Create Winning Value Offerings by Decoding Client Choices - Customer Value Series #3

1. Introduction

In every industry, businesses face a common challenge: Understanding what customers truly want. In my previous article we investigated the importance of developing customer-centric value offerings, and the transformational experiences companies can create by delivering product and service offerings aligned with the needs of customers.

?In this article we will explore the most sophisticated methodology available in the market today to identify the needs and preferences of your customers.

2. The psychology of choice

There are several reasons why companies struggle to identify the needs and preferences of their customers:

• Biases and assumptions within the company
• Changing customer expectations
• Diverse and segmented markets
• Hidden or latent customer needs
• Complex decision-making processes
• Complexity of emotions and motivations that influence decisions

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While difficult, it is essential for businesses to understand the needs and preferences of their customers in order to exceed their expectations, differentiate themselves from competitors and remain relevant in the lives of their customers.

Although companies have control over the offerings they put in the market, they have less control over how consumers choose between various competing offers. While there are numerous aspects that influence how customers make their decisions, the following 6 probably has the biggest impact on how we make purchase decisions.

There are three things that make it challenging for companies to truly understand what their customers want.

1. Not all of the above-mentioned factors equally influence our decisions in every situation. In some cases, only one or two may come into play, while in others, four or five might be relevant. Understanding how each factor affects decision-making is just the first step. What we really want to know is how these decision drivers interact and combine to shape our decisions in different scenarios.
2. Customers sometimes find it difficult to identify and express the aspects that drive their decisions. Many of these drivers might be subconscious and customers can only think about things using their current frame of reference (Like Henry Ford said, “If I had asked people what they wanted, they would have said faster horses”)
3. When asked directly, customers tend to indicate that EVERYTHING is important, making it difficult for companies to know where they should invest to innovate and improve.

3. Turning to science for a solution

What if you could design a “Preference Test” that takes all the above into consideration and help you pinpoint exactly what your customers want? ?Advancements in research methodology, statistical analysis and AI provides a solution that can be used in any industry or company. ?

Conjoint trade-off analysis is a research and statistical technique that simulates a real-world buying scenario and asks of customers to choose between different offerings. By replicating the actual decision-making process a customer goes through, we learn in real-time what drives their decisions. By asking customers to make these difficult real-life trade-offs, we find out what features they care about most.

To illustrate: Let’s say that you are selling cars and want to know what your target customers value the most. We would design real examples of potential value offerings and ask customers which one they like the most. Repeating this process and customizing the value offerings based on their previous preference selection, we uncover the drivers that influence their decisions the most.

4. Benefits for businesses

?Understanding what is important to different consumer allow companies to:

5. Usage in different industries

The beauty of Conjoint Analysis is that it can be effectively used in various industries, since the decision-making process is customized for a specific product, in a specific industry for a specific type of customer. It can also look at both the product design and service interaction.

Below are some examples of how conjoint analysis is used in different industries.

6. Why Conjoint Analysis is a Game-Changer for Businesses

Conjoint analysis is more than just a research tool; it’s a way to understand your Products and Service offerings from the customer’s perspective. This allows you to make data-driven decisions and develop Value Offerings that align with the needs, preferences and priorities of your target consumer.

This customer-centric approach takes the guesswork out of product and service design, pricing, and marketing. Whether you’re launching a new product, exploring a new market, or refining an existing offering, conjoint analysis provides actionable insights that will redefine what you do and how you do it.

By forecasting how customers will react to changes in product design, features, or pricing, businesses can minimize the risk associated with launching new products or modifying existing ones. Not only that, it also allows you to simulate what the effect in the marker will be if your competitors react and launch their own product or service offering.

In summary, conjoint analysis provides a data-driven foundation for strategic decision-making, making it an essential tool for businesses looking to understand customer preferences, optimize their product offerings, and ultimately improve their competitive position in the market.