Sustaining Higher Ed is a monthly blog dedicated to helping college administrators and board trustees lead their organizations toward greater financial stability so they can stay on mission during challenging times.
In recent posts, we have encouraged higher ed leaders to take a customer-centric approach in their strategic planning, and have considered what that approach might mean in terms of thinking more like a retailer and managing an institution’s brand. This month, we’ll look at a strategy for gaining insights into the outcomes an institution’s customers are seeking to achieve, and how that information can drive innovation for specific customer segments.
Customer segmentation, which identifies groups of customers with similar attributes to whom a given product or service will appeal, is a fundamental tenet of marketing, product improvement, and new product development. Segmentation has traditionally relied primarily on demographic factors (e.g., age, geography, income, gender) and psychographic factors (e.g., values, lifestyle choices, interests) to identify customer segments.
In the early 2000s, Tony Ulwick introduced a new model for segmentation that moves beyond demographic and psychographic factors to focus on the outcomes customers want to achieve. The model is based in part on the theory that customers “hire” products or services to get “jobs” done. By understanding what that job is and breaking down the discrete process steps required to get the job done, the service provider can gain a full view of all the points at which a customer might desire more help.
Ulwick’s work has become a modern business classic; last October, for example, the Wall Street Journal recognized his 2005 book, What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services, as one of the key “Books to Read Before You Start a Business.”
In this post, I want to explore how Ulwick’s concepts of outcome-driven innovation and “jobs to be done” can be adapted by colleges and universities both to improve the experiences of current customers and to spur innovation that might expand market share or appeal to new customer segments.
Defining desired outcomes in higher education
The process of defining desired customer outcomes requires work, and that task is made more complicated for higher ed institutions because their services are often delivered over a course of years and extend across multiple areas, including academics, student housing, campus life, and job placement. That task can be made more manageable, however, by first identifying the institution’s primary customer segments, defined by their desired outcomes, and then looking at the “jobs to be done” across service areas to help each segment achieve its desired outcome.
Outcomes are defined by listening to the customers, and this is where much of the work occurs. There is a tendency to include a wide range of stakeholders when seeking input, but it is important here to narrow the focus on the institution’s customers—those who are engaging with and purchasing the institution’s services. For colleges and universities, this means the focus should be primarily on students—including prospective students, to understand how their desired outcomes are driving their decision to enroll at a particular institution; current students, to understand their desired outcomes and how the processes required to achieve these outcomes (e.g., registering for classes, engaging in extracurricular activities, finding a job) are making “getting the job done” easier or more difficult; and recent alumni, to understand how well students have achieved their desired outcomes after leaving the institution. Although the group focus is narrow, institutions should strive for the greatest degree of diversity within these groups: different ages, different backgrounds, different races and genders, etc.
During the process of gathering student input, it is important to dig for desired outcomes. If, for example, a student says, “I want to major in engineering,” the next question should be, “Why?” There might be any number of underlying desired outcomes, such as a desire to improve problem-solving skills or to have a satisfying, high-paying career. The interview process will produce many desired outcomes; the next step is grouping these outcomes into common themes. For example, after analyzing and clustering students’ desired outcomes, an institution might come up with something like the following hypothetical segments:
- Students who want to master a subject area of interest to them (the Academics)
- Students who want to gain marketable skills that appeal to potential employers (the Careerists)
- Students who want to develop a network of friends and colleagues (the Networkers)
Improving and innovating for customer segments
With customer segments defined by their desired outcomes, institutional leaders can then focus on how they can improve and innovate to enhance the value of their customers’ experience or provide new services that help customers achieve their desired outcomes.
The first step in the process applies Ulwick’s concept of “job mapping”: From the customer’s perspective, what are the steps involved in “getting the job done”? The focus here should not be on what the customer is currently doing, which may or may not be the best solution. Instead, what are customers trying to do at each step, and how can that effort be made easier? Steps for the hypothetical Careerist group, for example, might include defining career objectives, identifying a major that will provide the necessary skills for that career, successfully completing a sequences of courses that build those skills, participating in internships that provide practical experience and confirm the career objective, meeting and networking with potential employers, and interviewing for and securing a job in the student’s desired field. When the steps required for getting the job done have been defined, leaders can examine existing services and explore how they can create better value for students at each of the steps. Are career services readily available to new students who are trying to define their career objectives? Do campus advisory services successfully guide students to majors that help them cultivate the needed skills? Do course offerings effectively focus on building those skills? What are the drawbacks of each step in the existing process, and how can those steps be improved (or if they aren’t necessary, be eliminated)?
The second step is to ensure that the institution is focusing resources on areas with the greatest opportunity to create value. As noted above, customer segments are defined by grouping together similar outcomes. How important are each of these outcomes to the segment as a whole? For example, students in the hypothetical Academics segment may have identified outcomes such as “I want to develop a program that combines my unique interests,” “I want to gain the necessary breadth and depth of expertise in a particular field to prepare myself for graduate studies,” or “I want to build a community of like-mind peers that I can share ideas with.” Students within the Academics segment should rank these outcomes in terms of, first, their importance, and second, the degree to which that outcome is currently satisfied. The greatest opportunities lie in developing solutions to produce outcomes that students rank as highly important but poorly satisfied (these are the factors Ulwick used to create his “opportunity algorithm”). It is here that institutions have the best opportunity to provide value in a way that differentiates them from other institutions.
The processes described in this post are time-consuming and require careful planning, but they offer real opportunities to break free from a “follow the leader” mindset in which institutions replicate what others are already doing by pursuing opportunities and providing solutions that truly and uniquely speak to what customers want and what they most highly value.