Customer-Driven Innovation: It’s About the Relationship

We love to talk about developing new products— and so do our sales forces and retailers. Rightly so, as new products are the reason behind start-up companies and, alongside distribution, they are the lifeblood of consumer packaged goods (CPG) companies. But organizations that are truly customer-centric are focused on developing a relationship with their customer—one that transcends the product and touches every interaction a customer has with them. It’s true whether the customer is an end user, a retailer or a brand manufacturer (in the case of raw material suppliers and co-packers). It’s the relationship that drives new products, as well as everything else in the organization.

Innovation is really about finding and implementing new ways to make these customers happier—creating a better relationship and more loyalty. It’s about discovering ways to serve them better, supporting their health and enjoyment in a way that everyone wins. In the best companies, this attitude penetrates every department, not just marketing and R&D. It’s a culture that permeates mission, vision and values, and it is measured and rewarded— throughout the organization.

The graphic shows a few of the functional groups that can be creative about their approach based on putting the customer first.

Customer-Driven Culture 

Where does it really start? With a customer- centric executive team that is committed first and foremost to serving the customer in every way. (Creative thinking and approaching challenges in unique ways begins at the top.) Being willing to take risks and reward employees for thinking independently trickles down into every part an the organization. Likewise, culture change starts at the top and is infused throughout the organization. From the CEO down, leaders set the tone, and employees learn about what is really important by watching; in particular, they observe the reactions of management.

To foster a culture of innovation, every employee must be encouraged to take risks, learn from “mistakes” and be relentless in having an outward focus. That said, a company needs to truly understand who their consumers are and what motivates them. Spending the time researching and understanding your market and your competitive landscape means that you can speak the language of your consumers.

Sales: How Are Customers Treated?

Years ago, when Bruce Barlean first started his company, his motto was “From our Family to Yours.” Do you treat your customers like family? To this day, Barlean’s (www.barleans.com) makes it easy for customers to work with them, according to Scott North, vice president of communications. “We try to make things simple, and remove the risk. If our customers have a question … we’ll answer it. If they have a need … we’ll meet it. If they are not satisfied … we provide a complete refund.” This straightforward approach, on top of an aggressive, innovative new product strategy, has fueled the company’s growth and reputation over the past decade.

How do you make it easy for customers to work with you?

Innovative thinking involves turning conventional thinking on its head. I was recently speaking with Reliant Beverage (www.relianthydration.com) about ways to engage consumers and promote their new premium sports recovery water. Matt Mazzoncini, the company’s designer and technology associate, made the comment: “What if we worked with our consumer to better understand how much their body needed [instead of how much we can sell them]?” What a great way to build trust and brand loyalty! It shows a genuine interest in doing what is best for their consumer’s health and their budget. They are getting into the mind of the consumer, understanding what they want and crafting a strategy around it.

Marketing: More Than Branding & Communication 

Traditionally, developing a marketing plan revolves around the four “P’s”: product, price, place (distribution) and promotion. For established brands, most of the effort is put around consumer and trade promotion of products: instore programs, sampling, trade shows, media outlets, etc. Kevin Urie, president of 47 Harmonic (www.47harmonic. com), looks at marketing in a different way: through the lens of the consumer. “I developed the Harmonic Cycle because I felt most brands had the four P’s figured out, but were failing with the planning and execution of their marketing. The Harmonic Cycle looks at all stages of the marketing cycle from the consumer point of view. Our goal is to make it easy for a potential customer to notice, desire and invest (our term for purchase) in our clients’ brands. When they do, we develop programs that ensure these new satisfied customers then turn into evangelists for the brand,” he said.

When we treat our customers as an important part of our sales force, instead of just looking at the revenue generated, it changes the relationship— customers are more satisfied and brands grow faster.

Operations Importance 

We don’t often consider the impact that back-end operations and quality assurance (QA) have on our customers, much less consider what new procedures we can put into place that are going to delight customers. And yet when raw materials don’t ship on time or a batch is out of spec, it can have massive effects on customers, resulting in broken relationships.

Recently, I reviewed sell sheets from an oil supplier. Upon close inspection of the CoAs from several batches, it became clear that the omega-3s were overstated on all the marketing materials. We were immediately distrustful of not only that product, but all others that the company made. It is simply unacceptable to customers to have late shipments to retailers, take two weeks to get basic QA documentation or to have errors in sales materials and quotes. Finding ways to improve response time and transparency with customers is one key to increasing trust and building the relationship. Innovation isn’t just for new products—it’s for new processes as well.

Disney just introduced MyMagic+, a waterproof wristband that’s a sophisticated data collection and technology system meant to make the customer experience at Disney World even more magical. It’s game-changing technology, and not without controversy. Still, look for ways to plug leading-edge technology into your customer interactions.

Legal’s Understanding

One would think your attorneys understand how critical customers are to your business, but it doesn’t always appear that way. I received an NDA (non-disclosure agreement) from a company recently that was written so harshly and one-sided that it was impossible to sign. I’ve seen technology licensing agreements that demand so much that the potential customer wishes they could find an alternative! If we view these documents through the eyes of customers, then we can build bridges that strengthen the relationship, versus setting up walls from the get-go.

Charles Cain, partner at CainHahn (www.cainhahn.com), described it this way: “Effective counsel will keep foremost in mind their client’s ultimate objective, which is not to have the most one-sided and technically correct contract the world has yet seen, but to reflect a business deal that makes money and serves as the basis for a successful relationship between the parties. Handled correctly, a well-drafted contract should help clarify roles and responsibilities, avoid misunderstandings and instill in both parties a true sense of collaboration rather than combat. This open, even-handed and collaborative process creates a solid business partnership based on mutual trust and performance, not on legal verbiage.” 

Product Development: What Delights Customers?

It all starts with knowing your customer and what their needs are. What are they doing to “create” solutions because there are no satisfactory products to buy?

I like Eric Reis’ model from the The Lean Start-Up (www.theleanstartup.com): create the minimum viable product in the shortest amount of time possible, put it in front of consumers, get their feedback, revise and repeat. First we do it with new product concepts, and then go back with actual product for them to sample, testing flavor, texture and satisfaction. We discourage firms from spending two years creating the perfect product (it is almost always a waste of time unless you are getting customer feedback during the process). If you are a Fortune 500 company, create space within the highly structured environment for entrepreneurial thinking and testing. It’s tough to be innovative without the leeway to experiment and work directly with customers.

Galazo (www.vivagalazo.com), an allnatural sports hydration beverage company, understands focusing on the consumer. My kids love these drinks not just for the flavor, but because they feel like the bottles are made for them—the packaging design features a big soccer ball on the front. As a soccer mom and household beverage gatekeeper, I love it because it doesn’t have all the artificial colors, preservatives and high sugar levels that will make kids crash before the next game.

Galazo Founder Richard Tait understands what his consumer is looking for, and how to make them a part of the sales team. It’s about fostering the relationship—focusing on pleasing the customer from product development through operations, sales and beyond, creating brand evangelists. I, for one, am bringing a case to the kids’ games this week. 

For more than 25 years, Beverly Emerson has been helping leaders of food and nutrition companies achieve significant growth through successful new product innovation. An accomplished CPG marketer and R&D executive, Emerson integrates consumer insights with technical expertise, creating products that make a difference—to both consumers and the bottom line. She can be reached at bev@olivetree-pd.com or www.olivetree-pd.com.