In the on-going war to increase customer loyalty, where should you focus your customer experience efforts?
Should you focus more on service responsiveness or that cool new feature?
Halve your telephone queue wait time or revamp your website?
These are difficult questions to answer but Kano analysis is one tool that you can use to help you make a decision.
In this post I’ll review what Kano analysis is, how it applies to the customer experience process and how to incorporate your Net Promoter Score data.
- Who is Kano?
- The Kano Attributes Defined
What is the Kano Model
The Kano Model is a framework for understanding and categorizing customer preferences. The Model categorizes customer needs into three main types:
- Threshold or Hygiene attributes
- Performance attributes
- Excitement attributes
Two additional types are also often referenced
- Indifferent attributes
- Reverse attributes
It was developed by Japanese researcher Noriaki Kano in the 1980s and is based on the idea that not all customer needs are created equal.
In creating this model Kano identified the relationship between product and service attributes and customer loyalty is not necessary linear nor positive and depends on the specific attribute and competing products and services.
Because each of these product and service attributes has a different relationship with customer loyalty you need to assess them differently.
By doing this you can more effectively prioritise where to invest precious time and dollars to improve customer loyalty.
Who is Kano?
Noriaki Kano is an educator, lecturer, writer and consultant in the field of quality management. He is a professor emeritus of the Tokyo University of Science.
The Kano Attributes Defined
Note that different authors often calls these attribute groups by different names but the concepts are all the same.
Threshold or Hygiene Attributes
Hygiene attributes are the core of what customers expect from your business. Unfortunately, delivering them above a certain minimum standard will not improve customer loyalty or increase Net Promoter Score.
Hygiene attributes are things that you simply must get right to even compete for customers.
Not having these attributes will have a large negative impact on your customer purchase intention and customer loyalty.
Another term for Hygiene Attributes is “table stakes.”
Examples of Kano Model Hygiene attributes include:
- Bank statement accuracy: customers expect bank statements to be accurate. Not having any errors will not win you any customer loyalty but one error will decrease it quickly.
- Food safety: This is the practice of ensuring that food is free from harmful contaminants and pathogens that could cause illness. It includes proper handling, storage, and preparation of food to prevent contamination. Safe food is an expectation
- Hotel room cleanliness: past a certain standard, additional room cleanliness will not drive customer satisfaction. Hospital grade sanitisation of the glasses in a hotel room will not win you new customers but a lipstick smudge will lose you some.
- Airline safety record: customers simply expect the highest safety standard from their airline and anything that mars their record will have quick and direct impact on customer purchase propensity.
In contrast to Hygiene Attributes, Performance Attributes do directly drive customer loyalty. The more/better the attribute the more/higher will be customer loyalty.
Examples of Kano Performance Attributes include:
- Ease of website use: an easy to use website will make more sales than a confusing layout that is difficult to navigate.
- Website responsiveness: The research is clear: faster websites make more sales.
- Increasing functionality: For the most part increasing the functionality of, say a piece of software, will increase the customer loyalty. Note that this is not a continuous curve and many would suggest that Microsoft Word, for instance, has so many features that adding a new one probably does not change customer loyalty.
Excitement Attributes are the ones that help businesses to overtake their competitors. These are the attributes that just need to be there, almost no matter how poorly implemented, and they will garner huge customer loyalty.
The problem is that these attributes are hard to find and even harder to keep ahead of your competitors long term.
Here are some examples of attributes that have at one time been Kano Excitement Attributes. All are now Hygiene attributes.
- E-commerce enabled website: not too long ago just having an e-commerce capable website was an Excitement Attribute. The ability to log-on, select and purchase your product at 10pm at night was a boon. Now of course it’s a Hygiene factor.
- Twitter support: Do you remember when companies started actively monitoring and responding to customer Tweets? That was a way to drive loyalty, now if no-one responds to your tweet within 30mins it’s reason to move your business, i.e. it’s a Hygiene factor.
- Frequent Flyer miles: when American Airlines first launched their frequent flyer program it was a game changer and a real reason to be loyal to the company. Now it’s hard to find the differences between different airline programs.
One example of a current Excitement attribute is in-flight-entertainment systems (IFEs, seat back TV’s to you and me).
United Airlines will be putting IFEs in their purchase of 270 planes because:
our NPS scores are off the chart when we offer this type of product…Everything about the experience of flying on an aircraft with seatback TV is better. The food is better on our aircraft with seatback TVs, literally, the food is better [due to the halo effect]
IFEs cost more upfront and in fuel to fly around but as an Excitement attribute they are worth it in terms of loyalty, and, I’m guessing, the slightly higher seat price they can charge for planes with an IFE system.
The biggest problem with Excitement Attributes is clear from these examples. They don’t stay exciting forever. In fact they almost always have a use by date so you cannot rely on them long term. But while they last they can be real drivers of customer loyalty.
As the name suggests, these are attribute that your customers don’t care about. Having them or not having them doesn’t affect customer loyalty.
Examples of Indifferent Attributes include the colour of your business logo, the font in your statements, etc.
These are features your customers would rather your product or service did not have, i.e. having them reduces customer satisfaction and loyalty.
An example of a Reverse attribute would be software complexity – more complex software is harder to learn and harder to use is likely to create lower customer loyalty.
Net Promoter Score (NPS)
Net Promoter Score (NPS) is a tool for measuring customer loyalty. It was developed by Fred Reichheld, Bain & Company, and Satmetrix in the early 2000s and has since become one of the most widely used customer loyalty metrics.
To calculate NPS, you ask customers a single question: “How likely are you to recommend our product/service to a friend or colleague?” Customers respond on a scale of 0 to 10, with 0 being “Not at all likely” and 10 being “Extremely likely.” Based on their responses, customers are grouped into three categories: Detractors (0-6), Passives (7-8), and Promoters (9-10).
Interpreting NPS Scores
The NPS score is calculated by subtracting the percentage of Detractors from the percentage of Promoters. Scores can range from -100 (all customers are Detractors) to +100 (all customers are Promoters). A score of 0 means that the number of Promoters and Detractors is equal.
Using NPS to Find and Identify Kano Model Attributes
The question is: how do you find these attributes and ensure that you are delivering on them for your clients?
The Kano Model and NPS can be used together to analyse and improve customer loyalty. By mapping Kano categories to NPS scores, you can identify which features are most important to customers and prioritize improvements accordingly.
The chart above shows some of the ways that you can identify old and new attributes. If you are using the Net Promoter Score® approach then you have some additional tools at your command.
A simple way to look for Hygiene attributes is to focus on feedback from your low “would recommend” scores.
Start with 0, 1, 2’s or even all Detractors and extract all of their comments. When you have a good list of qualitative feedback, look for some common themes in the data.
This can be done manually using simple brainstorming or outline software.
These attributes can typically come from any of your customers but those around the 6-8 scores will probably provide most of the relevant information in this area.
Again, extract all of your comments and review for themes as you did for the Hygiene attributes.
Look to Promoter comments for potential insights in this area. Often these are the customers to which you are most aligned and who are most engaged with your brand so they can provide some excellent insights into what other, similar, customers would find exciting.
It might sound boring to have to read all of the customer comments but as one client told me: 1 in 1,000 customer comments is the core of a game changing business concept. You don’t want to miss that opportunity, do you?
Measure Performance and drive change
By understanding which Kano categories correspond to which NPS categories, you can prioritize improvements based on their impact on customer loyalty.
Improving Basic Attributes is crucial to prevent customer dissatisfaction, but it does not necessarily lead to increased loyalty.
Excitement Attributes are the key drivers of customer loyalty, as they create delight and differentiation.
Once you have a good idea as to what the different attributes are you should circle back and put them into your customer feedback process. If you think that Attribute A or Attribute B is a hygiene attribute for your business you need to ensure that you are delivering on it well enough to push it below the conscious level with your customers.
Performance Attributes are important for customer satisfaction, but they do not necessarily create loyalty. For these Attributes, more is better so continue to invest in them to build customer loyalty.
If you find an idea for an Excitement Attribute start to investigate how you could build it into your customer experience.
FaQs related to the Kano Model
Kano analysis is used in the product and service design process to identify those attributes that are base necessities (Hygiene), drive loyalty (Performance) , drive exponential loyalty (Excitement), have no impact (Indifferent) or lower loyalty (Reverse).
Kano theory was developed by Noriaki Kano, Professor emeritus of the Tokyo University of Science, to describe the different affects service and product attributes have on customer loyalty.
Fundamentally, the Kano Model shows that the relationship between product and service attributes and customer loyalty is not necessary linear, nor positive, and depends on the specific attribute and competing products and service.
Kano analysis is a tool used to understand and categorize customer requirements based on their level of importance. It categorizes customer needs into three types: basic requirements, performance requirements, and excitement requirements. By understanding these needs, businesses can prioritise improvements to create a better customer experience and increase customer loyalty.