Focus Groups Take on New Format
By Bernice Hurst, Contributing Editor,
RetailWire
Focus groups 2.0 have
arrived. One of the first, and arguably foremost, is based at 3M Company’s
St Paul headquarters and is known as a “World of Innovation” showroom.
Referred
to as a “customer innovation center,” the idea is to “provide a forum for meeting
with corporate customers and engaging them directly in the innovation process.”
According to a New York Times’ piece written
by Mary Tripsas, an associate professor in the entrepreneurial management unit
at Harvard Business School, hands-on exhibits encourage visitors to consider
the future of technology.
John Horn, vice president
for research and development at 3M’s industrial and transportation business,
explained that the goal is to understand “what our customers are trying to
accomplish, not what they say they need.”
Face-to-face sessions
involve teams from visiting companies making presentations about their own
businesses to 3M’s experts who then take them on a tour of the showroom and
its technology platforms. These cover everything from optical films to reflective
materials, abrasives and adhesives. In other words, applications that can be
combined in innovative ways and establish what Dr Horn described as “productive,
long-term customer relationships.”
Other proponents of
innovation centers include Hershey, which uses both a tasting room to discuss
trends and get reaction to new products and a retail room for reaction to merchandising.
Pitney
Bowes recently opened its first innovation center so that customers
could experiment with a color printing system designed for increasingly sophisticated
print and mail applications. Executive vice president Leslie Abi-Karam hopes
that “working with customers in our innovation center will alter our development
trajectory.”
Ranjay Gulati, professor
at Harvard Business School, is the author of (Re) (Organize) for
Resilience, a book about how to make customers the center of a business.
He believes in the importance of “building a deep awareness of how the customer
uses your product … Being customer-driven doesn’t mean asking customers what
they want and then giving it to them.”
Discussion
Questions: What do you see as the advantages and disadvantages of innovation
centers versus other research techniques? Do you see them becoming
more prevalent?
What in the world does “Being customer-driven doesn’t mean asking customers what they want and then giving it to them” mean? That’s the basis of any sale.
Anyways, let’s not forget the 2003 Insperience Studio whose main purpose was to provide a place for builders, remodelers, and architects to discuss, test, and choose appliances. The fact it is now closed to the public may offer clues as to how major corporations ultimately think about obtaining information through focus groups; it sounds good but in the end, what is the ROI?
Unfortunately, the article doesn’t mention how the consumer participants of these events are selected. In fact, it sounds like an innovation showroom open to the public. With that in mind, calling these events “focus groups 2.0” sounds like a misnomer to me. One of the strengths of focus groups is the random selection of participants, whereas opening an innovation showroom to all-comers will likely only interest consumers who are already brand partisans. Many CPG companies should be extremely wary of developing products geared towards their brand loyalists as doing so risks producing a product that only appeals to limited demographic. Brand loyalty is a key factor in sales, but brand growth should be focused on attracting new consumers over selling more products to current ones.
Rate of return is another concern as well; these centers sound expensive.
That having been said, these innovation centers sound like another potentially valuable source of consumer input. Certainly 3M has the innovation expertise to make the best of the consumer input they receive. I just would not shut down typical focus groups in favor these innovation centers.
No longer is an R&D team, housed in one corner of the headquarters building or in a building of their own, the authority over new ideas/products/services. Today, companies are experimenting with ways of getting customers, consumers, suppliers, and partners involved in the idea creation process. This is another example of the type of collaboration that is critical in all phases of the value chain.
Given the success of Pepsi’s Innovation Center in Dallas, you’d have to believe several other CPG companies would follow suit. It is the ideal way to test ideas with consumers BEFORE bringing them to retailers. If your ideas increase sales and brand awareness, you’ll know that, which immediately makes your proposal more interesting to anyone that owns and fights for retail space. I’m not really sure why there isn’t more of both for other CPG companies and even for PepsiCo.
Focus groups and other qualitative research techniques are some of the most overrated ways to collect “data” and “consumer insights.” While they definitely serve a role, whether in the “2.0” format or not, they are too often used at the expense of better approaches, like looking at real behavioral data and listening to customers in more native venues (e.g., social media).
For retail more than anything, there is customer interaction in real time, whether via digital or brick-and-mortar channels. If retailers paid more attention and investment to these data, they would be much better served in both the short- and long-runs.
I’m a well known skeptic when it comes to focus groups. That said, I’m a little more open to the notion of what I call “focus environments” which allow SKILLED researchers to watch how customers physically interact, use and respond to various offerings. It’s much easier to trust what people do than it is to trust what they say.
I have worked with and been responsible for the Human Factors Engineering lab for a major company where this was one of the tenets of our work.
What my experience has shown me is that innovation labs or centers are a great way to spend a lot of money real fast, without a continuous feedback loop of real world, real time people. Social media sites really tell the whole story. Opening up your company to real world commentary by having people (consumers) rate your products or services is the most cost effective way to bring innovation into the enterprise.
Innovation centers tend to intimidate the attendees, especially senior citizens, who have manners and would not think of disagreeing with their hosts. If it were my money being spent, I would opt for a comprehensive social media feedback loop and monitor the core metrics very closely.
This article does not describe another focus group methodology. I will spare the readers of RetailWire an academic definition of focus group, but I will comment on the process defined in the article.
Essentially, 3M is redefining customer service as it used to be. If someone called into customer service regarding a product problem, the representative was obliged to let someone in the company know. That person would be back in touch with the customer to work out the problem. Sometimes that resulted in an improved or new product.
3M is bringing customers together to learn about what works and doesn’t work. If the 3M representatives are listening very carefully and are equally creative, new opportunities will be revealed.
We don’t have to label it focus group research. We can just say that for its new product strategy 3M wants to pay attention to the needs of its customers and this is how they plan to do it.
Focus groups can be wonderful and can lead to an ROI. But–homework has to be done prior. Each group of consumers should be carefully selected based on business goals.
We work with clients who need actionable business intelligence on ethnic groups. Hispanic, Asian and African American are very popular now. EthnicTechnologies helps clients determine the best consumer participants based on demographic, cultural, language preference, assimilation and channels to be used for focus groups.
This way when consumers do participate, the sponsor has a much better picture of the participants and how to roll out. The same resources used to select a focus group can then be deployed for actual programs, direct to consumer, media buys, even site location. With the Census coming up, the interest in ethnic business intelligence is on the rise.
I agree that there is a value to this format of focus groups. The challenge is to continually do a gut check to ensure you test the consumer on the competition and see in an unbiased way, what they like and what attracts them to competitive products and offers. Getting unbiased information like this is the most actionable way to get insights into your market.
I agree with Ryan Mathews. I think the benefit here, if any, is being able to observe how customers intuitively interact with your products.
Focus groups aimed at asking the customer what they want, tend to be roads to nowhere. In most cases consumers really don’t have a clue. How could they? They only know what their problem is.
I tend to favor Steve Jobs’ approach, whereby you hire really smart people to figure out solutions to problems that drive everyone nuts–then you market the solution and sell it.
Anyone remember the “Future Store” in Chicago near McCormick Place (for FMI convention purposes) back in the late 80s and early 90s? It incorporated all of the latest in-store technology, and I was responsible for Catalina Marketing’s Checkout Coupon installation there. Consumer visitors swarmed it and loved it. The “customer innovation center” reminds me of it. Was Future Store an example of focus group 2.0 way back then? Cool.
I think the designing products with the customers or segments involved is very important, but letting them drive the development process is somewhat of a risky proposition.
There is a big difference in “voice of the customer” in response to developing a product, to using the voice of an unskilled (in the specific area of expertise) to develop the products. The empowerment may be productive, but I would assume that it would also me counterproductive, and lead to a lot of noise in the channel.
We had experimented with innovation labs back in 2004 and it has worked pretty well with us. Since our team deals with retailers, our lab has a store step up where we bringing in our customers and prospects and try to address their problems.
A home improvement retailer while in the store discussed the challenge of putting barcodes on small items like nails and nuts. They were losing millions since the cashier at the till found it difficult to differentiate one nut from another and keyed in a common code for most nuts. Our innovation lab came up with a technology solution for them which was piloted in our live lab store. We have engaged with several other customers to collaboratively bring in innovation.
Innovation without understanding customers’ needs and wants both stated and unstated is often futile. These innovation centers enable to get these understandings.