Customer value and decision making

There are many prioritisation tools, but few have the specific focus on customer value of the Kano model. Yet customer value is a very important parameter in any product decision.

The role of customer value in decision making

Whether you are a solo founder, part of a team in one of the world’s largest corporations, a consultant or a manager, resources are always limited. You need to make the right decisions, prioritize what matters most.

There are three key areas to cover when prioritizing work in an organisational context:

  • What will it do for us? This is about contribution to business objectives.   

  • How will it affect our customers? This regards customer value.

  • How hard is it to do? This concerns the required effort: cost, time and complexity.

You’ll want to prioritize work that contributes to your business goals, benefits the customer and where the effort required to create and maintain it is proportional.

Conceptually, this comes down to:

Unfortunately not everyone agrees customer value is as important as business value when prioritizing work. I’ve often seen that when project budgets need trimming actions that  measure customer value (interviews, surveys, …) are first on the chopping block.

But think about it this way. When a customer sees no value in a product feature, even if that feature is very valuable to your business and it takes little effort to create, it’s not really an important feature. After all, customers won’t use it, making it literally useless. It’s that simple. 

Customers will only want to start using, keep using and recommend using your product if it’s valuable to them. Without that, there won’t be much value left for you.

“We don’t have time to examine customer value”

Despite the increased attention to customer value in product management and its best practices, a lot of teams and companies are still reluctant to assign customer value the importance it requires.

There are several reasons why customer value is given a minor role in decision-making:

  • Lack of empathy: the team is unable to understand or not aware enough of what its decisions do to the customer;

  • Overreliance on assumptions about what constitutes and delivers value to the customer;

  • Fear of change and fear of reality.

Identifying these roadblocks is important if a team wants to make sure customer value is integrated well in its decisions. 

Lack of empathy with customers

Teams that look at customers from the inside-out often make the wrong decisions. Not putting themselves in customer’s shoes makes businesses blind to the value customers are getting from competing businesses and from alternative sources. 

Inside-out thinking leads to believing that what’s good for the business is good for the customer. But business value and customer value should not be conflated. Mixing them up is equal to getting customers to do things that are helpful to the business but are intrinsically against their own needs. Customers are asked to spend effort doing something they are not willing to do. That’s a big ask, and reason enough for customers to leave. 

A related phenomenon is where customer value is made secondary to existing business processes. “The customer requires a demo before trying the product” is prompted by the Sales Director’s fear of not achieving their monthly demo KPI’s. It’s not inspired by a genuine concern for customer value.

Lack of empathy with customers is one reason for dismissing customer value as an important parameter in decision-making. It’s solved by taking a genuine, open-minded interest in the needs and wants of your customers.

Relying on assumptions

But perhaps even worse than not wanting to stand in the shoes of customers is believing that you know what it is to stand in their shoes.

“What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so.” ― Mark Twain

Everyone agrees it is very dangerous to assume things. But it’s like with driving: everyone else is a bad driver. People believe their own assumptions are sound and valid; it’s other people who don’t think straight.

Assumptions on customer value are almost always wrong. Every time a team tests what it believes to be valuable to the customer, it uncovers false assumptions that have crept into the product roadmap.

A similarly dangerous situation arises when teams believe customer value will only become visible when a feature is complete. It’s a mistake to think feature completeness and customer value are the same. Rajesh Nerlikar (author of Build what Matters) warns that teams who believe a feature has to be complete to deliver value end up investing too much time and effort before they realize that what they built isn’t useful.

Rajesh’s suggestion is to break up the feature. That way, the team can get evidence that further investment is justified. Breaking things up will also uncover hidden assumptions earlier and better align feature completeness with customer value delivered.

The invisible cost of neglecting customer value

Many teams are not ready to test their assumptions about customer value because the cost of being wrong is only visible at a much later stage. There is no tangible incentive to invest in research. By the time the cost of wrong assumptions is visible, the blame can be put on other parts of the process (bad coders! stupid customers! clever competitors!).

It is hard to make a case for investing in researching customer value. Every penny spent on investigating assumptions believed to be correct in the first place looks like a penny lost.

“The price of light is less than the cost of darkness” -- Arthur C Nielsen

That the cost of wrong assumptions about customer value is initially invisible does not mean it is not very high. Companies who do not invest in uncovering customer value will spend marketing dollars, product design and analytics reporting efforts on increasing the usage of a feature that never was of any value to the customer to begin with. They’d be flogging a dead horse.

It’s advisable to try and calculate the cost of acting on wrong assumptions as soon as possible. Find assumptions and imagine they are wrong. How harmful would this be to the product? Show how misattributed resources would hamper product development and its business potential. 

Customer research will seem less of a cost and more of an investment then.

Fear 

Teams can also discourage the introduction of customer value as means of testing assumptions and measuring success out of fear. 

Using customer value as an evaluation parameter leads to fundamental changes in processes and how the quality of work is assessed. That change is seen as a threat.

Worse even for teams who were safely operating in their bubble, is that customer value is a parameter that seems out of their control. It’s very common for teams to work with hard data and predefined remedies. Is traffic to the website slowing down? Add some more money to the ad budget and increase SEO efforts. 

But what should the team do if customer satisfaction starts dropping? What if customer have become indifferent about a product’s flagship feature? 

There is no predefined remedy. Instead of tackling the issue, fearful teams prefer to simply neglect it. Because there is no clear answer, they stick their heads in the sand. 

Such teams refuse to accept that reality has no clear answers and that uncertainty is essential to life. Teams that stick to what they know are unable to adapt. Their companies are en route to extinction.

It's hard to turn around teams that fear the uncertain because that is a problem with the team's culture. It can only be changed by repeating over and over again that embracing uncertainty is better than shying away from it. 

If ever your team — or you yourself — protest that there is no time for customer discovery, it's probably an excuse for something else: lack of empathy with the customer, too strong a belief in assumptions or fear of uncertainty. 

Each of these obstacles can be overcome. Empathy with the customer, openness to challenging beliefs and being undeterred by uncertainty are the superpowers of a team that creates more impact, better products and happier customers.