How to Turn Customers Into Converts
Whether it’s justified or not , most Americans feel they are above average. We’re all safe drivers with good grammar and well-behaved kids—church meetings aside.
This widespread self-assurance can be both a blessing and a curse for companies marketing their products to American consumers. The blessing is that people don’t shy away from trying products that might be a challenge to learn. The curse is that overconfident customers don’t plan on investing enough time to figure out how to use the latest gadgets and equipment. As a result, few become devotees.
Take the snowboarding industry as an example. Yes, the sport’s popularity is rising. But industry leaders know they’re missing a lot of potential converts. According to the National Ski Areas Association, only 15 percent of those who try snowboarding stick with it. That paltry conversion rate hurts companies that sell snowboarding apparel, gear, and time on the slopes. Marriott School professor Darron Billeter discovered something similar while conducting research on the introduction of the music video game Guitar Hero. As with most other video games, shoppers could head to a local retail store to give it a try at a demonstration console. Billeter surveyed shoppers before and after their trial jam session. Surprisingly, a consumer’s willingness to buy the game actually decreased after playing the demo version. Giving customers a test drive on the game was actually backfiring.
This prompted Billeter and two colleagues to embark on a thorough examination of consumer psychology. They conducted a series of experiments where participants had to perform unfamiliar tasks, such as typing on a keyboard with the letters arranged differently or drawing basic shapes while looking in a mirror. Before the experiment, participants had to guess how well they would perform and how long it would take to master the new skill. After they gave it a shot, participants again predicted their future performance and timelines.
In a study published in the February 2011 issue of Journal of Consumer Research, Billeter reports something that he suspected all along: American overconfidence vanishes once consumers try a new product, and it’s replaced with exaggerated self-doubt.
“The bottom line is that before people try a new product, they think that it will be easier than it is,” Billeter explains. “And after they’ve tried it once, they think they’re going to be worse than they actually will be.”
The new research shows that the learning curve for many new products is steep but fairly short. If companies can help their customers stick with their products for even a short while longer than they currently do, they will be much more likely to win converts. With Ajay Kalra, of Rice University’s Jones Graduate School of Business, and George Loewenstein, the Herbert A. Simon Professor of Economics and Psychology at Carnegie Mellon University, Billeter recommended four strategies to help companies improve product adoption rates: design products to feel familiar, hire a guide for your demo, take advantage of technology and timing, and buy time with bundled pricing incentives.
Lesson 1: Design products to feel familiar
Billeter confesses that he’s just like the rest of us when it comes to quitting. Several years ago he plunked down $500 for a PalmPilot that didn’t work like he had hoped.
“I thought it was going to organize my whole life,” he says. “But it had a stylus, and I had to learn to write in a different way. I tried it for a little while, and it wasn’t working. I quit. It was an expensive purchase, but I gave up on it.”
A 2006 study by Elke den Ouden found that all it takes is twenty minutes for customers to decide they’re giving up on a product, Billeter says. The best way to win this race against the clock is a familiar product design.
Designers of the Wii or iPad would probably cluck knowingly at the study’s findings. Billeter praises new products that incorporate users’ intuition and previously learned skills, rather than requiring purchasers to learn new processes.
“People don’t need to learn which button to press on a controller to swing the racket in Wii Tennis and don’t need to guess which icon to tap to flick through the photos on an iPad,” he explains. “The designers leveraged the fact that we’ve already gone through that learning curve. Those responses governed by the brain are already automated.”
Lesson 2: Hire a guide for your demo
Thinking back to the Guitar Hero situation, you may be wondering whether the new study means all in-store demos backfire—and whether your product demo is doing more harm than good.
“This research suggests that putting some products in consumers’ hands is a risky proposition, even for something as fun as Guitar Hero,” Billeter says. “You’ve got to be very careful. There are a number of strategies you can use as a firm to get people through the trial period.”
The first strategy is to put staff in place to walk people through their first time with your product. U.S. Airways—where Billeter worked prior to completing his PhD from Carnegie Mellon—found this useful when introducing the self-check-in kiosk at airports in Washington, D.C., and New York City. Most fliers instantly recognized how much time they could save by skipping the bottleneck of people waiting in line for a human to check them in.
Yet after pushing a few buttons, many found that frustration or feelings of uncertainty took over. The typical first-timer quickly gave up and got back in line to see a person.
In response, the airline stationed customer service reps at the kiosks to talk people through the process. And one guided experience per flier was all it took for this technology to take off.
“Because of the strong behavioral implications of the effect, firms marketing products or services that require learning should invest resources to hold consumers’ hands during the initial stages of product experience,” say the study’s authors.
Lesson 3: Take advantage of technology and timing
Not every company has control of the environment where its customers experience a product for the first time, and nowhere is that more true than in online retail. Fortunately the spread of video-calling technologies such as Skype makes distance less of a problem. Billeter says it doesn’t take much imagination to see how a visually rich customer service call could carefully walk people through the first use of a new purchase.
The technology you tap to bridge the distance shouldn’t overshadow the importance of timing, Billeter adds. A basic phone call can be a lifeline if it comes when customers need it most.
Say a customer purchases a new cell phone online and your company makes it easy to schedule a free device orientation with a customer service rep. All the customer has to do is check a box and select a day and time as he or she completes the purchase.
The problem in this scenario is that the company is offering support too soon. Customers will likely refuse help offered during the purchase process because they remain overconfident.
It’s not until they get their hands on the phone that they begin to realize, “This is harder than I thought.” A prime opportunity for support arises when customers dial in to activate the phone.
“When they make that call, you can suggest that you walk them through some of the phone’s functions such as importing contacts,” Billeter says. “Even though you’re not right there, firms can still control the process and be available when customers might be the most discouraged.”
Lesson 4: Buy time with bundled pricing incentives
There is an important side note to the snowboarding adoption research: Most of those who eventually quit did so without ever taking a single lesson. Instead they buy a day pass and hit the slopes to figure it out on their own.
Inevitably their day on the mountain proves more difficult—and perhaps a little more painful—than they had anticipated. At first, taking lessons seemed unnecessary, but their outlook is so gloomy now that signing up for lessons seems daunting, which may be why Craigslist has so many listings for slightly used snowboards.
“At this point, however, people don’t realize how quickly they will be learning,” Billeter says.
It’s a risk with skiing and many other sports as well. To reduce fail rates, Vail ski and snowboard resort in Colorado introduced pricing for first-timers that discounted the second- and third-day lift tickets, equipment, and instruction. The same idea can be applied to any business model where customers pay as they go, Kalra says.
“Introductory pricing should be set to encourage customers to continue with the product,” Kalra adds. “If you are trying to get people to learn how to play golf—or any athletic activity—instead of making the first lesson cheap or free, it will be better to have ‘Five lessons for $150’ or ‘First Lesson $100, next four for $15.’”
Reaching our potential
Billeter, Loewenstein, and Kalra’s study has direct application for those selling anything from medical devices to music lessons. Even further, it carries implications beyond the world of business.
Loewenstein is a leading expert on how current, fleeting experiences impact one’s predictions of future accomplishments. It turns out we tend to place undue weight on current performance when estimating our ability going forward. Billeter studied under Loewenstein in grad school and considers their most recent work another example of how our projection bias impacts our long-term happiness. Seeing things as they really are will undoubtedly impact who we will become.
“This research is not only about product adoption but also about skill development,” Billeter says. “Knowing that we need to stick with learning new skills longer than we think is very relevant to improving at math, writing, or other important skills related to our education or careers. It speaks to the potential embedded in each of us to achieve more than we thought possible.”
_
Article written by Joe Hadfield
Illustrations by John Kachik
About the Author
Joe Hadfield is a media relations manager at Brigham Young University, where he gets to tell the stories of the university’s talented students and faculty. Previously he worked as an analyst at the market research firm Knowledge Networks in Menlo Park, California. He earned a master’s degree in public policy and a bachelor’s degree in communications from BYU.
