The Business of Transformation

Marketing expert Lance Bettencourt sees opportunity in Noom-type models for other services. 

The Business of Transformation

Marketing expert Lance Bettencourt sees opportunity in Noom-type models for other services. 

Companies are missing out on a significant economic opportunity to help consumers improve their lives, said Lance Bettencourt, professor of professional practice in marketing at the TCU
Neeley School of Business.

Whatever the goal — losing weight, advancing a career, improving a credit score — consumers usually must cobble together the various products and services they need to achieve the goal.

A better approach exists, said Bettencourt, also academic director of TCU’s BNSF Neeley Leadership Program. In the transformation business model, service companies such as the weight loss app Noom integrate all of the required resources and experiences into a personalized, comprehensive offering in partnership with the client.

Better Business

Bettencourt outlined the hallmarks of a successful approach to the transformation business in the article “The ‘New You’ Business,” which appeared in the January/February 2022 issue of Harvard Business Review.

When he joined the Neeley faculty in 2017 after 13 years as a business consultant, Bettencourt brought insights into how to help companies provide innovative and improved products and services.

Lance Bettencourt spent 13 years as a business consultant before joining the Neeley School of Business faculty. Photo by Glen E. Ellman

As a strategy adviser with Strategyn and co-founder of the consulting firm Service 360 Partners, Bettencourt worked with Bombardier Recreational Products to design a line of next-generation utility snowmobiles. He also helped credit card company Capital One create online tools to enhance the shopping experience and increase its customer base. And he advised Standard Bariatric on the design and promotion of surgical tools for sleeve gastrectomy, a surgical weight loss procedure.

“In his consulting life, Lance was a thought leader in the jobs-to-be-done innovation approach,” said Mark Houston, associate dean for faculty and research and the Eunice and James L. West Chair in Marketing at Neeley.

“That perspective recognizes that customers don’t buy most products and services out of a specific desire to own those things, but because those things help the customer get some larger job done in their life. Much bigger ideas for innovation come from studying the consumer’s overall job and identifying ways to help them succeed.”

For example, consumers don’t buy treadmills for the joy of owning them but to improve their health. Yet a treadmill alone will not unlock the goal; it must be part of a larger, coordinated approach to diet, exercise and fitness. Bettencourt recognized a synergy between his jobs-to-be-done approach and the perspectives of Joseph Pine and James Gilmore. The management experts had coined and championed the concept of the experience economy, which theorizes that the way to earn customer loyalty is to create experiences that leave a lasting, positive impression. In their book The Experience Economy, the authors devoted a chapter to transformations.

“They recognized transformations as something inherently personal,” Bettencourt said, “but didn’t spell out how companies can figure out how to personalize and what offerings to bring together.”

Bettencourt teamed up with Pine, Gilmore and consultant David Norton. They collectively drew on their years of market research and numerous interviews with company executives to share insights into how to create a comprehensive personalized offering in their Harvard Business Review article.

Partners in Success

To compete in the transformation business, “you always have to start with the customer’s definition of success,” Bettencourt said, “and work backward from there to figure out what would be most valuable to offer.”

Together, company employees and customers pinpoint what success looks like at each step in the process. They jointly identify and plot how to overcome barriers that stand in the way: resources (time and budget), context (when and where things are done) and customer readiness (skills, motivation and clarity).

“Companies struggle to engage the customer as a partner in the success because they tend to view, ‘This is what we do, here is what the customer does.’ ”
Lance Bettencourt, professor, Neeley School of Business

“Companies struggle to engage the customer as a partner in the success because they tend to view, ‘This is what we do, here is what the customer does,’ ” Bettencourt said. “But especially for the transformation business, you need the customer’s resources, not just money but other intangibles such as their support network, for you as a company to ultimately have success in helping your customer transform. … You will have some customers who are less motivated, less knowledgeable. That’s where you personalize your offering to address these different levels.”

The article highlights Noom as a transformation business that has excelled in engaging its customers as partners. What started in 2008 as a seller of fitness equipment has evolved into an online company enabling customers to lose weight by changing their habits and mindsets about food.

Customers receive online coaching from Noom employees trained in psychology. The clients share their challenges with the coaches, who tailor their support accordingly.

Using the app, customers weigh in, log meals and track exercise daily to measure progress toward their goal — progress they can share with their coaches for further feedback. Daily lessons help customers understand the psychology and physiology behind the weight loss journey.

Integration Is Key

The article also highlights the success of TrueConnect, a financial benefits firm that helps individuals with low credit scores obtain loans through their employers and improve their overall financial habits and health.

TrueConnect surveyed potential clients to identify key requirements: Loans had to be available instantaneously upon applying, regardless of a person’s credit score, and easy to repay in full. In addition to favorable loan terms, TrueConnect offers free counseling on topics such as budgeting, reducing debt and establishing credit.

“The key word is integration,” Bettencourt said. “It’s not just that you have the offerings or even sell them as a whole. They need to be integrated so that they help the customers succeed as they go through the different phases of their journey and so that the decisionmaking is, if not automatic, at least reduced to a minimum.”

The article concludes by suggesting that transformation businesses base fees not on the components they provide but on what the customer achieves. For example, instead of charging a flat monthly fee to use an app like Noom, a weight loss transformation company could collaborate with its customers to set a weight loss goal and accompanying fee. Say, if a customer reaches the agreed-upon weight loss goal of 10 pounds within four months, the customer would pay $160 — the fourmonth equivalent of what the company wanted to earn.

“The most transformative element in a business of this model is asking, ‘How would we do things differently if we only got paid for customer success?’ ” Bettencourt said. Companies would then adapt their offerings to customers “in a way that says, ‘Their success is my success.’ ”