Identifying and meeting customer needs revisited
I’ve just re-read this post on the meaning of the phrase ‘identify and meet customer needs’ – I realise that one part of the explanation was poor.
It’s this. Usually, sellers define customer needs in terms of what the seller happens to be selling. A bank looks at ‘customer needs’ and sees current accounts, loans, savings and so on. An ice-cream producer looks at the same person, and wants to know if they prefer strawberry to chocolate. In this way, sellers slice the individual into a million and one different products and services – yet none of these actually see the individual. All they are really seeing is a mirror-image reflection of their own operational priorities. When they look at ‘the customer’ what they see is a potential unit of demand for what they are in the business of making and selling.
There is nothing wrong with this, in itself. What is wrong, however, is to assume that the mantra ‘identify and meet customer needs’ therefore provides a full and complete answer to the problem of value creation (back to my post of a year ago).
Crucially, it ignores three things.
First, it ignores the processes individuals have to go through to achieve a desired outcome. Take something we are all familiar with: ‘feed the family dinner tonight’. If you made a list of just the top-line steps an individual needs to go through to achieve this desired outcome, it might look like this:
1) Assess occasion
2) Assess family members’ preferences, dietary needs
3) Decide menu
4) Find recipes
5) List necessary ingredients
6) Check against stock in kitchen
7) Make shopping list
8] Plan shopping trip (‘before or after picking kids up from school?’)
9) Travel to store/s
10) Fine items/substitutes
11) Queue
12) Pay
13) Carry to and load car
14) Travel home
15) Unload car
16) Carry shopping to kitchen
17) Unpack
18) Prepare meal ingredients
19) Dispose of meal/waste/packaging
20) Assemble ingredients
21) Cook
22) Lay table
23) Eat!
24) Clear table
25) Wash dishes
26) Dry
27) Put away
28) Dispose of waste/leftovers
Now put yourself into the shoes of say, the brand manager of Heinz Baked Beans. As a brand manager you have an awful lot to worry about. You are worried about the quality of your beans and of your tomato sauce; salt levels, sugar levels, whether your product tastes better than the competition, the packaging (‘perhaps an easy-open can!’) its design, its advertising, its price, whether it should be on promotion, which retailers it is stocked in, and so on, and so on.
All of these are important. Brand managers are very busy people. And all these considerations are relevant in some way to the family member delivering a meal. But how many of those top-line 28 process steps is our baked beans brand manager really focused on, or interested in? In reality, his job is to improve the economics of his brand, not the economics of his customers. He’s doing his best to identify and meet his customers’ needs as he defines them, as a means to this end.
In fact, one of the insights of the buyer-centric perspective on value is that most – probably the vast majority of ‘consumer needs’ remain unmet – because they fall outside of seller-centric definitions of ‘value’ and ‘need’. Typically, these unmet needs are needs that cannot be packaged into a product that ‘consumers’ can buy and consume – they are process needs relating to those issues of planning, organising, coordinating, administering, logistics, processing etc highlighted by the list of 28 steps. This is true not only in the ‘feed the family’ scenario but across the board: financial services, health, travel, communications and so on.
The second thing the seller-centric perspective on ‘identifying and meeting customer needs’ ignores is the need for the customer to make a better decision. When faced with the baked beans fixture at the supermarket, the last thing the brand manager wants to say to the shopper (for example) is “hey, a word in your ear. The own label beans are just as good quality with the same great taste. I know, because they are made in our factory. But the own label version is 25 per cent cheaper”. In other words, the last thing most sellers want to do is help customers meet their need to make better purchasing decisions. If brand managers did that, customers might end up choosing somebody else’s product, and we can’t have that, can we?
The third thing this approach to identifying and meeting customer needs ignores is the customer’s metrics. Every step of that ‘feed the family’ process requires an investment of a range of different personal assets. It takes time and attention to think about what little Johnnie likes and needs for his dinner. (‘Damn! He had that yesterday!’) It takes time, effort and money travelling to and from stores, traipsing through supermarket aisles, loading and unloading the shopping etc. But none of these metrics are taken into account by the Baked Beans brand manager, or the supermarket marketing manager. How long would supermarket checkout queues be if supermarkets had to pay us for the time we waste standing in them?
This is important because, if we think about it a bit deeper, many of our biggest needs as individuals don’t relate to the features and attributes of products or services (those salt and sugar levels, for example). They actually relate to features and attributes of our lives – particularly, how well we manage our precious personal resources: our time, our energy, our attention, our emotional commitment as well as our money. Defining peoples’ needs in terms of the metrics of their personal assets is very different to defining needs in terms of product attributes.
So, to return to my original post. I made the point that that the mantra ‘identify and meet customer’ needs seems to be ‘complete, practical and morally right’. But actually the way it is often interpreted is often ridiculously incomplete (addressing only a tiny sliver of individuals’ real needs), is therefore not all that practical after all. Also, it’s often morally questionable at the same time (because of sellers’ quest to influence rather than inform individuals’ decisions).
Now. That’s the easy bit. The critique. The really hard part is working out ways to address the ‘value gaps’ generated by seller-centricity. What are the types of service, business model, relationship and measurement system that really do help individuals improve their economics?
Alan Mitchell
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