Conjoint Analysis

Conjoint analysis is an indirect, statistical analysis technique. Based on a limited number of key characteristics, different offer bundles are shown to customers, who then must decide which bundle they prefer. This helps with calculating the value of the different features of an offering and the overall interest in a specific solution.

A testing heavyweight, a conjoint analysis is often used when introducing a new product or service into the market. Similarly, whole business models can be compared and shown to potential customers to see their compared value. Conjoint analyses can give you great insights into the mind of your customers and a good understanding of the worth of the various parts of your offering. It can show you where to concentrate in your offer development, who your most likely early adopters will be, and give you limited insight on the willingness to pay. However, its limitations are significant. To be statistically relevant, there needs to be a large amount of test participants, who will most likely need to be incentivized as the test is long and potentially boring. You can only test a few characteristics so not to make the test too complex. Finally, the results might not necessarily be unambiguous. Especially for offerings that target a mass market, the advantages often outweigh the limitations and make this test format a great source of feedback and validation of your hypotheses.

Helpful Tips

Choose wisely: Conjoint analyses are based on different attributes that are mixed together to create a variety of bundles that are compared with each other. The higher the number of attributes you want to test, the longer the test lasts and the more participants you need to have to make it statistically relevant. Thus, decide which attributes are most important to you and focus on these.

Make it fun: This test format is boring. Your test participants get shown different bundles over and over again. To make it easier on the eye, put some funny videos or texts into your test, so that the participants lighten up and are more concentrated afterwards

Be conscious of incentives: It’s great if you manage to get a large number of participants to do this type of test for free, but it’s unlikely. Think about how to incentivize potential customers to do the conjoint analysis

Get help if needed: There is plenty of software out there to help you conduct your own conjoint analysis. If you feel like the effort is too great, get help from a professional or agency. This is generally money well spent.

Combine with other test formats: Conjoint analyses are done remotely on a computer, thus it is often not possible to interact directly with the customers and present them with your solution: use Explainer Videos or online Flyers to help the test participants get a better understanding.

Telecommunication companies often use conjoint analysis to test the attractiveness of service bundles. Combining characteristics like price, call minutes, MBs & SMS, they let customers decide which bundle they would be willing to buy at that price.

How to Guide

Decide which attributes of your offering you want to test. Don’t use more than 5 attributes.

Create the survey and choose which combinations of attributes should be allowed and which not. Use a service provider if you are unsure on how to set up the structure.