Innovation and Adoption: an enemies to lovers story
When thinking about retaining and recruiting customers with a new product, though the two might seem at odds, there exists a “sweet spot” where innovation and customer adoption can meet and compromise on a successful product. The innovation must significantly outweigh the costs of switching products and have a low barrier of change for customers. To effectively implement this practice, product managers should do sufficient research to understand, first off, that the innovation is targeting a problem large enough that customers would want this changed. They must ensure there is demand enough for the innovation to drive switching. Next, they must determine the cost of developing this product internally, and if the monetary gains from this innovation can far outweigh this. They should also scale their predictions down to assume that there is less confidence in the product than previously assumed and that customer recruitment will be harder than a simple cost difference. There should be significant research in the market to understand what alternatives the customer has to this product already, and in a highly saturated product line, there might be little motivation to switch. To see the benefits, companies must allocate their resources patiently so they do not run out of money before the benefits reclaim themself. They must also either have a product that is 10 times better than the alternative, or a product that has the least path of resistance for recruiting. Finally, being cognizant of the way the product is advertised to customers is essential to ensure this thoughtful developmental process reaches the customer in the most appealing way.
Loss Aversion: the soft launch
Loss aversion plays a major role in product adoption, as customers weigh the losses and downsides of a product much more significantly than they see the gains. This oftentimes means that when considering adopting a new product, buyers will look much closer at the downsides as a justification to stay with their current product. To leverage this important insight, product managers can plan to design their product to minimize any losses, and when making product choices, prioritizing this framework when taking risks. This means that if the product line features a groundbreaking new invention, but also presents a significant drawback to competitors due to the innovation, customers are likely to discount its effectiveness and avoid the barrier of switching. When aiming to increase the adoption, finding a middle ground between the innovation and the loss barriers is a feasible way to reach customers that are not ready for a significant lifestyle changes. Slowly stepping the customer away from their current product towards the larger innovation can reduce the idea that switching prompts significant losses. Incremental product releases can combat loss aversion as each step away poses a smaller loss margin and therefore a greater likelihood of adoption.
