Conjoint Analysis – Once a Luxury, Now a Marketer’s Routine

One of the most valuable information for marketers is being able to understand how customer’s buying decisions are driven. This is why conjoint analysis has been one of the most valuable and insightful market research methods for almost five decades. Conjoint analysis is a research method relying on surveys that explore which product features and price points affect customer’s decisions to buy a certain product.

In simple terms, conjoint analysis means you are presenting each product as a set of attributes and evaluate how important each of these attributes is to the customer. Some of the characteristics that are commonly used in these surveys are product features and pricing. So let’s see how you can put this method to use for your, or your client’s business.

Conjoint analysis in 2019

Although the conjoint analysis is an excellent way to understand how the customers think, many businesses fret from it because it has been known as a long, expensive process. Twenty years ago, this type of research could take between two and three months, and cost thousands of dollars. It was a serious investment reserved only for established businesses, usually conducted ahead of an important product launch.

However, times have changed. Stores and services have moved online, the way we make purchasing decisions is more impulsive and prone to continuous changes. The market is more competitive, as marketing tools and sales channels are constantly evolving. You have to keep up with your competitors.

Fortunately, the existence of online tools such as quiz and survey makers allows you to create and distribute surveys in a matter of days, targetting preferred respondents based on their demographic data and online behavior. Furthermore, data is instantly aggregated, and ready to be analyzed. Conjoint analysis is no longer a luxury – it can be a part of your routine.

According to BigDataMadeSimple, conjoint analysis is no longer a solid predictor of customer’s preferences in one year’s time – therefore, they need to be conducted more often. While they were traditionally organized ahead of a product launch or major overhauls of product lines, nowadays there are new ways to utilize this type of research.

Product development. By having continuous feedback from your customers, you can adjust your development plan and focus on features that are in high demand among your potential customers. If the survey is conducted right, you will be able to understand how much time and work each feature improvement requires.

Pricing optimization. Conjoint analysis is a great way to understand which features are non-negotiable for your customers, and more importantly, how much they are willing to pay for the assurance that this product feature is going to be included and efficient. Both product development and pricing optimization are of utmost importance for businesses in fast-paced industries such as mobile apps or SaaS (software as a service). In these industries, it is fairly easy for customers to switch between competitors based on ever-evolving features. Your competitor can easily tap into your customers’ preferences and incentivize the switch with good prices.

Measuring brand performance. While “brand” is a multifaceted term and its power is measured in many ways, conjoint analysis can be one way to measure how your brand’s power is affecting customers’ buying decisions.

Does it sound overwhelming? It may, but it is not difficult at all.

How to make a conjoint analysis survey

One of the best ways to create a conjoint analysis survey is to take a step back and put yourself in the shoes of your customer. Think about it – how do you decide which product you are going to buy? If you want to get deep into this thought process, you can find it in this article. There, I describe how I decided which activity tracker I am going to buy. I considered features such as:

• Heart rate monitor
• Step counter
• Being waterproof
• Price
• Efficiency (based on reviews)

In general, when buyers make a purchasing decision based on product features, they can do this by:

• Setting a minimum acceptable level for each feature and choosing the first option that meets these levels
• Choosing based on the most important feature

• Slowly eliminating alternatives by comparing them on the basis of one feature – price, efficiency, etc. until they end up with the winner.

By experimenting with various sets of products presented to your target market, you will be able to understand:

• Which features are prioritized by your target market
• Which features are valued by your target market
• How to become or remain competitive by capitalizing on important product features
• How to form and optimize your prices
• How to segment your target market based on prioritized product features

Conjoint analysis survey is usually comprised of around a dozen questions which present respondent with a choice between three to five products. Each set is represented side by side, with features available for comparison. For example, we could present the activity trackers like this.

The follow-up questions will include further variations – activity trackers without a step counter or waterproof protection. This will help you understand which features trump the others – for example, if the Amazon rating is 4.8 for a product, you may overlook the higher price or the lack of step counter.

You don’t want to overwhelm the respondents with choices, so don’t offer them more than 5 options in one product set, and keep the survey as short as possible.

You can distribute the survey to your email list, embed it on your website or put it in a hello bar or pop-up window. You can also offer an incentive such as a discount or a coupon for anyone who completes the survey.

Conclusion

Conjoint analysis is no longer a headstart that only big companies get. You can use it even before you complete the product development, toying around with potential features and researching how your target market rates and values them.

If you want to learn more about creating surveys, click here. To make sure that your results are valid, you have to reach the right sample of respondents, and achieve an acceptable response rate.

Conjoint analysis can help you understand your customers, segment them and capitalize on your competitor’s weaknesses. If you need a tool for simple survey creation and distribution, we got you – sign in to LeadQuizzes and start playing with options and product features. But LeadQuizzes doesn’t stop there – it can help attract new customers, grow your email list and target the right customers at the right time. Just click below and give it a shot!