What Are Your Customers Really Buying?
“If you frame your business in terms of products you’re trying to sell, life comes and goes, and you get supplanted by other products and technologies”
This according to Harvard Business School Professor Clayton Christensen as outlined in Disruptive Strategy In essence, customers buy for the experience or emotional need first, contrary to the common logic that the functionality of the product or service wanted is what matters most. This could be a critical consideration as a SME business tries to scale growth to differentiate from potential larger competitors.
In "Know Your Customers' "Jobs to Be Done", the authors highlight the common marketing flaw of businesses that too often collect demographic information to profile customer segments and often miss the emotional or psychological reasons for customer choices. Offering up a better approach, they suggest "what they (businesses) really need to home in on is the progress that the customer is trying to make in a given circumstance—what the customer hopes to accomplish. This is what we’ve come to call the job to be done."
According to Tony Ulwick, "Jobs-to-be-Done (JTBD) is best defined as a perspective — a powerful lens through which companies can observe markets, customer needs, competitors, and market segmentation differently, and in doing so, make their success at innovation far more predictable and profitable. Companies look at the world of innovation through this lens to accelerate their growth."
Here's a personal example. I recently had a broken tooth and my previous dentist retired so I contacted another dentist referred to me for an appointment. Upon meeting with the dentist, we discussed options and the dentist agreed to pull out the tooth and happily away I went. What's the missed opportunity here?
Many might answer to offer other services and convert me to a regular customer for all things dental! Certainly not wrong, yet maybe incomplete. The dentist very professionally addressed what I as the patient wanted which was to address the immediacy of a broken tooth, in this case by removing it. As a customer, my real need was not just this immediate problem but finding a new dentist that I would be confident in for my future oral health needs. Confidence here could include a caring attitude, good communication skills, feeling heard, etc. A dental practice that addresses my needs underlying confidence will have a new, long-term customer, maybe for life. By taking a JTBD approach, this business may design their customer experience differently.
Ask your current customers:
Why do they use your products or services?
What tasks do they want to perform with it?
To observe how the product or service is used.
Look beyond the functional aspects to the emotional and social aspects. This is what can create innovative thinking and potential improvements to keep your business thriving in a fast-paced world of change.
In How to Create Your Blue Ocean Through Noncustomer Analysis, we see how Salesforce grew from a start-up with 10 employees and an initial US$2M to a market cap of US$153B in 2022, becoming one of the biggest vendors of customer relationship management (CRM) software. They were thinking different! At the time, typical customers for CRMs were larger due to the substantial investments and commitment of 1-2 year implementation timelines for such systems. Salesforce embraced the "blue-ocean" of medium-sized and small businesses where there was little want or market demand for CRMs at the time.
"it was through understanding noncustomers and delivering what they valued that Salesforce unlocked huge latent demand and created a market of previously inconceivable scale"
Salesforce re-envisioned the 'needs' behind the 'wants' for this market segment and addressed it through a distributed online application, affordable price, a subscription model, etc. You too can bring this powerful customer thinking into growing your business. By leveraging the JTBD approach with current customers, you may discover new, profitable opportunities right in front of you!
Jerome Dickey, MA, ACC, CPHR, Q.Med