Customers look at your company the same way that your company looks at you as an employee: are your company (and you) adding value, and is that value worth the price? In the previous chapter, we focused on learning who your customers are and what their needs are. In this lesson we’ll probe deeper in an effort to understand why your customer buys.
Rather than focus on the customer’s personal attributes, such as age or other demographics, it is often more worthwhile to think of your customers as individuals who are trying to solve a problem.
Clay Christensen, the Harvard Business School professor and author of the Innovator’s Dilemma, created his “jobs-to-be-done” framework as a tool for analyzing the problems that customers face.
Christensen writes, “Customers rarely make buying decisions around what the ‘average’ customer in their category may do—but they often buy things because they find themselves with a problem they would like to solve. With an understanding of the ‘job’ for which customers find themselves ‘hiring’ a product or service, companies can more accurately develop and market products well-tailored to what customers are already trying to do.”
Businesses whose names become verbs – Xerox, Google, Uber -- epitomize the “jobs-to-be-done” mentality. They do what the customer wants done.
Put another way, Christensen’s idea is that customers expect you to solve their problem. If you do, then they will hire you again when the problem arises. If you fail to solve their problem, then you get “fired,” and they look for another way to get their problem solved. If no provider can solve the problem at a price the customer feels is reasonable, they may live with the problem till a new viable competitor enters the scene. Think back to the example of Metro Bank offering safety-deposit boxes in the UK, where that option had not been popular in large part due to the price to secure one.
Roberto Goizueta, the former CEO of Coca Cola, was a master at applying the “jobs-to-be-done” framework to his product. When he took over the company, it primarily sold through grocery stores and restaurants, where Coke and Pepsi locked horns in a market-share battle. Each company had about equal market share and those positions were so stable that it left little room for growth. He first challenged his sales staff to think of all the places where people would like to drink a soft drink but didn’t. He wanted to solve the customers’ problem of accessing a soft drink. This opened up the sales reps to places like laundromats, fitness centers, and subway stations. Coke then placed vending machines or refrigerators in those places filled with Coke products.
Goizueta’s next challenge was to get his employees to think beyond Coke products. He realized that Pepsi was not Coke’s only competitor. Customers drank many liquids throughout the day. So he shifted Coke’s thinking from being in the cola or soft drink business to satisfying customers’ need to drink refreshing liquids. From that point forward, he was not only interested in market share vis-à-vis Pepsi. Rather, he was more interested in “share of stomach” or what percent of liquids customers consumed that were Coke products. This thinking is what propelled Coke to ramp up production in its Minute Maid Orange Juice division and to move into the bottled water business, launching Dasani a couple years after Goizueta died unexpectedly.
These moves helped Coca Cola move ahead of Pepsi. While these two companies control about 60% of the global non-alcoholic beverage industry, Coca Cola’s share is 40% while Pepsi’s is 20%. Coca Cola’s customer-focused beverage moves forced Pepsi to diversify outside of the beverage business and even more into the snack foods industry with brands like Frito-Lay.
Critical Path Action Items
What is your customer’s “job-to-be-done”?
Is your company doing a great job for the customer or are they settling for the sub-optimal till a better supplier comes along?
How could your company become a verb?