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Pay Attention to Your Premarket
A number of years ago, I worked with an automotive parts manufacturer, in the division that was responsible for parts and services provided to the automotive aftermarket. Automotive parts manufacturers like this firm not only have the opportunity to sell their products to the new car manufacturers, but also to sell replacement parts and provide service to garages and other repair facilities over the life of the equipment. This aftermarket opportunity exists in most industries, from long-lasting capital equipment used in factories and facilities around the world to standard items like air conditioners and window screens found in most homes. Even facilities with relatively short lives like data centers and telecommunications sites offer aftermarket opportunities. In fact, the computer on which I’m drafting this article now has several replacement parts that were required as a result of failures of those that came with the computer when it was new.
The executive with whom I worked in the automotive parts manufacturer mentioned above had a unique perspective about the aftermarket. He viewed it as the “premarket”, arguing that firms that paid attention to how their products were used – and modified – after they were sold could often gain insights about opportunities for new product development. He could make a solid case for that concept, reflecting on the experiences of the automotive industry.
A substantial number of the options that we take for granted today on our cars and trucks first appeared in the automotive aftermarket. Examples are diverse. Small items like cup holders, most of the consumer electronics now found in our vehicles (e.g., CD players, DVD players, navigation systems, security systems, etc.), performance options like those associated with The Fast and Furious movies, and products like sunroofs that required actual alterations to the vehicle all began as aftermarket products.
Some enterprising individuals and firms figured out that there was demand for such products by car owners, and offered them in garages and retail stories that were typically not in any way connected to the carmakers and their dealerships. These aftermarket innovations were in fact premarket signals to the auto industry, which saw the success of these products in the aftermarket and soon thereafter began to offer them as options on their vehicles. Many of us can remember making the decision to buy the car with the CD-6 player and the sunroof, even though it had a higher sticker price. Eventually, many of these aftermarket innovations became standard equipment on many cars.
I used examples from the automotive industry because all of us are familiar with those products – and some of us can even remember buying and installing a cup holder in a car. But the automotive industry is not the only one in which premarket insights can be gained by studying how customers use products and evolve them to better serve their needs. Across business markets, I have seen examples of such premarket signals that translated into well-received product development strategies linked to products sold into refineries, data centers, printing plants, warehouses, mines, and at numerous other business sites.
A strong program of post-sale customer interactions and effective approaches to hearing the voice of the customer are required in order to capture premarket messages. Some firms that are active participants in the parts and service aftermarket for their industry ensure close relationships with customers by bundling aftermarket support into the original equipment sale. These firms at least have regular post-sale customer interactions as a foundation for hearing premarket messages from those customers.
In other instances, it takes a proactive effort to hear such critical messages, particularly in industries in which the customers involved in development, construction, or other front-end projects are not the same ones involved in life cycle operations. That situation occurs frequently in industries like utilities and telecommunications. In those instances, it is often necessary for a manufacturer to reach out to departments and individuals within the customer organization that are different from those to which it sells. And in all instances, a very effective program of listening is required, as it is often a small number of innovators that are the source of the type of premarket signals that can spark winning new product development plans. Best practice firms have learned to look for those innovators, recognizing that only a minority of their customers will identify opportunities to improve on the value of the products that they buy.
Messages from the market can be a critical input to product development and innovation planning, ensuring that investments are aligned with customer needs and not simply a reflection of opportunities for the evolution of the current products. Learning how customers are using and modifying existing products to make them more useful is high on the value spectrum in that regard. Implementing programs to spot premarket signals can pay great dividends as part of ongoing efforts to hear the voice of the customer and translate it into action plans that create value for customers and shareholders alike.
Author: George F. Brown, Jr.