I introduced the concept of order winners and order qualifiers in my article on key success factors and now I want to delve into this important topic in more detail.
How Customers Chose To Buy Or At Least Rationalise Their Purchase Decisions – Order Winners, Orders Qualifiers & Customer Value
Customers make their purchasing decision emotionally and logically on a perception of customer value for money.The unconscious mind communicates the decision to the conscious mind at lightning speed and leaves the conscious mind to look for the logical reasons to back up the purchase decision.
These rational decisions are based on customer value attributes like performance, availability, price and attractiveness of design which reflect both the needs and wants of the customer and his underlying motivations.
For example, many expensive cars are bought for prestige because of the desire of the buyer to feel good about themselves, to show off their success to others and to look and feel different.
These customer value attributes fall into two major categories – order winners and order qualifiers.
Order winners provide reasons why customers should choose your business, product or service. In contrast, failure to meet the minimum standards required on the order qualifier attributes will provide reasons why customers will reject or ignore your business, product or service.
The Background To Order Winners And Order Qualifiers
I first encountered the phrases “order winners” and “order qualifiers” when I read a book about manufacturing / operations strategy in the early 1990s. From memory, I think it was a small book by Terry Hill which appears to be out of print. sadly I can’t find it in my library to check.
It fired up my imagination because I hadn’t thought about purchase decisions in these terms – what moves you towards buying and what pushes you away.
Here are formal definitions come from the APICS Dictionery
Order winners are “those competitive characteristics that cause a firm’s customers to choose that firm’s goods and services over those of its competitors. Order winners can be considered to be competitive advantages for the firm. Order winners usually focus on one rarely more than two) of the following strategic initiatives: price/cost, quality, delivery speed, delivery reliability, product design, flexibility, after-market service, and image.” (APICS Dictionary 2008).
Order qualifiers are “those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace.” (APICS Dictionary 2008)
Isn’t This The Same Idea As Hygiene Factors and Motivators?
The idea of order winners and qualifiers comes from Hertzberg’s two factor motivation theory where he distinguished between hygiene factors and motivators.
In the management of employees, this theory recognises that different factors lead to satisfaction and dissatisfaction. For example, a boss who is a bully causes demotivation to the employees bullied but a change in manager, which will take away the dissatisfaction doesn’t automatically create satisfaction.
Cliff Bowman and David Faulkner in their excellent book Competitive and Corporate Strategy split customer perceived use value into hygiene value and motivator value and explicitly recognises the link with the Hertzberg two factor theory for buying.
“Hygiene value refers to those elements of the product or service that all competitors offer. These are the standard order qualifying product or service aspects that every firm has to provide just to be a credible player in the game.” (page 4 of Competitive and Corporate Strategy)
They go on to say…
“In order to win some customers, the firm needs to offer motivator value. These dimensions of perceived use value are not generally offered, and they would tend to be unique to a particular firm. These motivator values excite customers, and are the source of differentiation.” (page 4/5)
Bowman and Faulkner then go on to make some interesting points about order winners / motivators and order qualifiers / hygiene factors:
- Total customer value can only be increased by increasing order winners – improving the quality of order qualifiers above the minimum standard has negligible difference. Enough is enough. For example, (and this is extreme to make the point) once a hotel room is cleaned in the morning, there is no value in having it cleaned again every hour throughout the day.
- Order winners become order qualifiers as competitors copy your success. For example, look at how smartphone manufacturers one-up each other to get an advantage on their cameras, security features, internal storage, size of the screen etc.
- Activities within the business determine capabilities which can be linked to order winners and order qualifiers. Activities supporting order winners need to be managed for effectiveness while activities supporting qualifiers need to be managed for efficiency and low cost. I will look at this more in what I call the Strategy Box.
- Order winners generate premium prices, extra sales revenue and increased profit. Order qualifiers at best pass on their cost to the customer and, if the activities are inefficient, reduce the profit of the business.
This Is Similar To The Kano Model
Professor Noriaki Kano developed another model of customer satisfaction in the 1980s which was adopted by the total quality management movement in the 1990s.
The terms vary based on the translation but this model recognises three different levels of customer value attributes:
- delighters/exciters (order winners that are different or next scale better).
- satisfiers (order winners that are a bit better and qualifiers at or better than the minimum level).
- dissatisfiers (qualifiers below the accepted level).
Why You Need To Recognise The Difference Between Order Winning And Order Qualifying Customer Value Attributes
There is continual pressure to improve your business but to avoid becoming what Professor Michael Porter calls stuck in the middle . This refers to uncertainty in your competitive strategy between wanting to be different and have the lowest costs. Only in exceptional circumstances can you have both and normally, you need to be very clear on how you will focus your improvement efforts.
- Improving existing order winners or, even better creating unique order winners makes you more competitive and makes an aggressive competitive strategy more viable. These will create a new marketing bullseye for the niche if the order winner is unique. The harder competitors find it to copy your advantage, the stronger your strategic position.
- Improving any order qualifiers that lie below the qualifying threshold for a particular niche of customers will move you closer to the marketing bullseye and provided the costs of the improvement are not excessive, this should be profitable.
- Improving an order qualifier that is already above the qualifying threshold for the market niches you intend to serve adds to the costs of servicing customers but the benefits it produces are not appreciated by the customers.
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