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Your business is improving its offerings--and that's a good thing. The problem is, your customers don't always see it that way.
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This story appears in the May 2007 issue of Entrepreneur. Subscribe »

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Change is always in the air at 1-800-FREE411, a phone- and web-based directory assistance service. Two of the company's latest services include letting callers use 411 as a Yellow Pages-type service, and a self-service portal where the company's advertisers can manage their accounts and upload ads on their own time.

Scott Kliger, founder and CTO of Boston-based Jingle Networks, the 50-employee company that operates 1-800-FREE411, says both changes have been well-received. That's not always the case, however. A little over a year ago, 1-800-FREE411 tweaked its phone menu so callers, who could previously bypass ads with the touch of a button, had to listen to an ad before they could get their listings. The change had customers calling the company on the carpet. "Any time anything in the system happens differently from what they're expecting, we get a handful of complaints," says Kliger, 38. "Changing consumer behavior is the hardest thing to do."

Getting customers to accept something new--whether it's a product line or a menu change--is a vexing, age-old business problem. The Coca-Cola Company failed to lure consumers to New Coke. PlayStation 2 still outsells Play-Station 3. SAP and Oracle, meanwhile, mull over how to shift customers to their higher-performing products.

While companies focus on innovation, the typical consumer prefers familiarity. Companies "can actually innovate faster than their customers' lives can change to [use] those advancements," says Scott Anthony, president of Innosight, an innovation consulting firm in Watertown, Massachusetts.

Many companies use the carrot-and-stick method to prod customers toward newer products. Microsoft has stopped supporting Windows 98. Cingular (now AT&T) charges customers with old phones an extra $5 a month to encourage them to buy newer models. Such steps, however, are daunting for small companies with limited resources and meager market share. "People learn to [use] your solution in certain ways," Anthony says. "If you force them to forget all that learning, they're going to be irritated."

Some companies have managed the customer migration issue successfully. Intuit cuts off support for its older Quicken products as it introduces better and easier versions of the software. Apple is good at creating value and simplicity around new products that customers instantly understand. "If you make it hard, it doesn't matter how valuable [the change] is," says Jon Fjeld, a management professor at Duke University. "It's not going to be worth it."

Kliger aims for gradual, subtle changes to 1-800-FREE411's services. "It's often much harder for the consumer to get their heads wrapped around the value proposition than it is for you," he says. "We try not to throw something at our audience that they wouldn't expect." The company's sales were more than $2 million last year.

Think of your customers along a bell curve, from early adopters to late bloomers. Where the majority of your customers lie will dictate which strategies--incentives, price breaks, when to discontinue a product line and so on--are best for your product or service. "You need to make it valuable and worthwhile for your customers," Fjeld says, "and not expensive in terms of the price of the upgrade and any pain they have to go through to get there."

Anthony suggests developing a bridge strategy that helps customers take baby steps toward your new product or service. "If someone is using a very old version of your software, they might not want to jump to the latest, greatest version," he says. An intermediate step not only "brings them closer to the way you're currently organizing to reduce [your company's] internal complexity, but also makes it easier for them to transition." Surveys and focus groups that create a "based on what you told us" marketing approach for impending releases can also make customers feel they have a stake in the process, says Karen Leland, co-author of Water-cooler Wisdom: How Smart People Prosper in the Face of Conflict, Pressure and Changeand co-founder of Sausalito, California, customer service consulting firm Sterling Consulting Group.

It's hard work shepherding customers through the shock, denial, anger and acceptance of a product or service change. When 1-800-FREE411 customers complained about listening to advertisements, they got an overview of the company's business model. It seemed to do the trick. "We've got to pay for [our service] somehow," Kliger says. "Consumers understand that, and I think they respect that."

Chris Penttila is a freelance journalist in the Chapel Hill, North Carolina, area.

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