A fresh way to think about tradeoffs
One of the best presentations at this year's QRCA conference was from Tom Rich on the subject of tradeoff analysis. It's a simple framework that you can bring to thinking about customer decision-making.
A tradeoff at it's simplest is this equation: What are you getting? And what are you giving up?
You can categorize the relevant costs and benefits into five clusters, what Tom Rich calls consumer currencies.
Time includes both the temporal cost (how much time it actually takes) and the experience of time (how much time it seems to take). Consider some simple but boring household tasks to see why you need both.
Energy has three elements. There's the measurable expenditure of energy (wattage), such as having to carry a bag of groceries, or walk from your car. There's the skill involved -- a skill you may or may not have. And there is the hassle involved, what Rich calls emotional energy. The skill element is often a key factor in market segmentation. Consider buying travel online versus the travel agency experience it displaced. Consider why some people choose to continue paying bills in person, instead of online, even at the expenditure of considerable energy.
Money is about price and value, but also about affordability and liquidity. Those who are less liquid, or less creditworthy, are less able to take advantage of some kinds of savings, like bulk purchases.
Performance is how well the product or service does the job. This includes intrinsic quality, hedonic elements such as taste, smell, sound, texture. And also includes measurable performance criteria.
Self-esteem is a very important currency, and the reason why qualitative research is so important. Rich named nine dimensions of self-esteem! These include things like knowledge and feeling competent, having control over your environment, feeling unique and individual, nurturing, and affiliation.
To use the model most effectively, you want to consider the frame of reference of the decision-maker, including their attitudes and usage of the category.
For example, if you are pitching the Keurig coffee maker, you want to know if the frame of reference is a drip coffee maker, or a Starbucks purchase. For the drip consumer, you would talk about convenience and superior performance. For the Starbucks purchaser, your messaging might be about saving money but still getting a great morning coffee to start your day.
Rich cautions that this framework is not a linear process, "it is more like decision soup than a decision tree." By considering the tradeoffs your customers are making, you can improve your messaging and your targeting. All of this of course depends on having a lot of rich data to work with.
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