How to use customer insights for product development

We all know how important it is to listen to your customer and take their feedback on board. Yet have you considered using customer insights to support your product development efforts? With a range of undeniable benefits, you’re missing a trick and potentially enormous cost savings unless you are involving your customers in your product development journey.

But how can we gather customer insights? At what stage of the product lifecycle should we engage with potential customers? Below, we’ll review how customer insights can help improve product development.

What are customer insights?

Customer insights use a combination of data, analytics and feedback from previous and current customers. Then, you can interpret and analyse this information to make data-driven decisions and gauge market fit and customer demand for your next product. 

You can gain customer insights by utilising your website data and analytics for hard data. As well as this, anecdotal data is often very telling – for example, by speaking to customer service teams, reviewing frequently asked questions (FAQs) and customer feedback. You can also engage with your audience through interviews and/or customer feedback surveys to gain the answers you need.

Although you may think you understand the customer and their needs, gathering insights from those who regularly use your product or interact with your brand usually unearths new information. 

What is product development?

Product development describes the process from ideation to release and iteration of a product. 

Existing businesses may look at improving or creating products that complement their current offering, creating opportunities for cross-selling and up-selling to their current client base. New and existing businesses alike may be looking to create a new product, enter a new market or serve additional audiences. In each case, gaining customer feedback and insights is essential for success.

Why use customer insights to inform product development?

When it comes to using customer insight to inform product development decisions, there are plenty of benefits:

  • Validation on the viability of your product prior to undertaking costly development
  • Creating a product or solution that matches the customer’s needs and pain points
  • Large cost and resource savings
  • A quicker time between product launch and sales
  • Suggestions and ideas from the customer on future iterations of your product as well as complementary products

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How should you use customer insights for product development?

Existing businesses can utilise their current customer data to inform decisions relatively easily. The benefit of this is that loyal customers are likely to give detailed feedback to support your business and its development.

You can ask your current customers:

  • The pros and cons of your product
  • How your brand and product is perceived 
  • How your product is used
  • The suitability and market fit of future products or add-ons
  • If there is anything they’d like to see in the future
  • The customers’ perception of your brand vs. competitors

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This (non-exhaustive) list is a good place to start and can give you a good place to start on your product development journey.

If you’re developing a brand new product or you’re a new business, you’ll want to follow the new product development process (NPD). The new product development process generally follows the following 7 steps:

  • Idea generation
  • Research
  • Planning
  • Prototyping
  • Sourcing
  • Costing
  • Product launch

We’ll look at how you can use customer insights at each of these stages to improve your product development strategy below.

Idea generation

This stage of the process is all about brainstorming and coming up with the first idea. This is rarely what the final product ends up as, but it’s a starting point. Often, new businesses start by identifying a gap in the market or a way in which a current product can be improved. 

However, many businesses don’t know where to start. The SCAMPER model is useful in this situation:

  • Substitute: Substitute one material for another, this is happening a lot at the moment with eco-friendly products, where a product already exists but can be improved upon and will serve a new audience by swapping to environmentally-friendly and responsibly sourced materials
  • Combine: Combine two successful products to make one. I.e. a mobile phone with a camera to make a camera phone
  • Adapt: Adapt a product that already exists to make it more user-friendly or accessible, such as adding accessible one-handed zips to shoes 
  • Modify: Modify an element or multiple elements from a current product, making it faster, smaller or improving the design 
  • Put to another use: Using coconut oil as a moisturiser and teeth whitener rather than purely as a cooking ingredient
  • Eliminate: Remove something to make more profit or offer something already established at a cheaper price or in a simplified manner. The Nintendo Switch Lite is a good example, whereby the ability to connect to a TV or monitor is removed in order to offer a cheaper alternative to the flagship console
  • Reverse or rearrange: Change, reorder or reverse a product that already exists. For example, McDonald’s having customers pay before ordering rather than after makes takeout easier and reduces the need for as many tables or waiting staff

Whether you’re stuck for ideas or not, customers can help to generate ideas and identify missing or superfluous components, or suggest future products they’d like to see.

Research

The second stage of the product development phase is research. This is where product validation comes into play and customers are often a crucial part of this. You can validate your ideas by:

  • Asking for customer or public feedback
  • Gaining feedback from your target audience (perhaps in exchange for an incentive)
  • Having discussions with mentors, your network, family or friends
  • Using an online survey
  • Looking at Google Trends to check search volumes and if anyone has already come up with such an idea
  • Launching a campaign on Kickstarter to gain feedback from startup investors and mentors

The good thing about this stage is you’ll get an idea very early on of whether or not your product is viable – and by viable, we mean a product that your customers would pay for. And, if you find that it’s not, you’ve just saved yourself a lot of time and money, and you can start back at step one!

Planning

Once you have your idea and product validation research, it’s time to start planning. At this point, you’ll need to start sourcing a manufacturer (or manufacturers) who will create this product. You might have a rough idea at this point of costing based on your initial research, and the planning stage will, again, help you understand whether or not this is a profitable product.

As well as this, you’ll need to design packaging, a name, the positioning of your product (for example: is this a premium product, or a value brand?) and materials based on your previous customer feedback. If environmentally conscious materials are important to your target customers, this is the time to factor this in. 

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Prototyping

At this stage, you’ll have a good idea of the product as a whole. Prototyping is the stage where you’ll see your product come to life: initially by rendering or 3D graphic and then through 3D printing or manufacturing.

This is when the MVP (minimum viable product) comes into play. The MVP is unlikely to be your final product, but you need to understand at this point how you can quickly get something to market with the minimum amount of functionality and features as possible. 

Then, release the MVP to market: you’ll now have customer feedback to rely on to understand the iterations and improvements that need to be made for the final product to be ready to launch. Customers may also bring their own ideas and suggestions at this point which can help steer the product in the right direction.

Sourcing

Once your prototype is ready, it’s time to build the supply chain which includes manufacturing, sourcing materials, designing packaging and organising your shipping method. If you intend to have stock, a warehouse or shipping container may be required. 

At this point, you’ll have some idea of customer expectations and you can test a higher product price with free shipping as well as a lower product price and shipping costs to see what your customers prefer. Once you have this information, again, this can help inform the next steps of sourcing and the revenue that will be available to you.

Costing

While we’ve touched on it throughout the various stages, you’ll need to look at your final costings. Add up all of your costs to make each product to understand the cost of selling your goods, this should also include shipping costs, import fees and duties where required. 

Next, you can add a margin and create your retail price. You’ll want to check this again with potential customers and your target audience to understand if this is a price they would be willing to pay for the prototype.

Product launch

Finally, the product launch! Once your go-to-market strategy is complete, you should continue to rely on customer insights – particularly data – and feedback for future iterations of your product.

Conclusion

So, as you can see, customer insights can help with every stage of product development, from idea generation all the way through to product launch. Creating a successful product development strategy relies on feedback from users and customers, otherwise, you could waste significant amounts of time, energy and resources in creating a product with no viability or customer desire.


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