Prioritizing Investments to Delight Customers

Kano Analysis

The Kano model is a great framework helping businesses understand where their products and services stand in a competitive landscape in the context of their customers’ perception of value. This framework can help businesses prioritize their investment into product/service development.

Noriaki Kano is a Japanese educator focused on quality management. Kano recognized that certain product features drive stronger customer loyalty while others were less impactful. The model classifies customer reactions to new features. These classifications include basic needs, performance needs and delighters. The Kano model can be visualized on the chart below.  

Consider the Smartwatch

A smartwatch producer knows one basic expectation from the customers’ perspective for a watch is a watch band. If a watch band is missing, the customer will be dissatisfied, but when one is included, the customer would not necessarily recognize it as an advantage over other watches. This producer would then source a cost-effective band without investing too much into R&D on this component.

The watch producer sees that product review sites are comparing models based on their screen resolution. This is a performance feature where the greater the quality of the display drives customer satisfaction.

In this example, the producer has just created a solar charging mechanism to keep the battery topped up. They are the first company to bring this capability to the market and customers are delighted! This is an innovative feature that users love.

Over time, as competing producers incorporate their solar functionality, this feature will become a performance need. For example, producers will compete on charging efficiency. Eventually, this attribute will become a basic expectation from customers and few smartwatches will be sold without a solar charging mechanism.

Meanwhile, the producer may have a subset of customers who value only a simple watch that tells time and tracks steps. As the company adds more features and complexity, this subset of customers may find the product becoming more cumbersome. They are experiencing the reverse quality classification of product development.