Is the customer always right?

Is the customer always right?

Ed Hebblethwaite Director of Strategy at Seymourpowell

In a word no. But ultimately, yes. That might sound like confusing political hedging, so let me explain our point of view. Is the customer always right? Well it depends on the question you ask them, and when as well as how you ask it. If you ask them to imagine what they might like or need in the future, their answer may be interesting and creative,but it will generally be ill-informed.
Consumers wont have studied what is technically possible in your industry. They dont know what is commercially viable and where the world is moving in legislation, economics or demographics. So their answers are often
interesting, occasionally brilliant but often irrelevant.

passing the credentials test, a subsequent brief and our response to it, then a presentation. What became obvious at the presentation phase was a fundamental and irreconcilable difference in our approach to innovation compared to theirs. And this, we have noted in recent months, is not an isolated incident. It is becoming standard practice in many FMCG brand innovation projects. Our brewery friends looked at us aghast and said You cant innovate without a consumer insight! Well actually you canand really you should. Innovation isnt a clean, linear process from consumer insight through technical feasibility to prototype, business model and launch. It would be a lot easier if it was that logical, but it isnt! Ultimately we need to find the consumer benefit; the insight into why they find something logical, lovely, irresistible or just plain better. But ordinarily we cant just look or ask for the consumer insight. Instead we need to tease it out from many different angles. Why? Because consumers dont necessarily know what is possible and what will be lovely until they see it, touch it, experience it for themselves. As

they dont see a real need or benefit from the product they simply wont be prepared to pay for it. That means the customer can be both an initial irrelevance and the sole arbiter of truth in the innovation process. The key to this conundrum of consumer sovereignty is when and how to raise the question. Recently Seymourpowell was asked to pitch on some innovation work for an international brewery company. The pitch process took a familiar routine: a nice phone call out of the blue, an invitation to pitch,

However, if you ask the customer (or even better show a new product or let them try a new service) you will be able to learn how they perceive it, use it and even value it. In that sense the customer is ultimately always right, because if

Confidential. Seymour Powell Limited, 2012. All rights reserved.

and providing us with insights as to how to improve product and service experience. But it isnt the only path to innovation. And if all you base your innovation strategy on is consumer insights or responses to logical questions, your pipeline is not going to be as robust as it should be. To quote an old adage If your only tool is a hammer, every problem looks like a nail. So whats the answer - how should you innovate? Brands need to explore various paths before finding key routes to a differentiated, better and commercially viable solution. Its not just about opportunities, its also about restrictions perversely, these too can be fundamental to innovation. Another old adage, War is the mother of invention is also quite apt. Invention or innovation can often be spawned from adversity or restriction. Just look at the proliferation of Japanese low-malt beers like Suntory Pilsner. These were not born of a consumer insight I would really like less malt in my beer or my current beer doesnt satisfy me anymore or even the economic insight that people want to pay less for beer. Instead the real trigger was quite a mundane financial fact: Japan has a tax on malt and malt content. Companies trying to find a loophole to pay less tax decided to try producing a cheaper beer (that delivers more profit) which was a commercial success, resulting in a whole new beer category. If youre going to start an innovation project you should be considering all of these paths: 1. CONSUMER INSIGHTS Do some ethnographic research into what people actually do, not just what they say they do. How are people really using your product or service? Where are there points of pain and pleasure in the purchase experience, opening and closing the product, right through to disposing of empty packaging? Base this

the classic Steve Jobs quote goes, It isnt the consumers job to know what they want. Sometimes you need to show people what the future might look, smell, feel, taste and sound like so they can give a more natural and realistic response. The Holy Grail of the Consumer Insight seems to have overshadowed all other paths to innovation. It has become a panacea for all innovation ills and we believe its time for a different, more flexible and informed approach to be taken. The standard methodology these days appears to be to do some consumer observation, cocreation, some trends and a workshop to develop some innovation platforms. These platforms are then distilled down into two-line concept territories and screened (on-line quant

test) for potential appeal. We try to prove a concept by asking a lot of rational questions to human beings (who are fundamentally irrational) and then, unsurprisingly, a lot of these ideas fail. Subsequently a lot of people on the client side change roles internally and their senior directors question why they never seem to get any breakthrough innovations: Wheres my iPod, my Nespresso, my Actimel? The answer is those kinds of innovations often dont come from customer insights. Consumers might not even have known they wanted them until the products were gleaming on shelf. Dont get me wrong, we love consumer insight and we believe in it totally. We have a fantastic, world-class ethnography team who are dedicated to observing real consumer behaviour

Confidential. Seymour Powell Limited, 2012. All rights reserved.

on observed behaviour, not memory of a rationalised behaviour. (Dont do groups yet, they wont help you see a future, just understand the present or past) 1. TRENDS What are the key social, lifestyle, technological and demographic trends that are relevant to your brand? How should or could your brand take advantage of these? What is the design language that will stay true to your brand, and move it forward relevantly? 3. COMPETITOR ACTIVITY Analyse what the competitive landscape looks like; what are the different games the competition are playing and why? How does this affect you strategically? Have you got some clear space for credible, profitable differentiation? Do you want to be a fast-follower? 4. STAKEHOLDER PERSPECTIVES Who is funding this project, and what does success look like? What has worked and what hasnt worked in the past - and why? Customers and suppliers are stakeholders too: what do they want, what can they contribute? 5. SUSTAINABILITY We all know we need to get more from less, but what does sustainability really mean in your sector and region? Look at adjacencies, who is doing it well? Sustainability can be a positive point of difference, not just corporate governance compliance. But it definitely makes most impact when woven in at the start of the innovation process, rather than tagged on at the end as an after-thought! 6. LEGISLATIVE What can or cant you do? What opportunities does a shifting regulatory environment provide? Look laterally; work from the

If your only tool is a hammer ...every problem looks like a nail!

predicted direction back, where do we need to be moving? What is your plan B? 7. TECHNICAL AUDIT What new formats, innovations and manufacturing techniques can your R&D and production teams deliver today? Whats on the horizon? What are the technical constraints and payback profile? What is in scope and what will require a slightly different business model? 8. BRAND What does your brand mean currently? Where does it need to move to maintain or improve saliency, and what can we do to ensure that our brand reality or experience is true to our brand promise? Whats more, you need to look down all these paths at the same time and bring home all the nuggets of truth and opportunity that you can find. The spark of brilliance that eventually leads to your Next Big Thing might come from any one of them. You then need to share these with other people from inside and outside your business who can also look at your brand and the opportunities from different angles. You need to share the opportunities and restrictions and build some hypothetical solutions that buyers can respond to. You need to get real: quickly build prototypes, wire frames, service scenarios and interfaces so potential buyers can experience what youre offering as realistically as possible when you test it. You need consumers to respond in as natural a way as possible to give you the confidence to proceed and the directions to improve. And yes, this takes time, effort and budgetand no this probably isnt achievable in a two-line summary on an internet-based quant screener. Some of these innovation paths will be more fruitful and important to you than others so no

Confidential. Seymour Powell Limited, 2012. All rights reserved.

two companies or projects are the same. So if an innovation company comes to you and says Its all about consumer insight or consumer centric design or business modelling or technology at least you know theyve got part of the answer. But equally you know youll need to look elsewhere for the rest of the questions, the answers and even ultimately, the real blessed consumer insight.

The route to successful brand innovation has many paths and consumer insights certainly play their part. Consumers and their insights may or may not be the most crucial trigger to launching a new service or product. But lets not limit ourselves into thinking a positive brand shift and a healthy profit increase always has to start from the same place.
To find out more please contact: Tim Duncan tim.duncan@seymourpowell.com

Ed Hebblethwaite Director of Strategy at Seymourpowell Ed is a highly experienced planner, having worked in the industry for over 20 years, including stints as planning director at Interbrand, Fitch, Identica and VCCP. His projects range across a broad spectrum of disciplines advertising, direct marketing, graphic design, retail, corporate and product design and his drive is to use new ideas and stimuli to unlock the potential of brands. Think...the agency he founded in 2003, was sold to Seymourpowells (then) parent company Loewy in 2006. He is a vboard director at Seymourpowell, heading up Seymourpowell Strategy, the consultancys trends, ethnography and strategy unit.

Confidential. Seymour Powell Limited, 2012. All rights reserved.