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An introduction to developing new products and services

1st October 2021

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This article was written and originally published by The Productivity Group (trading as Be the Business). Be the Business is an independent, not for profit organisation set up to help business owners and leaders improve the performance of their business. © Copyright 2021 The Productivity Group. All rights reserved. Everything we publish on Business Talk is provided as general information only. It isn’t advice or an insight into the views of TSB or any of our Partners. This is for information only and should not be relied upon as offering advice for any set of circumstances. Please think about getting independent financial advice if you want help with your personal situation. While we make every effort to make sure the content is accurate and up to date, no liability is accepted by TSB Bank for any loss or damage caused by relying on any statement or omission. Links to external content are provided for information purposes only and not a TSB recommendation of any brand or service.

An introduction to developing new products and services

October 2021

Developing a new product or service for your business can be a daunting process. Leaders need to make sure they’re developing something customers want, at the right time, without overwhelming the rest of the business.

A good understanding of how to spot trends or gaps in the market can go a long way in kick-starting this development process. Once you’ve got an idea, it’s crucial to speak to customers and understand their needs.

A study by McKinsey showed that businesses with the best product development track records do three things better than peers: each set project goals early on, nurture a strong culture around the project and maintain close contact with customers throughout the project’s duration.

Developing new products or services isn’t necessarily optional either. Up to 63 per cent of customers expect companies to provide new products or services, more frequently than ever before.

This guide will outline some of the factors that could affect your development process, common mistakes businesses make and quick wins that will get you on the right track straight away. The next step will be to an action plan to direct your change and improvement.

What factors might influence your decision to develop new products or services?

A change in societal behaviours

Consumer habits are constantly changing, which can have a huge impact on your business and sales.

One of the biggest changes in recent years is the growing trend towards environmentally-friendly products, with 45 per cent of UK shoppers actively buying products that are environmentally and animal friendly.

It’s important to stay ahead of major trends like this and decide if they’re relevant to your customer base. If so, you’ll need to think how you can shape future products or services to fit.

Increased adoption of technology

Technology is a key factor to consider in any development process because it’s one of the fastest ways to leapfrog the competition.

Taking the time to research how other businesses in your sector are using technology can help to increase the longevity of your new product or service. Don’t forget to look at the digital tools available for managing the development project itself either.

The risk of stagnation

Leaders that don’t update or add to their available products and services run the risk of seeing the business stagnate and fall behind.

Bear in mind that developing a product or service takes time. It’s crucial to be proactive about new developments, rather than waiting for a decline in revenue to start the process.

Customer feedback

Customer feedback is instrumental when it comes to developing a new product or service.

Many businesses find that existing ideas or assumptions are challenged – or even made redundant – when they start getting real feedback from customers. Listening to this feedback ensures that you’re making the right improvements and tailoring it to fit customers’ needs.

The cold hard facts

How do you know what sort of product or service to develop?

Following customer feedback, buying habits and competitor activity is a good place to start when you’re generating development ideas. Online data companies like YouGov will also give you a broader view on upcoming trends and seasonal changes.

Common mistakes business owners make when developing new products or services

Not factoring in the capacity of your team

One of the biggest mistakes businesses make is failing to think about how a new development might fit around the current workload.

Developing a new product or service needs to be carefully managed, both from an operational and employee standpoint. Higher workloads can lead to stress and even burnout, so it’s vital that leaders think carefully about whether teams will need extra support or resources to manage the process.

These resources might include digital tools to make project management easier or external support from contractors. Having an open discussion with employees will help identify these needs.

Failing to get employee buy-in

Getting your team on board when you start developing a new product or service is essential. If your staff don’t understand why you’re embarking on the project or how it will benefit them, they’ll only see it in the simplest terms – more work for them.

Introducing the project early on prevents changes from feeling sudden and unexpected. There’s also plenty to be gained from getting employees involved at the idea stage.

Staff are often the ones who have most contact with customers, so they may be able to provide valuable insight on the direction of the project.

Basing the project on assumptions, not market research

Knowing where the gaps in the market are is key to making sure your new product or service is useful for customers.

Basing your developments on assumptions rather than concrete market research can have disastrous results. A worst-case scenario is creating something that people just don’t want, but market research can inform everything from pricing to competitor differentiation.

Research needs to be thorough and involve existing or target customers. It might involve surveys, focus groups or one-on-one interviews with customers. Even if you’re against the clock, don’t skip the research step.

Quick wins for developing your new product or service

Check that the product or service aligns with your USP

Jumping on a trend is tempting and can provide short-term gains, but it’s important to check that new developments align with your USP and the purpose of your business.

Invite a group of managers and staff to a workshop to brainstorm ideas. If you’ve got an idea already in mind, introduce it to the group and take suggestions on how it might fit into your business offering.

This will help to sense-check ideas and identify any major issues before you go into the development stage.

Carry out market research to check demand

Market research doesn’t have to cost the world, so set realistic research goals. While some formal research might be required, there’s plenty you can start doing right now that won’t cost you anything.

Look at what’s on offer from other businesses and who your competitors will be if you’re developing something from scratch. Online review sites contain a wealth of information: you can see how competitive certain categories are and if and how products are failing customer expectations.

Once you’ve got a broad overview of the current market, you can start talking to customers.

Give your employees a voice

Make sure your team’s voices are heard during both the planning and development processes. When you’ve introduced the project to your employees, arrange meetings with the relevant teams to find out:

  • What questions they have about the project

  • Any concerns they have about workload or capacity

  • Suggested tools or resources that will help with the project

  • Additional information or insight that could inform the direction of the project

After the meeting, it’s a good idea to send an anonymous survey to collect additional thoughts or suggestions. Not everyone will feel confident speaking up in front of others, so give everyone a chance to voice their opinions.

The cold hard facts

Which sectors are most likely to create innovative new products or services?

Research shows that manufacturers of electrical and optical equipment were the most likely to create or improve products or services, with 63 per cent actively engaged in a form of innovation. At the other end of the scale, accommodation and food services were least likely, at 23 per cent.

Now you’ve learnt about the underlying factors that affect how you develop new products or services, an action plan to direct your improvement efforts.