(2013-01-17) Ulwick Customer Segmentation Is Soured By Milkshake Marketing

Tony Ulwick: Customer Segmentation Is Soured by Milkshake Marketing. In Clayton Christensen’s well-publicized milkshake marketing video and HBR article “Marketing Malpractice: The Cause and the Cure,” he proposes executing customer segmentation differently: around the job-to-be-done... his milkshake marketing example is fundamentally flawed. The flaws show just how hard it is to apply jobs-to-be-done thinking correctly.

The end result of any market insight should be innovation, but to our knowledge, no restaurant or fast-food establishment has capitalized on Christensen’s insight and introduced a breakthrough breakfast milkshake that garnered skyrocketing sales. Why not? In our view, it is because both Christensen’s view of what the job-to-be-done is in this case and his starting point for the customer segmentation analysis are incorrect. Consequently, he ends up reaching the wrong conclusions about what the restaurant should do to innovate and grow its revenues.

Let’s start with the first problem. The jobs Christensen identifies are not jobs-to-be-done. Specifically, they are not outcome-driven jobs, which means they are not jobs that can be addressed with products.

Facing a long, boring commute, by contrast, is not a key task or goal. It is a context within which you execute a job.

Using our proprietary techniques and rules to define the customer’s job-to-be-done, we researched this market and concluded that morning commuters are not buying milkshakes to make the commute more interesting or to keep their extra hand busy. Instead, morning commuters are trying to “get breakfast on the go.” This is the job-to-be-done. They want to get and eat breakfast in their cars while driving to work.

Now for the second problem: customer segmentation. After identifying the job-to-be-done, we segment the market based on differing ways in which customers (the job executors) struggle to execute the job.

Christensen fell into the product-centric trap that most companies fall into: making the goal of innovation to sell more of an existing product (milkshakes) instead of creating the best product (which may not be a milkshake). The customer-centric goal of innovation should only ever be to create the best product to get a job done, without reference to particular solutions.

here’s how jobs-to-be-done customer segmentation should be executed: Once we define the job correctly (getting breakfast on the go), we uncover all the metrics customers use to measure the successful execution of the job. These metrics are the customer’s needs or desired outcomes.

In this market, more than 100 needs exist, including needs related to ordering, receiving, organizing, eating and disposing of the meal.

we then quantify with hundreds of customers which needs are most important to them, but poorly satisfied with the current solutions (biscuits, milkshakes, eggs, etc.) they choose today.

Using factor and cluster analysis, we uncover groups of morning commuters that struggle differently when executing the job-to-be-done. These different groups of commuters are our segments.

Using this approach, we may find a segment that has underserved needs related to ordering and eating the meal, while another segment may have underserved needs related to receiving, organizing, and disposing of the meal. Many possibilities exist.

This is exactly what we discovered when we helped Bosch create the CS20 circular saw. We studied carpenters (the job executor) who needed to cut wood in a straight line (the job-to-be-done)

we discovered one segment of carpenters who struggled because they had to make very complicated cuts. They had 14 unmet needs. We also found a segment of carpenters that make simple cuts and were overserved. The CS20 saw didn’t address the overserved segment, but it did address the 14 unmet needs in the segment that had to make complicated cuts