Summary: Terms like “luxury” and “utility” are used too often describe brands, each carrying positive or negative connotations. Here I present the Quality / Expenditure Matrix to characterize your consumers’ experiences, and to help determine how you can leverage that position to your advantage. E-mail. Tweet.
Inspired by my interest in amateur mixology over summer vacation, I stumbled across an interesting post, while looking for a cucumber gimlet recipe. As an MBA, I’m a big fan of 2×2 matrices, which made me particularly interested in this one…which places her cucumber gimlet recipe in the bottom left corner, indicating a High Quality / High Maintenance experience.
Looking at Erielle’s matrix, not only led to a great cocktail, but it also got me thinking whether brands could be classified along similar dimensions, based on the consumer experience they provide. Moreover, while a brand aspires to a certain position, what happens when they execute poorly? This gave rise to my version, called Quality / Expenditure matrix of customer experience…perhaps inspired by too many of those cucumber gimlets.
Let’s take a look at it, and some examples of brands that fall into each quadrant.
The Quality / Expenditure Matrix
This matrix looks at the customers’ experience with your brand along two dimensions:
The level of both money or or effort (time, energy, distraction, frequency) the consumer invests in order to engage with the brand.
The value of the product, or service, either by straight utility, desirability, or the depth of relationship forged between brand and consumer.
Let’s look at each of these quadrants in more detail.
Understanding the Quadrants of the Q/E Matrix
In each of the areas of the matrix, there is a distinct type of consumer experience, that has both a “positive” side, when executed well, and a “negative” side, when executed poorly. So it’s important to note that unlike the famous Lovemark matrix, which maps brands on axes of “love” and “respect”, I choose not to imply inherent negative connotation from brands that do not fall into the “top right” quadrant. instead, each quadrant represents a differentiated consumer experience strategy, that if the brand executes successful can still lead to a wildly successful business.
Note: My quadrants and Erielle’s won’t quite match up, since as a math geek, I had to stay true to the Cartesian coordinate numbering system.
1) Prestige Players: (High Quality / High Expenditure)
Brand in this quadrant epitomize the exclusive “high-end” of the market. Here you’ll find all of the usual suspect brands jewelery, sports cars, hotels, and others. The idea is that their high price paves the way for exclusivity, and as such a premium user experience.
When done right: you have the uber exclusive brands like Ferrari, or Raphael Nadal’s $500K Richard Mille watch.
When done wrong: you get pretentious brands, that seem to be “trying too hard”, like the new breed of Vegas hotels (and the W hotel chain in general), and bad art-house films.
2) Accessible Luxuries: (High Quality / Low Expenditure)
This is my favorite class of companies, in that they seem to provide great service “effortlessly”. While many brands aspire to live in this quadrant, very few can execute it successfully. There is a delicate balance to make the need for customer experience permeate the organization, and keep the accountants, and process geeks, at bay and not fall into the seductive trap to dilute the brand by over expansion.
When done right: the best customer experience brands emerge like Netflix, jetBlue, and Zappos.
3) Convenience & Value: (Low Quality / Low Expenditure)
While “low quality” is typically seen as negative, not every type of brand needs to be a luxurious, or forge a “deep customer relationship” — if you can provide good value, cheaply then you will forge brand loyalty.
When done right: Value for money with a brand like Walmart, or even your favorite local greasy pizza joint. If you make it easy and transactions understandable — that is the customers know what they’re going to get, this model can be executed successfully.
When done wrong: There is a fine line between doing this model well, and falling into providing cheap crap, like Taco Bell or the Ford Pinto.
4) Monopolies & Utilities: (Low Quality / High Expenditure)
The most challenging category for brands to achieve successfully, since there is an imbalance between customer value and effort, in that customers need to expend more than what they receive. The only brands that can seem to get away with this, are those that are “must haves” — which are monopolies and utilities.
When done right: You have a profitable monopoly, like telcos and cable companies; however, an alternate way to look at this is when you have a dominant platform that people choose to use, like Twitter, Facebook (or Microsoft back in the day) where users have a high volume of interactions, but the value of any one of them is very low.
When done wrong: what was “necessity” becomes “nuisance”, which will inevitably lead to new entrants into the market to disrupt the current models. Examples include the Post Office, disrupted by FedEx, or a legacy carrier like United Airlines being disrupted by the aforementioned jetBlue.
Summing it up
The Quality / Expenditure Matrix is a useful tool to help you assess how best to match the value your brand imparts with the kind of customer experience it offers. With that initial assessment, you can correctly position your brand into an appropriate quadrant, which can then help guide your strategy for success, based on looking at brands with similar patterns (and anti-patterns).
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