The New Coke. The Arch Deluxe. Amazon’s Fire phone.
These products all share a common, unfortunate fate: market failure. While all of these came from established, well-respected brands, they did not resonate with the public. They failed miserably. In the end, these flops cost companies millions of dollars in both R&D and marketing resources.
They’re also a reminder that innovation doesn’t come easy. When companies launch a new product, there’s a high likelihood that it will fail. In many companies, developing the next billion-dollar idea is one of the most crucial tasks.
Products fail when they don’t fill a real customer need in the market. That’s why customer-centric innovation is key to business success.
The following 13 stats speak to the importance of developing better products today and help reveal why large enterprises, even more than upstarts, need to infuse customer intelligence into the innovation cycle.
If you’re planning on launching a new product, it will likely fail.
- In consumer goods, about 85 percent of new products fail in the market. (TWEET THIS STAT)
- Another study, from the Harvard Business School, estimates that 95 percent of consumer products fail. (TWEET THIS STAT)
The cost of launching a new product is high.
- On average, the cost of launching a new product is in the neighborhood of $15 million. (TWEET THIS STAT)
Customers expect brand innovation.
- A 2016 study shows that 63 percent of customers like it when manufacturers offer new products. (TWEET THIS STAT)
- Eighty-four percent of customers say it is somewhat or very important that the company they buy from is innovative, according to the research firm Lab42. (TWEET THIS STAT)
- Customers are willing to pay more for innovative products. For instance, 83 percent of customers indicate that they would pay more for innovation in electronics. (TWEET THIS STAT)
- Nine in 10 customers agree that brand innovation needs to impact society, according to a study by the PR agency Edelman. (TWEET THIS STAT)
- The same study found that 69 percent of customers expect brand innovation to improve society. (TWEET THIS STAT)
Business executives see the value of product innovation.
- Forty-three percent of business executives that participated in a 2014 PwC study agreed that innovation is a “competitive necessity” for their organization. (TWEET THIS STAT)
- PwC also found that 93 percent of business executives believe that “organic growth through innovation will drive the greater proportion of their revenue growth.” (TWEET THIS STAT)
Smaller companies tend to have the edge when it comes to innovation.
- Innovation is not just about spending money on R&D. In fact, according to the consulting firm Booz & Company (now part of PwC), brands that invest heavily in R&D aren’t more innovative than those that don’t. (TWEET THIS INSIGHT)
- In 2014 alone, small and mid-sized companies stole 0.7 points of market share from large enterprises. (TWEET THIS STAT)
- Between 2009 and 2014, large companies lost a total of 2.0 points of market share, representing $18 billion in lost revenue. (TWEET THIS STAT)
Creating hit products isn’t easy, but, as many product developers know, you’re more likely to succeed if you have a deep understanding of the customer. Accelerating the innovation cycle requires customer feedback in each step.
To get the quality customer input companies need to make better decisions about their products, it’s important to understand the various sources of customer intelligence available. By appreciating the pros and cons of each method, companies can ensure that they have the necessary feedback to make confident decisions about their products while building authentic, meaningful relationship with their customers.