Friday, May 15, 2009

Customer Orientation

@adamshostack objects to something I quoted from Clayton Christensen: Understanding your customer isn't enough (hattip Chris Lawer, Gunnar Peterson).

What Christensen is saying, and I absolutely agree with this, is that understanding the customer is the wrong level of analysis (granularity). What we need to focus on is the job the customers are trying to get done when they use your product or service.

Adam thinks this is "fascinating & wrong. W/o understanding customer orientation, you can't from job" (via Twitter).

I think pharmaceutical sales and marketing provides an excellent example of why Christensen is correct. As I have explained before, a typical twentieth-century business model involved drug company representatives making personal visits to doctors. To support this kind of model, you collected lots of information about the doctor - not just professional (size of practice, specialization, and so on) but also personal (ethnic group, sexual preference, ages of children, golf or squash). The drug company employed a range of representatives of different types, and selected the appropriate rep to visit a white gay squash-playing doctor.

The trouble with this business model is that it is not aligned with the products and services of the drug company. Doctors increasingly regard these kind of sales visits as a complete waste of time; even if they accept the hospitality of the drug companies, they have learned to be resistant to the sales messages.

What the drug company needs to focus on is how to provide more value to the doctor. For this purpose, you don't need information about the doctor, you need information about what the doctor actually does. In particular, you have to understand the decision process in which the doctor thinks about prescribing particular drugs to a particular patient, as well as the collaborative process in which the doctor and other healthcare practitioners discuss alternative courses of treatment with a patient.

Understanding the doctor is missing the point. The opportunity to create business value comes from understanding the work of the doctor. Different doctors may have different styles and habits, and may approach similar cases in different ways (although this is increasingly constrained by procedure and protocol imposed by health authorities or health insurance companies). That's the right level of analysis.

One technique we use for this analysis is business process modelling. But we're not interested in the company's own processes, we're interested in the customers' processes, and in the variations in these processes. Business survival depends on providing products and services that add value to these customer processes, so it's the customer processes we need to understand. Not the customer as a passive and indivisible entity (as in many CRM systems) but as an active bundle of behaviour and capability and purpose.

See also Clayton Christensen on jobs needing to get done (via Anders Sundelin).

Related post

Misunderstanding CRM and big data (November 2014)


Anonymous said...

I suppose where this falls down for me is that I can't figure out what someone would mean by "understanding the customer" which doesn't cover what Christensen means. When Moore talks about understanding the customer in his photo editing example, it's all about understanding the customer and what they want to achieve. (Crop, zoom, remove redeye) in contrast to other customers who want to edit rgb levels.

Can you explain Geoff Moore's work in a way which doesn't include all of what Christensen says?


Richard Veryard said...

If you search for "understanding your customer" you will find a considerable body of material about customer identification and segmentation. This is a common theme within CRM and customer analytics, and seems to be the kind of thing Christensen is criticizing.

Of course some people may say that they always intended "understanding your customer" to mean something more than this. In which case "the customer" is no longer the primary unit of analysis, but becomes an aggregation of other things - actions, intentions, and so on. Which happens to be pretty much what Christensen and I are saying.

Anonymous said...

Got it, thanks!

Ramesh Kunhiraman said...

Understanding customer behavior, his actions or intentions would help in identifying information required for customer to make decisions. Any difficulty in coming up with decisions or lack of information should be sign of potential customer pain point. Does that make sense?

Richard Veryard said...

Have belatedly spotted Ramesh's question.

I certainly agree that observed customer behaviour may provide some clues about potential customer pain and could yield some suggestions for improving the provision of information. Obviously this idea would be validated if changing the provision of information improved the volume or speed of the sales process. However, this validation is at a statistical level, and we should never jump to conclusions about the pain experienced by a specific customer, because of course there are countless other explanations for any given pattern of customer behaviour. See my post on Responding to Uncertainty.