Innovation is a trillion-dollar industry.
Companies spent at least $500 billion in R&D during 2019… and that’s only for the USA.
Global venture capital investments, all of which are by definition in innovative ventures, peaked at $70 billion per month in late 2021. That’s the baseline, too, since it’s impossible to know every private investment.
Meanwhile, customers have infinite options. Marketing spends big dollars for customer feedback. Standing still isn’t an option.
What makes this challenge so tough?
We won’t solve innovation in this article, but we will explore one of the leading indicators of innovation that is too often ignored.
The Know How is in your hands.
Lagging and Leading Indicators
Lagging indicators are familiar.
If you’re planning an event, track how many people attended the event. It’s precise because you know exactly how many people showed up, it’s relevant because you care most about the number of attendees… and it’s useless because the event is over. There’s nothing you can do about it now.
Leading indicators are less familiar.
They require guessing the future a little bit instead of simply measuring what already happened. If you’re planning an event, track how many people bought tickets in advance. It’s a little less precise because some people may not be able to attend, but it’s relevant because buying tickets is required to attend, and it’s incredibly useful because now you have information you can do something about.
If ticket sales are exceeding expectations then you know to worry less about promoting the event and more about making sure you can host all those people. Or maybe you keep the marketing going, to guarantee a sell-out.
If ticket sales are below expectations then you know it’s time to invest in better marketing. No point perfecting the event itself if no one’s attending.
Why are we spending this section to explain what these indicators are?
- So that you can build bridges between customers and the company and among the company’s teams.
- Because what customers are saying and doing is a powerful leading indicator of innovation.
Customer Feedback is a Leading Indicator of Innovation
While an obsession with customer success is becoming a requirement to even exist in the market, it’s surprising how many companies simply ignore their customers about important product decisions.
You talk to real customers every day
The Sales team hits the streets to sell your product. The Marketing team pores over impressions, views, clicks, and activations. The Product team interviews several customers per week.
Except, these aren’t usually real customers in real situations.
The Sales team is talking to people who may want to buy your product… but not to people who are paying for and using your product every day. Or they’re managing one of several accounts, where the mode is either “everything is fine, let’s go get new business” or “we’re about to lose this customer, all hands on deck.”
Marketing’s job is to recruit new customers. And, while analytics are vital for modern marketing, they don’t tell you why someone’s making a choice, or how they’re feeling.
Customer discovery interviews and demos are an essential tool for product development. The downside is that these likely aren’t current customers living in your product. They’re also more likely to be neutral or favorable, since they agreed to spend time with your team.
You talk to frustrated customers in unique situations
The extension of our first point is that the Customer Success team is the only team talking to frustrated customers in all kinds of unique use cases.
Few people contact Customer Success just to brag about how well the product is working. We simply expect products to work perfectly, every time. That’s what we paid for, after all.
As your customer count grows, the chances of someone running into an unfamiliar error skyrocket. It’s why crowdsourcing can work: any large crowd will eventually explore every possible option.
By talking daily with frustrated customers who bring up a lot of unique situations, you turn every customer into a crowdsourcing engine for learning quickly about your product.
You’re the natural Voice of the Customer
Your company doesn’t have the time to talk with every customer. That’s where you come in. By learning from all those diverse customers in real situations, you become the Subject Matter Expert on how your product actually works.
That makes you the most informed voice in any discussion to represent the customer.
How to Innovate with Customers
You may need to coach your Leadership team a little, but the practices we recommend are actually simpler, easier, cheaper, and faster than most of the indirect tools your company uses to create innovation.
After all, asking is better than guessing. Being shown is better than guessing. Information straight from the source is better than 2nd or 3rd tier measures.
Here’s how to innovate with customers:
1. Be Proactive
Short and sweet, this practice is best explained as “Go out and find customers to talk with.”
Waiting on a customer complaint means a customer is already unhappy. You might fix it but that costs money and time. Meanwhile, losing a customer has never cost more – it’s 3x more expensive to acquire a customer than it was 10 years ago.
Invite active users to brief interviews. Connect with inactive users. Grab five minutes at the end of a customer call to ask them a few questions.
You’ll be amazed how willing customers are to share their perspective.
Now that your customers are talking with you, listen. This sounds simple but most people simply talk too much. Whether it’s defending the product, explaining the situation, or simply a personal preference, your voice drowns out the customer.
Leave room for them to think, even if it leads to awkward silences. Paraphrase what they have said, to confirm your understanding. Ask for specific examples for everything they say.
You’ll often find that customers are struggling to express themselves well. This is a combination of them being frustrated, busy, not as educated about your product as you are, and not as familiar with the industry as you are.
This means that what a customer is saying may not be exactly what they mean.
As Henry Ford said, “If I had asked customers what they wanted, they would have said a faster horse.”
3. Study What Customers Do
Just like “listening between the lines”, it’s vital to study what actions a customer actually takes. Humans are notoriously bad about remembering specifics.
The Recency Bias – the tendency to value the most recent experience over the typical experience – is a particular issue. For example, if your most recent experience at a restaurant was the best meal you have ever had, then you’re likely to love the restaurant even if the 5 meals before then weren’t great.
Ask customers to show you by sharing their screens or even by capturing their point-and-click process using Extelli. Invite them to talk out loud while they show you what they’re doing. Encourage them to share everything they are thinking and feeling. Look at the analytics to see where the time and clicks are actually happening, too.
You’ll usually find that what a customer is saying is reasonably accurate but not complete. By studying what they actually do, you complete the picture.
Co-creation means developing a feature or improvement alongside your customers.
By working with active customers, the quality of feedback skyrockets. They also bring practical use cases from their own lives.
It’s important to work with a small, focused group of committed customers for the life of the project. You don’t want to build a backlog of fun ideas based on 10-minute conversations with a hundred customers. That’s how you become a feature shop, always chasing the next exciting feature. It’s also how you don’t build a functional system that creates value.
The customer group should be willing to meet with you several times, and to spend time testing the feature as it develops.
Co-creation doesn’t mean you’re committed to what the customer says. It does mean you take their feedback extremely seriously.
5. Build Bridges
Check out our previous article for a deep dive into building customer-focused bridges.
In a nutshell, the Customer Success team is uniquely positioned to build bridges of communication between customers and the company, and among the functions of a company.
These bridges are built on meaningful customer feedback.
Customer-Led Innovation and Customer Success
If CS is all about building bridges, then Customer-Led Innovation is all about turning the most valuable feedback in the world into innovative insights.
It would be hugely expensive and difficult to build a “Customer Feedback” team that somehow learns more from customers than the average Customer Success team already does.
This is because customers find Customer Success, while that “Customer Feedback” team would need to go find real, diverse customers with unique experiences.
No one is better-positioned to turn customer feedback into innovative insights than Customer Success.
By bringing these insights to the company, you can lead your entire business to sustainable innovation… and delight a lot of customers, too.
Today we’ve explored how customer feedback is the leading indicator of innovation, and how to partner with customers.
Join the Conversation
Extelli lives in the world we’re discussing here… and we would love for you to join the conversation. Check out our post about this topic on LinkedIn.