Create a Product Your Customers Will Want
There's an old Saturday Night Live skit about a diner that serves only cheeseburgers, chips and Pepsi. Little did anyone know that the skit's catchphrase, "Cheeseburger, cheeseburger! No Coke. Pepsi!" would sum up a growing mantra for 21st-century consumers: fewer choices, please.
Consumers are feeling overwhelmed as companies race to add more functions, designs, options and service plans. The same skit today could make fun of the endless number of burger choices the diner offers instead of how few.
The burgeoning selection facing consumers is an accelerating trend as technology makes it easier for companies to process information, says Roland Rust, a marketing professor at the University of Maryland in College Park who coined the term "feature fatigue" to describe the beleaguered feeling today's consumers have about products overloaded with features. He points to BMW's iDrive, a dashboard information and entertainment system estimated to carry 700 features, as an example of features run amok. "The temptation for anyone designing products is 'Let's just pack 100, 200 or 700 things into the product,'" he says. "It makes you wonder what people [inside companies] are thinking."
In his research, Rust asked college students to use a variety of video and music devices that had varied numbers of features. He discovered that even the most tech-savvy students preferred the simplest products. "Feature fatigue hits experts as well as novices," Rust says. "That was something we didn't expect."
He also learned the excitement over a long list of features wears off when consumers realize a product is too difficult to use. "You may get that first sale, but it costs you in the future," Rust says. "[Customers] say, 'I'm not going to buy from that company again. They make stuff that's too complicated.'"
The Complexity Complex
Over time, a company can end up with an unwieldy product line rife with SKUs, intricate distribution systems and salespeople who keep pushing for additional features. But managers are getting frustrated by the complexity of it all: Two-thirds of managers surveyed last year by consulting firm Bain & Co.said too much complexity in processes, planning and products is raising costs and hurting profit growth.
Complexity is a tricky issue for companies because it's the result of thousands of small decisions based on incremental revenue and cost, says Mark Gottfredson, head of Bain's global performance improvement practice in Dallas and author of Bain's complexity management research. These incremental costs get built into fixed costs, making them hard to track. "[If] you have to buy a scheduling program that's twice as expensive to implement, how do you [trace] that back to an incremental decision to add one more product? You simply can't," he says. "You don't realize [that] the underlying reason it costs you so much [to operate] is that you have such a complex product line."
Competitive pressure can tempt companies to go overboard in building their product lines. "There's always a challenge imposed on us to compete," says Pankaj Malviya, 36, founder of 3-year-old Relationals, a 20-employee CRM software company in San Jose, California, that competes with big players like Salesforce.comand Siebel Systems. For firms like Relationals, there's a realistic breaking point. "You may keep adding features," Malviya says, "but the complexity may increase so much that the sales reps may stop understanding what the [product] is all about."
Entrepreneurs need to find what Gottfredson calls "the innovation fulcrum": where the number of products strikes a balance between customer satisfaction and operating complexity. Start by understanding how costs behave. As your company grows, imagine it operating with only one product, and look for the cost overlays that have built up over time. Then add complexity back in only to the extent customers need it, Gottfredson advises.
Next, create some discipline around your product line. Identify a few core market segments, and create a vetting process for new ideas. This way, "you're only doing the things that really are attractive out in the marketplace," he says. With new products, keep your R&D efforts focused on the one main feature customers will actually use.
You'll also have to rein in your sales team. Malviya wants Relationals' salespeople to sell the product's simplicity and make sure customers understand how to use the current set of features before new ones are added. "Their [customers'] ROI does not lie in having 20 different features," he says. "There's no point in serving them extra stuff if they haven't achieved success in what they already have." Relationals projects 2006 sales of $1.8 million.
Rust predicts companies will keep adding complexity to their offerings, but there will eventually be a backlash as consumers who have finally had enough seek simplicity in the things they use. "People can only cope with so much," Rust says. "The smart companies that really succeed are going to be making products that are simpler, that will satisfy customers more." Cheeseburger, anyone?