Anthony W. Ulwick

Outcome statement = direction of improvement + performance metric + object of control + contextual clarifier

(See “Giving Customers a Fair Hearing,” in the Spring 2008

issue of the Sloan Management Review for additional details on what a need is and the rules to follow when documenting outcome statements.)

Desired outcome statements can be uncovered using any of the popular interviewing methods, such as personal interviews, focus groups, or observational or ethnographic interviews.

While most qualitative research has a short shelf life, a complete set of desired outcome statements is an important company asset for years to come as desired outcomes don’t change over time—the solutions that address them do.

With a complete set of desired outcome statements in hand, a company can gain quantitative insights into its market that were never before possible.

4. 
   FIND SEGMENTS OF OPPORTUNITY
   

Market segmentation is a method that companies use to target unique offerings to groups of customers that will value them. Over the years, many methods of market segmentation have been developed and implemented.

Qualitative methods, including the creation of personas, are used to segment markets using demographic, psychographic, or behavioral categories or stereotypes. Quantitative methods, such as conjoint analysis, aim for greater precision through the use of numerical values and calculations.

Unfortunately, nearly all segmentation methods, whether qualitative or quantitative, fail to distinguish between customers with different unmet needs, which is the only form of segmentation that will deliver real value.

We have conducted hundreds of segmentation studies for companies in dozens of industries and have concluded that the differences in people’s needs do not come from different demographics or psychographics. In fact, we have proven that demographic, psychographic, and behavioral and attitudinal data will nearly always fail to explain why customers have different unmet needs. A 28-year-old man from Montana with a college degree can have the same unmet needs as a 55-year-old woman from Florida who dropped out of high school. Both, for example, may be unhappy with their Internet service.