“Loss aversion” ultimately causes consumers to value their existing possessions that they may have to give up far more than the potential gains of purchasing new products through the endowment effect. This is because people perceive losses of the same size as gains as more impactful. Because executives overvalue new innovations and predict them to be more useful than existing ones, this means that there is a mismatch in expectations between companies and consumers on the success of new products.
To facilitate the adoption of new features, product managers can develop products that require little behavior change so that customers are more likely to accept them. While innovative products may be far more useful, buyer resistance is high when behavior must be adjusted drastically such as with technological breakthrough products. Ideally, product managers should aim to develop products that require little behavior adjustment but provide great benefits, such as a much improved user interface. They can introduce the change slowly such as by following the general flow of the app but incorporating a new feature, such as Instagram’s “Post Quietly to Profile” feature which follows the general post flow but allows users to not notify their followers of the post. If the product requires large behavior change, product managers should plan for slow adoption by not depleting all their resources in a short amount of time.
