New product development can contribute to better business growth and higher lead generation. If your business can effectively utilise the data you've collected from your customers to create a stronger relationship with them, it's a strategy worth considering. Ready to know more?
New product development is the third strategy in the Ansoff Product-Market Matrix after market penetration and market development which we’ve covered in previous articles. The strategy revolves around targeting existing customers with products that have new characteristics and offer different benefits. The strategy is therefore appropriate for businesses who have a deep understanding of their customers' specific problems, needs and desires, and are able to expand their product lines to achieve maximum business growth. While it is a great strategy to implement if you are in a position to leverage your in-depth knowledge of clients, it does carry more risk (i.e. product failure and customer backlash) than simply attempting to increase market share via market penetration.
To ensure this business growth strategy is successful there are two key pillars you can use, database marketing and relationship marketing.
1. Database Marketing
The first pillar of new product development provides a systematic approach to gathering, consolidating and processing consumer data. Databases have been used for storing customer information for a long time, however database marketing is differentiated by the fact that the information is stored and processed in more sophisticated ways. With technological advances such as the cloud, more data can be stored and maintained therefore allowing your business to develop a clearer profile of your customers. This not only leads to better product development tailored specifically to your clients needs, but also allows you to create more targeted marketing campaigns, which improves your visibility within the market.
To utilise the database you need to create direct communications with your clients through personalised emails or recommending specific content that will help solve their problems. Small steps like this shouldn’t be hard for you as you already have quite a lot of information surrounding their needs. However, to effectively execute database marketing of a product development strategy, your business should be equipped with a powerful and user-friendly database, as well as a marketing automation system. This will make implementing the strategy much easier and you’ll be able to reap the rewards of business growth in a timely manner!
2. Relationship Marketing
- Retaining and
- Delighting the customer
The best part about this strategy is that you’ve already found your customers and you’re hopefully already satisfying them!
Satisfaction is a key factor in relationship marketing because it is ultimately the customer’s emotional evaluation of the service or product you’re offering. Every interaction with the consumer impacts upon their level of satisfaction, whether it’s an email response, a tweet or a face to face meeting. Therefore in order to satisfy your customers you must create highly relevant, useful content for them based off information extracted from your database. By providing them with a service which they deem to be helpful and valuable, you will be able to retain customers, gather more information surrounding them, store it in your database and create new products which are relevant to their needs (see how it’s all becoming interconnected now?!).
The last step, after satisfying and retaining your customers is to delight them. Going above and beyond their expectations to make them a brand evangelist is something that not all businesses can do, however the return on investment is well worth it. Pareto’s rule suggests that 80% of your profits come from the most loyal 20% of your customers, demonstrating the immense ROI that can be obtained from delighting customers with your product.
Next time you're in need of business growth and product development inspiration, just cast your thoughts to Apple, Netflix or Amazon, and how they have built empires around completely understanding their customers and providing products to satisfy their needs. Think about how they have retained their customers by creating a value proposition people can’t ignore and finally, remember that delighting your customers is the ultimate goal in any business setting.
If you would like to know how your marketing is fairing and if there's any aspects in which you can improve, we can help you! Our marketing experts are here to take a look at your strategy and offer solutions to boost your lead generation. Click on the button below to get started.