How Our Customers Helped Us Get into the Big Leagues

By Ellen Diamant, Chief Creative Officer, Skip Hop, New York City
When my husband and I first became parents, we searched everywhere for a diaper bag that would meet our needs: a bag with a sleek design that would hang on a stroller. Frustrated by the lack of options, we decided to make our own. In 2003, we turned our idea into Skip Hop, a diaper bag product line... and quickly realized we had a lot of competition in the parenting product industry. We had to figure out how to make our brand a "go to" brand.

We knew that coming up with products that we thought were innovative wasn't enough; we had to go out and ask customers what they wanted. Here's how we collected our customers' best ideas and used them to come up with killer products -- and build a company bringing in over $30 million in retail sales.

An unknown quantity
When we started, we were confident we had found a niche that no brands were filling in the parenting product industry: high-functioning products with lots of attention to detail. We created our first product, the Duo Diaper bag, to stand out: 11 pockets for organizing, a universal ability to attach to strollers, and pockets that were just the right size to hold sippy cups. It sold well immediately -- hundreds a month -- but that wasn't enough for us.

We didn't want to stay small. We wanted to sell to Target, Toys R Us, and all the bigger outlets. But to deal with chain stores, you need to be a known quantity, and we weren't yet. Moreover, we didn't have a lot of money to start a big ad campaign, so we needed to find a different way to build the Skip Hop brand.

The more we thought about our target audience, the more we realized that if you want to sell baby products, your first step is to earn parents' trust. We decided we could set ourselves apart by showing parents that we were especially sensitive to their concerns and that we could work hand-in-hand with them to develop our product.

Going to the customer
Finding our potential customers was easy -- we headed out to every kind of event we could think of that would likely to draw parents. We visited moms' groups, charity events, play groups, story hours, and parent support groups in cities across the country. In New York City, we attended one event with literally thousands of expectant moms in attendance.

We told these parents about Skip Hop's philosophy. Then we'd show them the product and ask for feedback. When we returned to the office, we held staff recaps to share the response from customers -- like the need for a special pocket for cell phones.

Focus groups
I'm a big believer in the focus group. We knew that our competitors hired expensive market research firms to run focus groups on their new products. Our approach was going to have to be cheaper and more DIY-style.

Through word-of-mouth, we drafted friends and family who had kids, promising them a free meal or free product in exchange for their feedback. (That made recruitment easy.) We often ended up with groups of people who knew each other, which we found made for more effective and natural feedback, since friends play off of each other's opinions.

We asked about shopping habits, showed sketches of our new concepts, and welcomed whatever ideas they suggested. This became an essential way for us to improve and refine our product. We have modified our Duo Diaper Bag six times in response to customer feedback.

To this day, monthly focus groups remain a regular part of our practice. I often attend these myself to hear the feedback directly, but if not, I always follow up with the staff that runs them. And our approach costs us so much less than if we were working with a big firm.

Assessing the strategy
Reaching out to customers had two effects. First, we created a better product more sensitive to what parents really needed. We didn't respond to everything we heard, of course, but when we noticed recurring comments, such as the desire for a special pocket for cell phones, we worked that into our design tweaks.

Second, we accomplished what we set out to do: In going out and visiting mom groups, we created buzz around our product and established our brand. After these visits, we discovered that parents would mention our stuff on message boards like Baby Bargains and UrbanBaby (CBS Interactive, which owns BNET, also owns UrbanBaby). The grassroots response has led the growth of our company -- we made $30 million in retail sales last year -- and helped us get into big stores. Today, our product is featured in Target, Toys R Us, and a number of other big chains that we had set our sights on.

Ellen and Michael Diamant were named finalists in 2010 Metro New York Ernst & Young Entrepreneur of the Year awards.
-- As told to Caitlin Elsaesser

Read more:

• Read more on using focus groups to understand your customers
• Learn some tips on how to conduct effective focus groups
• Read about tips on using customer reviews to improve your business