Situating Financial Decisions

by guest blogger Ignacio Mas

A job waiting to be "hired." Photo courtesy of Ignacio Mas.

Understanding customers’ purchase decisions is the core of the marketing challenge. We know it’s about segmenting in order to get more granular customer insights, identifying customers’ alternatives in order to put a given product in a wider context, evaluating the needs and the benefits as well as the barriers to adoption. But all too often the analysis becomes mechanical, customer and product market lines are drawn rather arbitrarily, and it is all expressed in a cool technocratic language that customers themselves wouldn’t recognize.

In Finding the Right Job for Your Product, Clayton Christensen and his colleagues offer a very crisp approach to keeping the customer at the center of the analysis. Think of it as customers finding that they need to get a job done, and seeking which products or services to hire to do the job. It may appear to be a mere switching of words: "job to be done" rather than customer "needs" or "benefits;" "hiring products" rather than "buying." But consider some of the implications of the job-to-be-done mindset.

First, buying decisions are most often driven much more by the particularities of situations rather than by intrinsic customer characteristics. To use the milkshake example in the article referred to above, the job fulfilled by a milkshake sold at 8am on a Monday morning to bored commuters is not the same as that of a milkshake sold at 5pm on Saturday afternoon to the same person with kids in tow. It is more useful to segment by the circumstances of the situation (e.g. time of day, day of week) rather than by assumed customer socio-demographic factors.

Second, the range of alternatives that customers might consider for the job can be much broader than is usually recognized. To use another Christensen example, we should want children to "hire" school in order to help them feel a little bit successful every day. Indeed, teachers’ battle daily for their pupils’ attention and motivation; win that, and education follows. Looked at in this way, going to school competes with the local soccer club or even belonging to a gang.

Third, purchasing decisions are driven in part by the capacity of the product or service to fulfill the functional needs felt by the customer, but also by the emotional elements surrounding the decision, such as fear, decision fatigue, pride, or the desire to fit in. Christensen explains how IKEA is organized to do a particular job very well: “We need to furnish this apartment today!” What a powerful synthesis of functional and emotional needs. Injecting drama and emotion is much easier if we are cognizant of the situation, and not just of the nature of the characters involved.

Logical as all this is, applying the "job to be done" framework to finance may not be so straight-forward. Financial considerations seem to touch every aspect of living the desire for your children to lead a better life than you had, to minimize life’s daily hassles and humiliations, to feel like you are keeping up and fulfilling your obligations to kin and kith, to reduce the feeling of present or future dependency. And financial considerations stretch over time: Unlike the milkshake, they don’t appear in our lives momentarily. Breaking up the customer experience into situations may therefore seem artificial.

Still, the key situations may be those "moments of determination" when people decide to set money aside or borrow in order to try to beat what the future has in store for them. Through these determinations people gain a greater sense of control over events, whether of the daily, occasional or life-cycle kind, and need not be accompanied with any concrete expression of goals. These determination moments are hard to identify but an indirect way to access them might be to interview people at the moment when they are acting on the benefits of that determination, such as when they are at the shop to buy a new pair of shoes. It is then possible to work backwards to what got them there: how they developed that determination, what were the circumstances leading up to it, what jobs they felt they needed to get done, what they "hired" to get it done. That involves recall and we know the hazards of memory, but it is hard to make sense of people’s financial practices without putting things on some sort of timeline.

Much of both quantitative and qualitative client research is focused on classifying people (their income, education, prior financial history) and their living environment (their location, culture, available financial services). We may need to put more emphasis on a third element: classifying the situations in which they find themselves when they make financial decisions.

Ignacio Mas is an independent consultant on technology-enabled models for financial inclusion.