Consumers are creatures of habit, often seeking out their favorite restaurant, hotel or store, because they know they’ll have a positive experience. These positive experiences make them loyal — whether it’s a perfectly grilled steak, a service associate who helps you find that perfect gift, or the ease of pre-selecting your hotel room in advance of check-in.
However, if a consumer’s go-to business never changes, the experience might seem stale. Once-loyal customers might consider switching.
This point was driven home when I watched the movie Chef, about a chef who wants to transform the time-tested menu to impress a food critic. The owner disagrees, saying, “Look, if you bought Stones tickets and Jagger didn’t play Satisfaction, how would you feel? Would you be happy?”
The chef sticks with his 1990s-style menu and gets scorched by a terrible review from the food critic.
The Business Dilemma
So the question is: when is it time to change and when should you keep things the same? Can you do a little of both?
The same dilemma is faced by many businesses. To change or not to change? When is the right time? When sales decline? When complaints increase? When stock prices fall?
If you act too quickly, customers may be upset. If you wait too long, customers—and their money—could walk out the door. But how do you know when the timing is right to introduce change? And, should it be a completely new product/servicing offering or just a modification?
Many companies come to mind when thinking about waiting too long to change. Consider Motorola which, according to Forbes, once had nearly 50% of the cell-phone handset market. In 1995, they passed up chances to enter the digital market early, sticking with more primitive analog designs, because it felt sure that analog’s 43 million customers couldn’t be wrong. Within four years, Motorola’s market share had slumped to 17%.
In deciding whether it’s time for change, companies need to understand a multitude of factors but key inputs to this decision are:
- Knowing where they are in the product life cycle curve
- Understanding the current state (baseline)
Product Life Cycle
Theodore Levitt‘s classic Product Life Cycle has been around since 1965. Understanding which stage a product is in provides information about expected future sales growth, and the kinds of strategies that should be implemented to protect sales. The product life cycle of many modern products is shrinking, as Tom Spencer found, while the operating life for many of these products is lengthening.
As explained in Using Market Research in Product Development, many companies recognize the importance of offering something new. For this reason, they allocate substantial sums to research and development to help them determine when it’s time for a change. Most companies spend between 2% and 5% of sales on R&D.
However, as stated by Paul Hague in the third edition of Market Research, not all products/services necessarily completely die and need to be replaced with something new. There are often opportunities for modifications and improvements which can result in a rejuvenation of the product life cycle. In fact, per B2B International, 90% of new product research is focused on product additions and modifications rather than on new concepts.
Product improvements by their nature are less drastic and are much more easily accepted than conceptually new products. As with our restaurant example, an entirely new menu was perhaps unnecessary but rather, some innovations and changes to existing items while keeping some old favorites breathing new life into the restaurant while still keeping the brand intact.
In parallel with a product life cycle assessment, organizations should have a baseline measurement of areas of satisfaction and dissatisfaction. As my colleague Jon Skinner wrote , by knowing what issues upset customers the most (causing dissatisfaction and disloyalty) and by understanding what makes loyal customers return and recommend a business, organizations have better insight into whether it is time to pursue the introduction of something new (where “new” is adding/changing/or removing a product/servicing offering). It is important to remember that the issues that upset customers the most aren’t necessarily the most prevalent problems but rather, the ones that have the biggest impact on customer loyalty.
However, a baseline is not enough. Businesses need to take regular temperature checks and compare their results to the baseline. More formal, data-driven Voice of the Customer (VOC) research will reveal even more about customer experiences and expectations. This could include short surveys after every interaction, more detailed monthly, quarterly or annual surveys and staying on top of ongoing social media chatter.
By using an experienced research partner for product life cycle assessments, baseline studies, and temperatures checks against the baseline, businesses can make informed decisions about when it’s time to change, what should change, and what must stay the same.
Being true to your brand or what sets you apart from the competition is great. But when you risk driving your customer to choose another business, it’s time to change.
Don’t lose your customers because they’re tired of the same old menu. Know when it’s time for change and get ahead of the curve!
Vice President, Client Solutions
To learn more about Lori Childers