I just read a very interesting article in the June edition of the Harvard Business Review. It is titled Eager Sellers & Stony Buyers: Understanding the Psychology of New-Product Adoption and written by John T. Gourville
The basic message is this: consumers of technology tend to overvalue the status quo and the losses they would incur to switch solutions by a factor of 3. Producers of technology tend to overweight the benefits of their new technology and ignore the costs psychological costs associated by switching to their solution by a factor of 3. The math: 3 x 3 = 9 time effect. Or a 9x gap in perceptions between the producers and the potential consumers.
Now… I’m assuming that most who read this will see it as a very insightful and significant perspective, probably one that augments the work done by Moore and Christensen. What I find intriguing is how this could be leveraged by incumbant technologies (read: those of us producers who are not start-ups, but instead, need to defend our installed base).
I believe that this is laregely due to classic framing by producers and cognitive dissonance by customers. In other words, many companies get trapped into thinking that focus on customer satisfaction is enough. I’ll address the cor
e problems with satisfaction in the next post, but for now, I want to focus on pyschological accounting and what I’ll call the incumbant halo and why it takes either a serious pain or a sly company to much energy to create the inertia for change.
Customers make an emotional commitment in the process of buying a product. The level of that emotional commitment will vary from product to product and from person to person. Regardless of the level of commitment, the thing to remember is that it is hard for us as human beings to sever relationships when a positive emotional commitment exists.
Or, when the halo is in place, a company with a positive emotional quotient can do no wrong and a company with a negative emotional quotient can do no right.
It is incumbent upon us as producers to fully understand the emotional connection our customers have with our products or services and then determine how to strengthen them.
