by: Matt Rhodes

An article in this week’s Economist reports on how for the last eight years Reckitt Benckiser, a household products maker, has bucked the trend both in its own industry (with average year-on-year sales growth of 7% when others’ sales are declining or stagnant) and on the stock market (its share price rising by 356% when the FTSE has dipped by 13%).

Such performance cannot be put down just to Barry Scott in the Cillit Bang adverts. Rather Reckitt’s success is due to something that sounds easy but is incredibly difficult for larger companies and brands to do effectively: listening to customers.

Reckitt listens to what customers say and understands their habits; this lets them innovate. And innovation is important to companies like Reckitt: over 40% of their sales come from products that are less than three years old. The new is important.

New products at Reckitt are tested with customers; positioning is tested with customers; ideas are tested with customers. In fact, customers are involved at every stage in the innovation funnel something that is not commonly found but has clearly helped Reckitt. Their R&D spend is lower than their competitors and less than 20% of their brand innovations fail - a figure that may sound high, but actually isn’t! Their CEO, Bart Becht, may have said this week in a Guardian interview that they “make some stupid products”, but they’re clearly products that customers want.

So what can we learn from Reckitt.

1) Involving customers at every stage in the innovation funnel can have real benefits. These are the people who use your product in the end and so getting them to help with ideas, development and testing can be really powerful. This is different from just market research and testing as you can get customers to be inventive and creative, coming up with ‘crazy’ ideas of new products. Some of these crazy ideas will turn out to be quite sensible.

2) You can over-develop products. Sometimes it’s best to get a product out to market and see what the reaction is rather than endless testing and development. You will quickly see what happens; whether a product is a success or not.

3) But it’s worth testing sooner rather than later. Even though you can just put products straight to market it is good to test. A way to expedite this is to involve consumer testing at the earliest possible stage. Get them involved at ideation; use them to help eliminate ideas they don’t think would work or to spot problems early on.

4) If you ask them, listen to them. Involving customers so closely in product development means you have to listen to what they say and use their opinions to inform your decisions. This isn’t an add-on or a tick-box exercise; you’re involving them and mean it.

5) If you ask them, tell them what you think too. The best information from customers will come if you are involving them in a two-way conversation. Asking them for feedback and then responding to it - telling them what you think back and letting them know what actions you have taken on their feedback.

Using customers in your innovation isn’t something to get into lightly. It takes commitment across the business and is a longer term engagement. But the outputs of such close insight and research can be incredible!

Original Post: http://blog.freshnetworks.com/index.php/2008/02/15/why-reckitt-get-it-and-what-we-can-learn/

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