Sample frameDay 222·Marketing · Locate

Good morning. Ask a customer what matters to them and every answer comes back yes. Today you make them pay for one.

Marketing.

The Trade-Off Test

5 min read·Apply by lunch

The question

Think of the last three things you added because customers said they wanted them — what did each of those customers actually give up to get it? If the answer is nothing, not money, not a feature they'd have to lose, not a longer wait, then you collected a wish list and built a roadmap out of it.

The idea

Day 133 already put whole packages in front of someone and read the choice back: three proposals worth the same to you, and whichever one they reach for tells you what they value. This morning takes that move and adds the arithmetic that turns a read into a number. Paul Green was a marketing professor at Wharton, and in 1971 he published a paper in the Journal of Marketing Research with Vithala Rao called 'Conjoint Measurement for Quantifying Judgmental Data'. It took a result from mathematical psychology — R. Duncan Luce and John Tukey had shown in 1964 that the separate contributions of several variables can be recovered from a person's ordering of the outcomes alone — and pointed it at a problem every operator meets. Ask a buyer how important price, speed, support and reliability are and they'll rate all four highly, because agreeing costs nothing. Green and Rao stopped asking about attributes. They showed people whole options instead, complete bundles each carrying its own price, and asked them to rank the bundles. What makes that a measurement rather than a read is the design underneath it: the bundles are built to a pattern, so every attribute sits at each of its levels in exactly half of them, which means the other attributes cancel out when you read one. Three offers tell you which package they reached for. A patterned eight tells you how much of that result each attribute was separately carrying. The method reached commercial use quickly: the Courtyard by Marriott concept was designed this way, in a study Green ran with Jerry Wind and two colleagues, published in Interfaces in 1989. The trap is treating a stated preference as a measured one. The second trap is sketching the bundles rather than patterning them, which quietly turns the measurement back into a read.

The framework

01
Stated importance and measured importance are two different numbers.
Ask someone to score how much each attribute matters and you're measuring agreeableness, not preference. Nothing in the question forces a comparison, so nothing separates the answers: price matters, response time matters, having a named contact matters, all of them eight or nine out of ten. Preference only becomes visible under constraint, and a rating scale applies none at all. Every survey you've run that came back as a flat wall of high scores told you nothing you could act on, and you probably acted on it anyway.
02
Build eight whole options, and put a price on every one.
Pick four things you could genuinely change — price, contract length, response time, scope, who does the work — and give each of them two levels you would actually sell. Then write eight complete options, every line filled in, each with its own price. Eight sounds like overkill until you see what it buys: the pattern in the worksheet puts every level in exactly four of the eight options, so when you read one attribute the other three cancel out. Four bundles can't do that. They'd tell you which one won and nothing reliable about why.
03
What did the winner cost them?
The ranking isn't the output. What sits between the ranks is. Take one attribute, add up the ranks of the four options carrying its first level, then the four carrying its second, and compare the totals. That gap is what the attribute moved: a narrow gap means the buyer barely noticed it, a wide one means they reordered the whole list to get it. Run all four and you have a trade-off rate for each — how much price they'd absorb for a shorter wait, how much contract length for a named contact. One attribute usually comes back with near-identical totals, and you've been funding it for years.
04
The two decisions this settles.
A trade-off test earns its morning by answering two questions at once. What to build next: the attribute buyers reordered their list to obtain, rather than the one that generated the loudest requests. And what to charge, because the same rankings show how much of your appeal survives the higher price you have been nervous about naming. You don't need a large sample to see something this coarse. You do need real buyers rather than your own team, and you need the price printed on every option, or you've measured enthusiasm again.

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