September 30, 2023

Catching and evaluating customer needs and opportunities.

Once we become acquainted with the "importance vs satisfaction" framework and its associated models, we can explore methods to evaluate opportunities for better needs prioritization.
Catching and evaluating customer needs and opportunities.

In the previous blog post we learned about the most common approaches and frameworks that are used to categorize customer needs.

It's beneficial to visualize both importance and satisfaction ranging between 0 to 100 percent. This makes the values on the axes more versatile, ensuring consistency across 5-point, 7-point scales.

The graph's each plotted point signifies a need paired with its importance and the level of satisfaction derived from the product or feature addressing that need. For instance, a product positioned at the graph's bottom-left, where both importance and satisfaction are at zero, offers no value. On the other hand, one at the top-right, where both metrics are 100%, presents maximum customer value for the specific need.

Image showing importance and satisfaction for multiple features
Visualizing importance vs satisfaction for several needs/features

We also can visualize the Gap between them, so it will be easier so see which features should be and can be addressed. Such visualization helps to communicate reasons between the decisions and make sure that every body in the team have aligned vision.

Image showing gap between Importance and satisfaction
Visualizing gap between importance and satisfaction

On the picture above you can see not only importance and satisfaction, but also gap between them (indicated by by colour and size of the bubble).

On the picture above you can see, that both needs 8 and 6 have the same gap of 25, but as we discussed before, needs with higher importance (top left corner) should be addressed first. So for us need 6 will be top priority.

Now lets dive into how can we calculate customer value and how to calculate the opportunity for improvement we have.

Quantifying Customer Value

A simple formula can help deduce the value a product or feature delivers:

Customer Value Delivered=Importance×Satisfaction

For instance feature 7  caters to a need with 30% importance and provides 32% satisfaction, its customer value would be 0.3 x 0.32, which is 0.096. At the same time, feature 2 brings = 0.81 *0.94 = 0.76 customer value.

Visualizing this on a graph can provide a clear picture of products or features that offer the most value – the larger the rectangle's area, the higher the value.

Image showing value for different features that product manager can calculate
Customer value visualization for features 2 and 7
Identifying Opportunities to Enhance Customer Value

By assessing the value a product delivers, one can identify the potential for enhancement. This opportunity can be quantified as:

Opportunity to Add Value=Importance×(1−Satisfaction)

A higher score indicates a better chance of delivering enhanced customer value. Ideally, products or features in the upper-left quadrant. Lets visualize what opportunity scores for 3 features in our list (darker colours correspond to features with higher opportunity score).

Opportunity for improvement score for several features
Opportunity score (Colour gradation for opportunity score)

To make sure that we understand the meaning of opportunity, lets draw opportunity of these 3 needs on next plot.

Opportunity score are for several needs illustrated
Opportunity area plot

As you can see, the higher area on the bottom right from our need, the more possibility for improvement we have.

However, we shouldn't forget that:

Importance vs Satisfaction is not static framework, while new features introduced to market, existing solutions move to the left. See this post.
Assessing Improvements and Their Impact on Customer Value

When satisfaction increases due to product improvement, we can determine the newly created customer value with:

Customer Value Created=Importance×(Satisfaction after−Satisfaction before).

We assume that importance doesn't change, only customer satisfaction from the solutions used to satisfy needs.

For example, with a need importance at 82% and satisfaction improving from 52% to 70%, the new value generated is 0.82 x (0.7-0.52) = 0.1476.

Conclusion

While it's vital to enhance satisfaction, it’s equally crucial to focus on high-importance needs, which present the maximum potential for delivering value. In the dynamic world of product management, by understanding these metrics and visual tools, professionals can strategically enhance products, driving unparalleled customer satisfaction and business growth.

Related News

October 12, 2023
Software deployment is a multi-faceted process that goes well beyond writing code. It involves meticulous planning, development, testing, and eventual release to ensure software quality and reliability. Any product manager should understand challenges and processes behind the scene. As you know, creating software is not just about creating it in lab conditions, but also needed infrastructure to make sure it will work in different environments and error-free. Today, I aim to describe this process, providing you with a clearer understanding of how companies typically ship code to production.
October 3, 2023
Understanding data is fundamental in product management. It aids in making informed decisions, gauging product success, and understanding user behavior. The two primary types of data that every product manager should be familiar with are: quantitative data and qualitative data. Lets check the difference:
October 6, 2023
In the evolving product design and development landscape, understanding the end-user has never been more critical. As businesses oriented to user centric product, user research becomes more and more important. This guide, a comprehensive walkthrough of user research, aims to arm you with the process and types of research needed to put the user at the heart of your designs.