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Management How to meet customer needs at the top of the ‘benefit ladder’

Dan Olsen has been tech savvy since he was a kid, getting into technological product management as an adult and now consulting on the development of Web and mobile products from his Silicon Valley base. But he is unimpressed with the product development he sees around him in all fields.

He believes it's vital to identify underserviced customer needs and offer improvements. But he sees too many product development specialists who aren't even aware that's something you should do. "They just talk about it superficially. They don't get it. It's also messy – soft and fuzzy. You can't prove it with math," he said in an interview.

So they slap some nice features together in a product, promote the supposed jewel, and if it flops, tweak it or walk away. But he believes there's a more sensible approach, following practices that give some structure to the soft and fuzzy, which he shares in his new book The Lean Product Playbook. "You can't prove what will work or won't. It's an art, not a science. But you can apply a process to it, trying to validate your thinking. Still, you have to be comfortable with fuzzy," he said in the interview.

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Start by talking to people, and then climb what he calls "the benefit ladder." Ask what they need from a product. Then ask why what they need is important. When you get an answer, ask again.

Take the customer who prefers an SUV to a minivan, saying it's because SUVs don't have sliding doors. Why is that important? Because he likes vehicles with stylish design. Why? Because he wants to feel trendy. Why? The ultimate motivation is now revealed: He wants to be accepted by his peers.

Applying that with each customer reveals general approaches the company can take, beyond just focusing on the specific features mentioned. At Intuit, where he first learned these techniques, the marketing research for TurboTax came up with lots of specific features users wanted. But ultimately the company needed to focus on three customer benefits at the top of the ladder: Feeling confident, saving time, and saving money. This approach made conversations by managers and product planners clearer. "It give you a consistent map of what you're doing," he said.

In considering a benefit ladder, he asks you to remember psychologist Abraham Maslow's classic hierarchy of needs. Higher-level needs such as belonging, esteem, and self-actualization can't be achieved unless basic, lower-level physiological needs for things like water, food and security are met. It's the same with product needs.

When he led product management at Friendster, this truth smacked him in the face. His team was an enthusiastic pioneer in the social networking space, with all sorts of cool ideas. But as more people flocked to the site, the servers couldn't keep up. So pages weren't loading quickly, if at all. "The site has to be up and load quickly. That's a basic need you must meet. If you don't meet the lowest needs, the higher ones don't come into play," he said.

He urges you to consider building a user-satisfaction matrix, which on the X axis shows how satisfied folks are with the current features or product, and on the Y axis how important those features are. Obviously, if they don't like the product and consider it of low importance, you can simply forget about it – and also forget products where satisfaction is high and importance low, since little can be gained.

But interestingly, if they like some aspect and it is of high importance, he suggests it's not worth your firm trying to come up with a new product for that market. He cites Google: Users are very satisfied and a search engine is of high importance, but even if you come up with a better idea for a new search engine, you are unlikely to unseat Google. Research suggests that to make an impact, you would have to be not just a bit better but 10 times better to succeed. That area of high importance and current satisfaction is just too competitive.

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On the other hand, if the current product is considered important but customers are not particularly satisfied, an opportunity exists for you to innovate in that area. If you asked people how satisfied they were with their last 10 taxi rides, you would find an opening for a different approach, which Uber capitalized on.

He is often asked how to specifically measure importance and satisfaction. He recommends a scale from 1 to 100, after asking questions that give a range of choices, like completely satisfied or completely dissatisfied, for which numbers are later substituted. With one product, he asked about 13 features routinely and then plotted the results, which revealed where to focus attention. The feature with 87 per cent satisfaction and 93 per cent importance wasn't worth much attention, as not much could be gained. But another feature with only 55 per cent satisfaction and 82 per cent importance held considerable scope for improvement.

The bottom line: Don't guess what your customer wants or, worse, give her what you want. Ask. Ladder up the answers until you can get a more general sense of needs. Cover basic needs first. And use the importance-satisfaction dynamic to help guide your efforts.

Harvey Schachter is a Kingston, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column, Balance. E-mail Harvey Schachter

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