Marc Benevento
Industrial Market Insight
Some studies cite new product success rates to be as low as 10 or 20 percent, while other research shows the success rate near or above 60 percent for industrial products. There is much debate about the “correct” figure, which depends upon the definition of success and when one begins measuring. What is certain is that investment in new product development is necessary to drive growth, and companies should endeavor to maximize return on investment in new product development.
Improve your company’s new product success rate by focusing on establishing a strong value proposition very early in the new product development process. The value proposition is not only a tool for articulating benefits of a product or service to prospective customers, but the process of assembling it requires a development team to focus on delivering true value to the customer. Investing time and resources to better define projects can result in faster technical development, increased peak sales, and accelerated business growth.
Given the importance of value propositions to business growth, it might be surprising to learn that many companies in the business-to-business world feel they are not proficient in constructing them. In a recent Industrial Market Insight survey, the ability to develop a value proposition ranked as the most pressing concern of industrial marketing professionals.
Although it takes considerable time and effort to craft a strong value proposition, the five steps below outline a clear path to success.
Step 1: Create a customer-oriented statement
Value propositions should be written for the customer in language that is meaningful to them. Benefits should be stated from the customer’s perspective. For example, instead of listing a benefit as “low viscosity”, explore costs and challenges with “pumping and metering highly viscous liquids.”
Step 2: Identify the target market or customer as specifically as possible
For industrial products, this could include identifying customers that make similar products, or those that use the same process or specific type of equipment. The better the target is defined, the more precise your team can be when developing a solution.
Step 3: Identify and address the most meaningful outcomes
This means the project team has listened to customers, identified and prioritized their needs, then elected to address the most significant unmet needs of the target customer group. Too often, teams focus on customer needs that can be addressed immediately, and fail to identify larger, more urgent, more profitable opportunities. This is a critical, yet often overlooked, aspect of value proposition development.
Step 4: Quantify benefits
Demonstrate, for example, how much money or time can be saved if the new product is selected instead of other options. Reporting the relative change in performance against an existing or competing product is a great way to quantify benefits.
Step 5: Differentiate from the competition
Demonstrate how customers will benefit by selecting your product instead of competing offerings. Using the results of benchmarking tests to show benefits relative to competing products is one way to accomplish this and showcase the hard work of your development team.
If you follow the five steps above, you are well on your way to establishing a winning value proposition for you new product or service. Visit the Industrial Market Insight value proposition page for more pointers, or to see how well your value proposition practices compare to the best in the industry.
Marc Benevento is the founder and managing director of Industrial Market Insight, a consultancy focused on the needs of manufacturing companies seeking performance improvements and organic growth. Industrial Market Insight has tools and resources to help uncover and market needs and translate them into new business opportunities. More information can be found at www.industrial-market-insight.com or by email: info@industrial-market-insight.com