How do we typically plan new products and decide where we compete? Most companies segment their markets. They may divide their market into product categories, e.g. function or price (high and low tier) or segment the customer base into target demographics, e.g. age, gender, income. B2B (Business-to-Business) companies usually segment by industry and company size or by buyer profiles.
Clayton Christensen, one of the most prolific business professors and influencers from Harvard Business School, suggests that this segmentation is a major fail. People within a certain demographic don’t buy because of being within a certain demographic segment. For example, 12-18 year age teenage girls don’t go ga-ga over Justin Bieber just because they are 14-18 year old teenage girls. It may be a correlation but not the cause. If you can find the cause, you can create the right product.
Rather, Clayton suggests thinking about products as being “hired” to do a “job”. Think of people as not “buying” a product or service but “hiring” it to solve a problem, then provide a product that can deliver the necessary result(s). Each job has functional, emotional, and social dimensions. You must get into the mind of the customer, follow him or her throughout the day, and as Clayton suggests, ask “Why does he do it that way?”
Professor Christensen gives a profound example with his famous “milkshake” experience. A fast-food restaurant wanted to improve milkshake sales. It followed the classic segmentation by product (milkshake) and then by customer type (who most likely will buy milkshakes). So they followed the normal opportunity evaluation route of asking people who fit that particular customer type profile to evaluate the product and provide feedback (read: feature changes). The feedback was clear but product “improvements” based on this feedback did not increase sales.
So a new researcher went in and watched when and how each milkshake was purchased, the time and whether other items were also purchased, whether they drank it at the store, etc. It turned out that 40% of all milkshakes were bought in the morning, with nothing else, and buyers took them back to their vehicles. So the researcher then asked customers basically (but not in these exact words),”What job needed to be done when you came here to hire that milkshake?” The answers were that these customers had a long commute, weren’t really hungry but knew that they be hungry soon, and wanted something to keep them going until lunchtime. They also had an extra hand to keep busy and wanted to make something to make the commute interesting. Other products such as a bagel, banana could not do the same “job” (too dry, didn’t last long enough, etc.). However, a shake was nice and thick, took time to suck down, was clean, and kept you full until lunchtime.
So now, by understanding the job that needed to be done, the fast food company knew how the milkshake could do the job better. Make the shake thicker so it lasts longer. Add fruit bits so it’s more interesting during the drive. By understanding the job that the product is supposed to do, you end up growing the category. It’s not just milkshakes but taking share from bagels, donuts, etc. (Think about this: milkshakes were not even being considered a breakfast item when classic segmentation is applied!) The product is improved and the market is expanded by knowing all dimensions of the user experience (the ultimate user experience).
Professor Christensen's talk about his Milkshake experience is linked here:
Edward Koch was a beloved mayor of New York City, the quintessential New Yorker. One of his most enduring questions when encountering citizens in the public was “How’m I doing?” He’d pause to listen to the replies and then start talking. I used to see him in retirement sitting at a street cafe in Little Italy chatting and taking pictures with passers-by.
Product and Market Managers should learn to be like Ed Koch and reach out to customers to find out “how am I doing?”* You can’t just rely on sales and service for third party feedback about your products and the user experience. I followed the “Ed Koch” school of thinking to the extreme by regularly calling strategic and random customers from our installed base. (You can always take a break during each week to do this. No excuses.) Users were pleasantly surprised when someone from “Corporate” was willing to take time to call, thank them for their business, and just making sure that they were happy – without any hidden pretenses. Many times, I learned that they were happy but might have a question or was unaware of certain product functions which would have made their life easier – these were easily resolved with some instructions or a few product tips. There were some rare occasions where they were quietly unsatisfied but gave me the opportunity to make things right – I might create some software templates for free or give some training via a web meeting, They ended up as very happy customers who otherwise would have walked away in the future. Other times, they may have an issue with another business group and I would relay that information to the appropriate managers for corrective action.
What did I get in return? A personal connection and opportunity to learn directly from users about what they liked, had difficulty with, how they used the products in real life, feedback on what they would like to see in future revisions, a pulse on their business and market, as well as business referrals and customer references. I would connect with over 100 customers in this very efficient and non-obtrusive manner each year. I call that a win-win!
* I feel that every manager and every person can do a reality check with this method. It may not be with customers but with your staff, Sometimes, the "Emperor has no clothes" but those closest to him won't tell the truth.
Frank Lio is a Product Manager, Strategist, and Change Agent in the Hi-Tech industry. His growing track record of successes include creating 3 winning software products, leading nationwide seminars, and turning around a failing business unit. He is currently serving a dual role as Product Manager and Business Team Support Manager at Instron ITW.
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