Product Features: How to Get it Right

One of the key aspects of effective product management is the ability to identify and offer the features and the functionality that will satisfy the preferences of your target market better than the offerings of your competition. Naturally, customers make trade-offs between product attributes and price, so the right features must be offered at the correct price point. Conjoint analysis is one of the analytical tools often used to unravel these trade-off patterns. This is a somewhat simplistic view, as there is a myriad of other factors such as brand equity, level of support, partner ecosystem, etc. For the purposes of this blog, however, let us isolate the issue of identifying and offering the right product features.

There are 3 types of features, each having a very different impact on customer satisfaction (and your success):

1.) The must-have features: these features are extremely important but do not increase customer satisfaction. They are assumed to be part of the product offering. Their presence does not improve satisfaction. However, their absence is exponentially related to levels of dissatisfaction. These attributes are often unspoken by the customer, due to the fact that they are assumed.

2.) The one-dimensional competitive features exhibit a linear relationship with satisfaction: increasing the performance of these features by one unit will increase customer satisfaction by one unit. These features are easily identified during customer surveys.

3.) The leap features are those that have an exponential positive relationship with customer satisfaction. Improving their performance beyond that of competitive products has a dramatic impact and leads to significant competitive advantage. The catch is, these attributes are unspoken by the customer and are hard to identify.

Below is a graphical representation of the relationship between functionality and satisfaction described above:

Now, let's talk about implications. What this means to marketing professionals is that they need to select the appropriate techniques of assuring that customer functionality preferences are properly identified. Typically, the must-have features are common knowledge; for example, in the case of servers, this is reliability, scaleability, security, etc. These attributes are often included in customer surveys (online or phone) and customers assign high importance rankings to them. However, they are not interesting in terms of achieving competitive advantage. The competitive features display a higher impact. Understanding their importance is key to being competitive. Customers can identify them on their own, as they think of these features in terms of solving their business problems and enabling their business objectives. Market researchers look for their relative importance, for trade-offs that customers are willing to make, and for the relationship between importance and satisfaction (the goal is to achieve high satisfaction for attributes of high importance).

The most intriguing and difficult to identify are the leap features. They are also the ones with the largest impact. Because customers are typically unaware of the features (or of the fact that they would significantly improve their business), marketing professionals cannot rely on traditional research techniques such as online panels or phone interviews. Other methods such as empathic design or customer visits need to be deployed to identify leap features. The idea behind empathic design and customer visits is to close the gap between what customers say they do (need) and what they really do (need). Ideally, these visits would include someone from the engineering and/or marketing team (though this is seldom the case). Depending on the maturity of these solutions, these methods can be augmented by an online survey (for more mature solutions) after building hypotheses based on the results of phone surveys and empathic design/ customer visits. The purpose of this validation is to arrive at the desired confidence interval and margin of error (typically, we target 95% confidence and 5% margin of error).

To sum up, marketing professionals need to understand the relationship between functionality and satisfaction to select the appropriate market research techniques. Depending on the product maturity and its position in the technology adoption cycle, they ought to deploy the proper mix of methods to achieve their objectives.