1. Identifying Customer Needs
Chapter 4
Identifying Customer Needs

2. Why identify customer needs?
Ensure that the product customer-focused and no critical needs are missed or forgotten
Identify latent (hidden) and explicit needs
Fact base for justifying the product specs.
Archival record of the customer needs
Develop a common understanding of customer needs among members of the development team

3. Concept Development Plan

4. Subtle Distinction: Needs & Product Specs.
Needs are largely independent of any particular product we might develop; a team should be able to identify customer needs without knowing if or how it will eventually address those needs.
Specifications do depend on the concept we select. The specifications for the product we finally choose to develop will depend on what is technically and economically feasible and on what our competitors offer in the marketplace, as well as on customer needs.

5. Similar Terms
Other terms used for Customer Needs in industrial practice:
Customer attributes
Customer requirements

6. Five-Step method to Identify Customer Needs
Gather raw data from customers
Interpret the raw data in terms of customer needs
Organize the needs into a hierarchy of primary, secondary, and (if necessary) tertiary needs
Establish the relative importance of needs
Reflect on the results and the process

7. Mission Statement

8. Step 1: Gather Raw Data from Customers
Interviews
Focus groups
Observing the product in use

9. 1.Interviews
Development team members discuss needs with a single customer.
Interviews usually conducted in the customer’s environment and typically last 1-2 hours.

10. 2. Focus Groups
A moderator (a team member or a professional market researcher) facilitates a two-hour discussion with a group of 8 to 12 customers
Typically conducted in a special room equipped with 2-way mirror and videotaped
Participants are usually paid a modest fee ($50 to $100 each); total cost about $2500
Firms that recruit participants, moderate focus groups an/or rent facilities are listed in the telephone book under “market research”

11. 3. Observing the Product in Use
Reveals important details about customer behavior
For example, a customer painting a house may use a screwdriver to open paint cans in addition to driving screws.
Observation may be completely passive, without any direct interaction with the customer, or may involve working side by side with a customer, allowing members of the team to develop firsthand experience using the product

12. 3. Observing the Product in Use
For some products such as do-it-yourself tools, actually using the products is simple and natural
For others, such as surgical instruments, the team may have to use the products on surrogate tasks (e.g., cutting fruit instead of human tissue when developing a new scalpel)

13. Choosing Customers
Griffin and Hauser estimated that 90 percent of the customer needs for picnic coolers were revealed after 30 interviews.
In another case study , they estimated that 98 percent of the customer needs for a piece of office equipment were revealed after 25 hours of data collection in both focus groups and interviews.
As a practical guideline for most products, conducting fewer than 10 interviews is probably inadequate and 50 interviews are probably too many.

14. Interview Logistics
For example, if a 10-person team is divided into five pairs and each pair conducts 6 interviews, the team conducts 30 interviews in total

15. Lead Users
Needs can be identified more efficiently by interviewing a class of customers called lead users.
Lead users are customers who experience needs months or years ahead of the majority of the market and stand to benefit substantially from product innovations.

16. Lead Users
These customers are particularly useful sources of data for two reasons:
They are often able to articulate their emerging needs, because they have had to struggle with the inadequacies of existing products.
They may have already invented solutions to meet their needs.

17. Which customer to select?
The choice of which customers to interview is complicated when several different groups of people can be considered “ the customer.”
For many products, one person (the buyer) makes the buying decision and another person (the user) actually uses the product.
A good approach is to gather data from the end user of the product in all situations, and in case where other types of customers and stakeholders are clearly important, to gather data from these people as well.

18. Customer Selection Matrix

19. The Art of eliciting Customer Needs Data
Gathering needs data is very different from a sales call: the goal is to elicit an honest expression of needs, not to convince a customer of what he or she needs.

20. Interview Questions When and why do you use this type of product?
Walk us through a typical session using the product
What do you like about the existing products?
What do you dislike about the existing products?
What issues do you consider when purchasing the product?
What improvements would you make to the product?

21. General Hints for Effective Interaction with Customers
Go with the flow.
Use visual stimuli and props.
Suppress preconceived hypotheses about the product technology.
Have the customer demonstrate the product and/or typical tasks related to the product.
Be alert for surprises and the expression of latent needs.
Watch for nonverbal information.

22. Documenting interactions with Customers
Audio recording
Notes
Video recording
Still photography

23. Audio Recording
Making an audio recording of the interview is very easy.
Transcribing the recording into text is very time consuming, and it can be expensive to hire someone to do it.
Could be intimidating to some customers

24. Notes Most common method for documenting
Designate one person as the primary note-taker and have the other person concentrate on effective questioning.
Notetaker should strive to capture some of the wording of every customer statement verbatim.
Transcribe notes immediately after the interview to create a description of the interview that is very close to an actual transcript; sharing of insights between the interviewers.

25. Video Recording Almost always used to document a focus group session.
Useful for documenting observations of the customer in the use equipment and/or using existing products.
Useful for bringing new team members “ up to speed” and as raw material for presentations to upper management.
Multiple viewings of video recordings of customers in action often facilitate the identification of latent customer needs.

26. Still Photography
Taking photographs provides many of the benefits of video recording.
The primary advantages of still photography are ease of display of the photos, excellent imagine quality, and readily available equipment.

27. Final Result of Data Gathering Phase
A set of raw data, usually in the form of customer statements but frequently supplemented by video recordings or photographs.
Please remember to: write thank-you notes to the customers involved in the data gathering process.

28. Step 2: Interpret Raw Data in terms of Customer Needs

29. Customer Data Template

30. Step 3: Organize the Needs into a Hierarchy
The result of step 1 and 2 should be a list of 50 to 300 need statements.
The goal of step 3 is to organize these needs into a hierarchical list:
Primary needs
Secondary needs
Tertiary needs
Organizing the needs into hierarchical list is intuitive

31. Needs Organization Procedure
Print or write each need statement on a separate card or self-stick note.
Eliminate redundant statements.
Group the cards according to the similarity of the needs they express.
For each group, choose a label.
Consider creating super groups consisting of two to five groups.
Review and edit the organized needs statements.

32. Hierarchical List

33. Step 4: Establish the Relative Importance of the Needs
Useful in making trade-off decisions
Assign numerical importance weights for needs
Two basic approaches to the task:
Consensus of the team members based on their experience with customers
Importance assessment based on further customer surveys

34. Importance Weights: Consensus or Customer Survey?
Obvious trade-off between the two approaches is cost and speed versus accuracy.
Few customer will respond to a survey asking them to evaluate the importance of 100 needs.
Typically the team will work with only subset of the needs. A practical limit on how many needs can be addressed in a customer survey is about 50.

35. Example

36. Step 5 : Reflect on the Results and the Process
Some question to ask include:
Have we interacted with all of the important types of customers in our target market?
Are we able to see beyond needs related only to existing products in order to capture the latent needs of our target customers?
Are there areas of inquiry we should pursue in follow-up interviews or surveys?
Which of the customers we spoke would be good participants in our on-going development efforts?

37. Step 5 : Reflect on the Results and the Process
Some question to ask include:
What do we know now that we didn’t know when we started? Are we surprised by any of the needs?
Did we involve everyone within our organization who needs to deeply understand customer needs?
How might we improve the process in future efforts?