Buyer Psych: Lossless Adoption (or near enough)
Guiding Question: 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?
Nobody likes giving up what they already have, even if the alternative is objectively better. Eager Sellers Stony Buyers posits that this well-established phenomenon of “loss aversion” happens because “losses have a far greater impact on people than similarly sized gains”. They highlight this with several examples, from psychological research on $100 wagers or PG&E industry surveys (pg 3, 4).
Loss Aversion and Buyer Resistance
Loss aversion is relevant to PMs because it is a powerful force behind a buyer’s reluctance to purchase or use a product. Since consumers tend to overvalue the benefits of an entrenched product 3x, and companies run the risk of doing the same, a PM needs to acknowledge that there’s a manifold difference in their company’s perception of the value proposition and the consumers’. This difference must be narrowed down in order to foster user adoption (pg 6).
A Guide to Overcoming Loss-Driven Buyer Resistance
1. Establish Your Challenge
On a fundamental level, how much behavior change does your product require? This requires an in-depth understanding of the user’s experience, though this would be expected of any PM. The case provides a framework to do this, as well as categories (pg 6).
Answering this question establishes a baseline understanding of your positioning in the buyer’s mind and allows you to determine what you are aiming to be. Doing this helped me realize that my current project is currently a Long Haul but has the potential to be a Smash Hit with some psychology-driven tweaks.
2. Accept Systemic Resistance
You should approach the situation based on the category you fall into. If you are a Long Haul company, understand that the goal is to foster adoption slowly and patiently. If you are a Smash Hit company, you must move fast and capitalize on the advantages you have before the risk of competition (pg 7).
3. Minimize Controllable Resistance
Some things are still in the PM’s control, including product features and target market. The reading offers three strategies to minimize resistance leveraging this control.
Product control: An intuitive approach is to reduce the behavior change required from a user and therefore the “loss” they feel when thinking about their old ways. This can be done by diagnosing what those perceived losses are and designing products that soften the blow, or eliminate it entirely, while still delivering the benefits (pg 9).
Target market control: Some people have more to lose than others. “The unendowed” don’t have a solid status-quo solution, and would therefore be easier to sell to since they have far fewer losses compared to those who already have one. Additionally, some people that already have a solution may have outsized benefits or undersized costs compared to the general market because of their unique situation, and they are ideal early adopters (pg 9).
