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In today’s competitive business world, the way we make decisions, related to the development of products, services, or customer experiences, has changed.
Leading businesses can no longer rely exclusively on intuition or experience to guide them. They need a way to minimise risk, increase profitability, and guarantee high levels of customer satisfaction. In other words, they need data.
In today’s information-driven environment, companies have more opportunities than ever to remove the bias, emotional impediments and other problematic components from their decision-making strategy. However, many businesses have been slow to catch on.
Only around 25% of enterprise businesses say their decisions are driven by data, even though 90% say data is crucial to their organisation’s success.
Fortunately, this means evolving brands have an opportunity to gain a competitive edge, by using data to drive their most significant growth-focused decisions. Here’s why you should unlock the power of data for product development (and how you can do it).
Data can help enhance virtually any business decision, from which channels you use to deliver customer service, to which audiences you should target. However, one of the best ways to use data to facilitate business growth is to use it to guide your product development strategy.
Studies show that 68% of companies that used market research and data in their development journeys increased revenue within 12 months. But, increased profits aren’t the only benefit of data-driven product development. The right strategy also:
Navigating a complex landscape, brimming with competitors, and changing customer demands can make some companies feel as though they need to be “mind readers”. How do you know which new products and features will increase revenue, and which will fail to grab customer attention?
The answer is to use your data. Capturing and analysing various sources of data, from social media mentions to reviews, and search data gives you an opportunity to understand and anticipate customer trends, helping to improve your forecasting strategies. It can even give you the power to anticipate and address customer needs before they ever articulate them.
Data doesn’t just tell companies which products they should create. It also helps you to determine how you can optimise everything you produce. With detailed attribute data and customer insights, companies can refine product features, design, and even marketing strategies.
With advanced analytics, businesses can even combine various attributes in concept development, leading to the creation of more powerful, profitable product concepts.
Launching new products into any market is risky, no matter how well you think you know your customers. Just look at how badly the original “Google Glass” product failed. The more data you have, the more likely it is you’ll be able to reduce your risk of a “product bomb”.
Google failed to properly research the feelings customers had towards XR products before launching its new solution, and that led to its downfall. New and existing companies can learn from this tale of woe, ensuring they leverage all forms of data during product development.
Ultimately, every product or solution your business creates should be designed to serve your target audience. It needs to either address a problem they have or help them achieve a specific goal. If you don’t fully understand what your customer’s priorities and expectations are, how can you design a product that fulfils the right needs?
Data-driven product development strategies allow you to draw insights from previous interactions with customers, as well as the wider market, to make more intelligent decisions. You can boost your chances of your product making the right first impression straight away.
Perhaps most importantly in today’s competitive world, data-driven product development ensures you can gain an edge over other brands. The chances are there are some companies in your industry that offer similar products or solutions to the same target audience.
Without the right data, you don’t know how to develop a product that outshines the offerings already available. Analysis of your competitors, combined with deep insights into your target audience, gives you the step-by-step guidance you need for product differentiation.
Taking a data-driven approach to product development can be a powerful way for companies to boost their chances of success. However, like any change to your business processes, a data-driven product development strategy requires the right approach.
Here are some best practices for getting started.
If you’re going to be using data to guide your product development decisions, you need a way to capture as much of it as possible. Additionally, you need to ensure the information you’re collecting is accurate, complete, and up-to-date. This means not only investing in tools that help you to capture data from customer conversations, the web, and your sales processes.
You’ll also need to think about using AI tools, machine learning, and other innovations to align your data, validate it, and ensure it delivers accurate insights.
How many people in your business fully understand the power of data? How many use automation tools and AI to rapidly optimise customer profiles, learn about the customer journey, or make intelligent decisions in their workflows?
If your data-driven product development strategy is going to be successful, everyone in your team needs to know how valuable the right insights can be. Creating a data-driven culture means leveraging training initiatives and strategies to show your team members why data should matter to them, and how they can use it effectively in their roles.
It’s easy to assume that bringing data into product development means focusing only on providing your product teams with insights. However, the most effective strategies require an aligned data ecosystem, with input from multiple teams.
If your marketing, sales, customer success, and product development teams all share the same data, this helps you to create more effective solutions, based on the specific needs of your customers. Leveraging a cross-functional approach to alignment not only improves your data resources, it also ensures everyone in your business has a say in the creation of the right solutions.
Part of taking a data-driven approach to product development is understanding that the creation of amazing services, items, and offers requires some experimentation. You need to be willing to take risks, try out new ideas, and put your data-driven insights to the test.
Embracing “agile methodologies” in product development can help with this. With an agile approach to product development, you can continuously test and improve products, based on customer feedback. This helps you to collect and use more data in real time, and constantly upgrade the performance of whatever you create.
Finally, when bringing data into your product development lifecycle, remember it’s crucial to take a holistic approach. Don’t just use data to drive the initial decisions of which products you’ll create, or which markets you’ll serve. Constantly add to your data resources.
Track key performance indicators and metrics to identify areas for improvement after your new product goes live. Further feedback from consumers and use it to guide your product distribution, pricing, and marketing strategies. Keep learning, optimising, and growing.
While instinct and experience can be extremely valuable in certain business environments, you need more if you want to guarantee the success of your business in today’s world. Taking a data-driven approach to product development boosts your chances of outshining the competition, earning customer loyalty, and building your revenue.
With the right data, you can ensure every product is a resounding success.
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