September 30, 2023

Customer needs prioritization frameworks

Understanding how to prioritize customer needs is crucial for a product manager. In this post, we'll explore some prevalent concepts: Gap analysis, Opportunity score and Kano Model
Customer needs prioritization frameworks

In our last post, we delved into the satisfaction/importance framework, a powerful tool. Previous blog post you can read here.

Now lets look to ways how to use it more efficient.

Gap Analysis:

When you look up gap analysis online, you're bound to find several definitions. We will be using the following one, as it is easy to implement in any software you might be using to gather and work with data:

Gap=ImportanceSatisfaction

That is so easy.

A large gap signifies an unmet need and oppotunity for improvement.

However, this method can sometimes be misleading, because the real "base value" for Importance is not considered, so we can end up in situation when the biggest gap show us that there is the biggest opportunity in need that isn't important.

For example: Importance 8 and satisfaction 4 , not equals to importance 4 and satisfaction 0. However the gap between them will be the same.

Job to be done:

Anthony Ulwick proposed another way to express the same concept but removing the drawbacks of Gap Analysis. His outcome-driven innovation technique, which like the gap analysis, uses importance and satisfaction, comes with an improved scoring system:

Opportunity Score=Importance+Maximum(ImportanceSatisfaction,0)

Here, importance acts as a tiebreaker for equal gaps. Using this calculation, needs with a higher importance will naturally have a higher opportunity score, even if the gap is the same.

Lets look at previous example:

Importance 8 and satisfaction 4 : Opportunity Score = 8 + Max (4, 0)= 12

Importance 4 and satisfaction 0 : Opportunity Score = 4 + Max (4, 0)= 8

Ulwick's principle revolves around the notion that consumers buy products to accomplish a specific job. The product chosen largely depends on how it aligns with the desired outcomes for that job. This methodology, commonly termed as "jobs to be done", has also been advocated by figures like Clayton Christensen.

Ulwick highlights the importance of precisely defining customer needs, as opposed to relying heavily on the often vague "voice of the customer" His belief is that the product team should take charge of clear definitions.

Kano model:

The Kano Model, developed by Lean practitioner Professor Noriaki Kano in the 1980s, is a framework used in product development and customer satisfaction research. It seeks to categorize and prioritize customer requirements based on the impact they have on satisfaction. The model offers insight into understanding customer preferences and assists businesses in prioritizing product features.

Kano model general
Kano model

Categories within the Kano Model:

  1. Must have (Basic needs): These are the fundamental requirements that customers expect from a product or service. If these needs are not met, customers will be dissatisfied. However, simply meeting these needs does not greatly increase customer satisfaction because customers take them for granted.
  2. Performance Needs: These are features that customers articulate and expect. They are typically the ones that customers use to compare with competitors. Meeting these needs increases customer satisfaction, while failing to do so decreases satisfaction. The better the performance of these attributes, the higher the customer satisfaction and vice versa.
  3. Delighters (or Exciters): These are unexpected features or enhancements that, when present, can greatly increase customer satisfaction. However, their absence doesn't cause any dissatisfaction because customers aren’t expecting them. Over time, delighters can transition to performance or even basic needs as customers get used to them.
  4. Indifferent Needs: These features or attributes do not significantly affect customer satisfaction, regardless of their presence or absence. Customers simply do not care about them.
  5. Reverse Needs: These are attributes that can cause satisfaction when absent and dissatisfaction when present for some customers. They are the opposite of what one would typically expect. For instance, while some users might prefer advanced features in software, others might find those features confusing and would prefer simplicity.

To understand better next picture shows customer emotions on different stages of these needs (taken from the book Digital Product Management: Design websites and mobile apps that exceed expectations By Kristofer Layon)

Kano model user emotions
User emotions

Benefits of the Kano Model:

  1. Prioritizing Features: Helps businesses decide where to allocate resources by highlighting which features will have the most significant impact on customer satisfaction.
  2. Innovation: By identifying delighters, companies can find unique ways to stand out from their competitors.
  3. Better Understanding of Customer Needs: The model aids in understanding not just what customers want, but how different features impact their overall satisfaction.
  4. Optimizing Product Roadmaps: For product managers, the Kano model can guide the product roadmap, focusing on features that maximize customer satisfaction.

Challenges and Limitations:

  1. Dynamic Nature of Needs: What’s considered a delighter today can become a basic or performance need tomorrow. Regular reassessment is crucial.
  2. Subjectivity: The classification of needs can be subjective and can vary across different customer segments.
  3. Doesn't Consider Financial Viability: Just because a feature is a delighter doesn’t mean it's feasible or financially viable to implement.
Don't forget : What’s considered a delighter today can become a basic or performance need tomorrow. Regular reassessment is crucial.

In summary, the Kano Model provides an analytical approach to understanding customer needs and preferences. It assists businesses in making informed decisions to enhance customer satisfaction and offers a lens to view features from a perspective that's beyond just importance but also on the impact they have on satisfaction.

Overall we review models that are commonly used.

In next post we will understand how to calculate opportunity and check captured value after implementation.

Conclusion

In summary, Gap analysis, Opportunity score and Kano Model provides an analytical approach to understanding customer needs and preferences. It assists businesses and product managers in making informed decisions to enhance customer satisfaction and offers a lens to view needs from a perspective that's beyond just importance but also on the impact they have on satisfaction.

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