over those of your competition. That will require your customers and potential customers to share sensitive, intimate details about their businesses. It would be best if you created an environment where they are comfortable doing so. Here are several tips to help you get that done.

  • Small groups work best. The bigger the meeting, the more formal it gets. The more formal it gets; the less information gets shared. The best size for the validation team is three, one presenter, one questioner, and a host from the account team.
  • Don’t bring senior management to working-level meetings and vice versa. Information flow is stifled when multi-levels of management are in the same room. Management will want to set a good example for subordinates. Subordinates will worry about divulging something inappropriate in front of management.  Everyone will take an overly cautious stance on what is said and shared.
  • Make sure that you have information to give as well as get.
  • Split up the presenting and question-asking tasks. A presenter that constantly stops to ask questions and record answers is distracting. Better to keep the presenter in the “giver” mode and let someone else do the “getting.”
  • Let customers know well in advance your visit that you will be sharing your plans. Alert them to any specific areas that you’ll be probing. This gives them time to prepare and makes the best use of their and your time.
  • Resist the urge to “sell” or get defensive about your strategy. If the customer objects to something you’ve said or presented, seek to understand the concern rather than defend your position. Remember that you’re not selling anything other than the fact that you are a first-rate supplier that seeks to understand its customers’ needs.
  • Talk 20 percent and listen 80 percent of the time. One-half of your talking time should be devoted to asking questions.

Your customers are not of one mind, nor do they all use and evaluate products the same way.  So, you are guaranteed to encounter conflicting data. You’ll need to decipher the source of any inconsistencies and how they affect your vision for your new product. To improve your ability to do that, keep the number of variables low. Do your best to use the same materials, questions, and validation team for every voice-of-the-customer meeting. Also, get multiple perspectives within any given customer; for example, R&D, production, and management.

How to Get a Voice-of-the-Customer Meeting

What’s your most frequent response to an Amazon product feedback request in your inbox?

You delete it.

What about when your phone’s flashing the caller ID of the dealership where you just purchased your car?

You let it go to voicemail.

What about the customer survey link that the check-out clerk circled on the bottom of your Home Depot or Staples receipt?

It never even registers on your radar.

As an equipment supplier, do your customers respond similarly to your voice-of-the-customer meeting requests? If so, here’s what to do.

You discard requests for product feedback because you don’t believe that providing it will result in something that will improve your life or impact the supplier’s product. All we hear is the supplier asking us for something that it needs. We don’t hear anything in their request that suggests that we’ll get something that we need. So, we choose not to engage.

If you’re a capital equipment supplier and use the same “Give me your feedback!” approach to secure voice-of-the-customer meetings, you’ll be met with the same response. Instead of asking customers to meet with you for a voice-of-the-customer meeting, offer to share your strategy and plans with them. Suddenly instead of asking the customer for something, you’re offering to give them something. So, don’t do this:

Dear Customer:

I am the product manager for the Turbo XT system at EquipCo. I am conducting voice-of-the-customer meetings to gather input for our next-generation system. I’d appreciate a couple of hours of your time so that I can ask you some questions.

A request like this only communicates your needs. It’s all about you. It’s not much different from a complete-this-survey request from an internet retailer. Your customer will view it as more bother than it’s worth.

Instead, do this:

Dear Customer:

We are establishing plans for the next generation of the Turbo XT system. To ensure that our products meet your requirements when they come to market, we would like to meet with you to review our plans.  When we meet with your team, we will:

  • Share our new product performance targets and design concepts
  • Ask questions about your requirements and priorities

Your feedback will help us produce products that will meet your needs, help you address your most important issues, and help your company be more profitable.

My team and I will be in your area from August 15-20th. Is it possible to set up a two-hour meeting in that time frame with the appropriate people from your company?

Now we’re getting somewhere. This second version of the voice-of-the-customer meeting request makes it clear that you plan to provide something valuable. You’re offering them an opportunity to push your strategy in a direction that meets their needs. The capital equipment buyer’s chance to influence their supplier’s product plans is well worth two hours of their time.