- What role does the concept of “loss aversion” play in buyer resistance? How can product managers leverage this knowledge to facilitate the adoption of new features?
Loss aversion is the concept that losses have a far greater perceived impact on people than similarly sized gains. This concept culminates to have several impacts in buyer resistance.
Overestimating Costs of Change:
Because of loss aversion, consumers tend to overestimate the costs associated with learning and adapting to new features. This includes economic costs and the cost of the effort of change like the time and effort to learn a new interface or switch old habits to adapt to new interactions. This overestimation of the cost and the ‘headache’ of weighing the costs and benefit all deter customers from buying into the new product.
Status Quo Bias:
Along with the overestimation of the perceived impact of the loss, status quo bias contributes to buyer resistance. When threatened with a new alternative that claims to beat their current product and reign triumphant, users feel a sense of attachment to their old ways that pushes them to resist buying into a new product. Even with the improvements the newer product may offer, this attachment causes them to view the potential losses from the switch more negatively than the possible gains.
Two possible solutions to the problems I addressed come to mind that Product Managers should seek to employ when rolling out a new product or feature.
First, to address the problem of status quo bias, PMs can target consumer groups that are less attached to the incumbent feature/product. In targeting these groups early on, they can hope to build an atomic network that can have compounding effects that overcome the existing status quo bias. These less attached consumer groups can come in the form of younger users, users of a particular location, or users who are in socially dense areas like college campuses.
Second, to address the issue with the overestimation of the cost to change, PMs should instill programs or initiatives to ease the path of resistance. For example, if the cost of change is monetary, some kind of free trial or rewards program that nullifies the initial financial barrier at first and allows the user to see the gains without the costs, could help justify to customers why the cost associated with the change is justified. If the cost of change is more related to effort, PMs should ensure to lower all these barriers to entry. In some cases, that might look like ensuring that all of the new features are supported by the same technology or systems that supported the prior, so that users would not have to go through the process of downloading or learning new software.
