PRODUCT DEVELOPMENT

In this module we will talk about product and service management, and start explaining the importance of a well-planned, documented and executed development for the proper future management of any proposition, products, and services.

We will cover the role and objectives of a product or service manager and include:

• How to set targets efficiently;
• The needed outputs of any planning exercise and how it influences the overall bank;
• What aspects to track on a product or service to ensure performances.

We will also discuss the tools on acquiring, maintaining (i.e., increase loyalty and return) and avoiding attrition of customers.

Finally, there is the concept that ‘less is more’.

It is important to discuss product development before we explain how to manage products and services in a retail bank. The right approach and discipline to document all the steps in the development of a product or service means that future management of the product or service will be much easier.

This is not about the marketing and sales success of products or services, but the efficient management of all their aspects, to deliver what it promises in the way it does.

The commercial and marketing success of a product or service is a consequence of a combination of analysis, decisions, and actions. The most important factor is to understand what the role of the product or service will have in solving a customer problem.

Ideally, a product or service should be created based on insights from customer interactions, market opportunities, or regulatory issues – and not a simple copy of a successful competitor offering! Sometimes a bank can even launch something similar, but at the very least, the product or service should answer an unanswered question or address a demand from the customer or prospect. Otherwise, all competitors will offer the same products and the bank may end up in an endless price war, where everybody loses.

Unless a bank has a very efficient cost base compared to the broader market, entering a price war is not the most effective way to gain market share, as not only will it eat into the bank’s current profits, but afterwards the bank will lose clients once it tries to adjust its pricing upwards.

Understanding customers is vital to maximise a product’s return and performance, as the product is built to answer a customer demand. It always considers customers’ behaviour towards the bank, using this to design the fulfilment steps in line with how customers prefer to interact with the bank. Communications that use the right tone of voice and the speed of response during customer interactions are critical parts of the development of a successful product or service.

Also, as discussed in the Business Models module, by building the product with customer knowledge in mind the bank will allocate resources to where it matters the most, avoiding unnecessary investments or costs. Minimum regulatory and technology requirements are sometimes unavoidable and can add cost to any project. Frequently products are built in Head Office meeting rooms, with no input from customers and once such products hit the market, the bank realises there is limited or no demand for it.

In summary, a bank should only build a product based on three things:

• Customer insight;
• Market opportunity;
• Regulatory demands.

Banks should never build a product or service simply to react to fashion or a competitor, nor to their executives’ vanity!

Some may say “What about innovation?” Innovation must be thought or developed, having in mind customers’ issues, problems and dreams.

Once the bank identifies an opportunity meeting any of the above criteria it can decide to create a product or service and look on for creative ways to deliver it.