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.
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 which looks for reasons to rationalise the decision.
These 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 their underlying motivations. Many expensive cars, for example, are bought for prestige because of the desire of the buyer to feel good about themselves, to show off their success and to stand out as 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 on order qualifiers 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 was reading a book about manufacturing / operations strategy which referred to a book by Terry Hill which appears to be out of print.
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)
Hygiene Factors and Motivators
The idea of order winners and qualifiers comes from Hertzberg’s motivation theory for hygiene factors and motivators. In the management of work area, this recognises that different factors lead to satisfaction and dissatisfaction. A boss who is a bully causes demotivation but a change in manager takes away the dissatisfaction but doesn’t create satisfaction.
Cliff Bowman and David Faulkner in their classic book Competitive and Corporate Strategy split customer perceived use value into hygiene value and motivator value explicitly recognises the link with the Hertzberg two factor theory.
“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)
“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 Faulknber 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.
- Order winners become order qualifiers as competitors imitate.
- Activities within the business can be linked to order winners and order qualifiers. Activities for order winners need to be managed for effectiveness while activities for qualifiers need to be managed for efficiency and low cost.
- Order winners generate premium prices and profit. Order qualifiers at best pass on their cost to the customer and, if the activities are inefficient, reduce the profit of the business.
The Kano Model
Professor Noriaki Kano developed another model of customer satisfaction in the 1980s which was adopted by the total quality management movement.
The terms vary based on the translation but this recognised difference customer value attributes:
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 stuck in the middle, you need to be very clear on how you focus your improvement efforts.
Improving order winners makes you more competitive and makes an aggressive competitive strategy more viable.
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.
Paul Simister is a business strategy coach who helps business owners to differentiate their businesses and develop winning strategies. Get your free copy of the ebook The Six Steps Profit Formula.
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