How companies choose to compete has a significant impact on their success. The most common choice they make is to try to be different. Which is not surprising. Differentiation has been a mainstay of marketing strategy for over fifty years (it probably shouldn’t be, but that’s another story, for another time).
Yet, despite the near universal desire to be different, it remains a custom more honoured in the breach than the observance. In reality, how most businesses compete is by offering similar products at similar prices.
To understand why this is, to identify the trap that many businesses fall into, and to introduce a tool that will help avoid that trap, we have to first talk about cabbage. And to explain why on earth we should do that, we have to take a little journey to my childhood. Don’t worry, this won’t take long.
I grew up in England, with all the cultural and environmental experiences that brings. These include a tolerance for rain, an innate ability to recite Monty Python, an intricate understanding of the rules of cricket and, importantly for this article, a rather bland and unexciting diet.
That’s not to say my diet wasn’t nutritious, my parents would insist that I “eat my greens” and employed various tricks to persuade me to consume something that only a rabbit would eat voluntarily.
My dad would point out that eating cabbage would “put hairs on my chest” and “make me big and strong, like a soldier”, which was a better strategy than trying to explain the benefits of anti-oxidants to a five year old. He clearly had a basic knowledge of a good value proposition. Although he also made the same suggestions to my sister, proving he had absolutely no understanding of segmentation.
Anyway, enough of my childhood memories, the point I am getting to is about types of customer benefits (the connection to cabbage will be along shortly) and how they can be classified. Noriaki Kano, a Japanese writer and consultant, suggested benefits fall into four main categories.
1) Indifferent benefits – these are benefits that your customer doesn’t get excited about when you deliver them and doesn’t care about when you don’t. If the customer doesn’t care, neither should you.
2) Must have benefits – are those that will make your customer very unhappy if they are missing but they will not really notice when they are delivered; they are anticipated and expected. If you checked into a hotel room and found fresh towels in the bathroom and a neatly made bed, you wouldn’t get excited; it’s what you would expect. But find an unmade bed, damp towels on the bathroom floor and a suspicious looking hair on the soap and you would be logging onto tripadvisor before you started to unpack.
3) Performance benefits are the stuff of day-to-day competition. Think longer battery life, shorter delivery time, faster processing, better performance and so on. More (or less depending on what is being measured) is generally better and leads to greater customer satisfaction.
4) Delighters are those benefits that customer isn’t expecting and therefore doesn’t feel cheated when they are absent but create great delight when they appear. Think of a complimentary upgrade on a long flight.
You may have seen these benefit categories shown on a ‘Kano’ chart similar to the one below, where customer’s satisfaction with a product feature or benefit is related to the level of functionality that is provided by the supplier. Functionality in this context means how well a particular feature or benefit is delivered relative to competitors.
Delighters have an exponential, positive relationship, the more functionality provided, the more happy and satisfied the customer is. Conversely, not delivering delighters creates no real dissatisfaction, as delighters, by definition, are not expected and nobody misses what they never had.
Must have benefits are the opposite of delighters. Here there is an exponential, negative relationship. Failing to deliver must have benefits, as the name would imply, creates strong dissatisfaction. Delivering them, though, only creates neutral satisfaction at best; they are, after all, very much expected.
Performance benefits have a broadly linear relationship, the higher the functionality delivered, relative to competitors, the more satisfied the customer is and vice versa.
Finally there are indifferent benefits, which have no relationship to satisfaction at all; regardless of how well you deliver them the customer remains steadfastly of the opinion that they don’t give a shit. These are not plotted for obvious reasons.
The majority of businesses spend their time focused on the one-dimensional or performance benefits; the straight line on the chart. Which makes sense; these are often the only type of benefits you get regular feedback on. When surveyed, these are the benefits customers’ mention as important, when negotiating on price, these are the benefits that customers point out your failings on.
Consequently the performance benefits, get a disproportionate amount of attention, they have become the commonly accepted benefits that everybody competes on. In the world of the ubiquitous three-letter acronym, the commonly accepted benefits become CAB and given that these commonly accepted benefits can be many and varied, we can use the collective noun of ‘Cabbage’ (see, I told you we would get there).
Like the eponymous vegetable in the article title, they might be essential and good for you but they won’t electrify the palate. ‘Cabbage’ benefits are important for long-term competitive health but they are not, well, very exciting. They provide no real, long term opportunity to differentiate you from you competitors or delight your customers.
So how do you figure out what’s what? Which benefits are performance benefits? Which are the must haves, the delighters and the indifferent? There are two ways to approach this, by conducting a specific customer survey and mathematically modeling the results, or by using best judgment and intuition to create a working hypothesis.
I prefer the latter, at least initially. It will allow you to understand the principle without any major investments. For those who are happier alone in front of a spreadsheet for hours, I will explain the statistical approach in a future article or video, but for now, let’s keep it casual.
The first step is to create a list of all the benefits you currently offer as part of your value proposition and add to this any new benefits you could conceivably offer or that the customer could possibly want. Don’t limit your thinking here, create as big a list as you can imagine.
Once you have a definitive list, take each benefit in turn and ask two questions; how satisfied will the customer be if we successfully and consistently provide this benefit (relative to competitors)? And how dissatisfied will the customer be if we don’t? Use a ten point scale where 1 = ‘not at all’ and 10 = ‘extremely’, then plot the results of your hypothesis on a 10×10 grid as shown here.
Firstly look at the indifferent benefits, are you offering things that, frankly, your customer doesn’t care about? If so you might want to stop.
Next, look to the must have benefits, you should already be aware of deficits in this area, as customers tend to vote with their wallets. In any event you want to ensure that steps are taken to prevent any future problems.
Now look to the delighters as these have huge potential for innovation and distinction, have you allocated the resources to make these happen or explore the possibility? Are these the focus of your product development activity?
Finally, and only in last place because you are most likely already doing this, look at the performance benefits or ‘cabbage’. Make certain this remains a strong focus, as it is necessary, if not exciting. Just make sure this isn’t the only thing on your plate.
To conclude this article with the food analogy we started with, make sure you ‘eat your greens’ so you get hairs on your chest and grow big and strong, like a soldier. Just make sure you leave room for desert, because that is what really delights people.