Mine is better than yours

Getting users to switch to your product.

I was walking down the pasta aisle of the grocery store with a friend, she was doing some grocery shopping with me and was picking up some Kraft dinner for her kids. She grabbed 4 boxes without thinking and put them in her cart. I stopped her and told her the Annie’s mac and cheese was on sale and tastes better. My friend told me she’d only try Annie’s if it was being given away for free. I think she was exaggerating but the sentiment was clear; Annie’s would need to be 10X less expensive than Kraft mac and cheese for her to switch. Believe it or not, there is some solid science behind her irrational fear of “firing” Kraft and “hiring” Annie’s.

Striving for 10X better products

For the last decade, there has been a lot of talk about striving for a “ten-times better product” but most product designers glaze-over what a 10x better product really means. Why? Because no one really knows what a 10x better product is; it could mean almost anything.

Let’s say I’m a well known coffee restauranteur and I want to get a larger market share. I can compete on price, taste, emotion, and experience. In order to produce a 10X better cup of coffee, I need to choose an aspect of the product that is meaningful to the customer. You can determine the most meaningful aspects of the product by talking to your customers. Some will appreciate a lower price, others will appreciate a more delicious blend. You want to optimize the product without offending current customers. (So, changing the taste of the coffee is a risky move because there’s evidence customers like the current taste, and no evidence a new taste will gain market share. A change to the taste, in fact, may cause current customers to “fire” my coffee if they don’t like the taste as much.)

Let’s say I figure out customer experience is a meaningful aspect of the product that could differentiate us from other cafés. I start investigating all of the customer experience touchpoints and learn customers hate the lids we use on our to-go cups. After doing some research to find out all of the complaints with the current lid, we product a lid that is 10X better. We launch a customer feedback survey and receive an 80% satisfaction rating on the new lid. We should be prepared for a larger market share, right? It’s possible but even though we produced a lid that is 10X better than our old lid, it doesn’t necessarily make our product 10X better than our competition.

Mere ownership and Endowment bias

Why are we striving for a 10X better product in the first place? It’s not just a random number. We want to attain a 10X better product than our competition in order to overcome a couple cognitive biases everyone has: (1) the Mere Ownership Effect and, (2) the Endowment bias.

These biases are similar and tend to reinforce one another. The Mere Ownership Effect causes customers to over-value products they own. This effect is so strong that customers can develop this bias just by touching a product or, even, by merely seeing it in a catalog or on a website. There’s been a lot of research done on the Mere Ownership Effect but suffice it to say, in order to overcome this bias a product must be at least 3X better than the product the customer already owns.

Now, when you add in the Endowment Bias, getting a customer to buy your product gets even more difficult. It compliments the Mere Ownership Effect by causing customers to under-value products they don’t own.

The Endowment Bias can influence how much a customer is willing to pay (WTP) to acquire a product. We’ve seen cases where the price a customer is willing to accept (WTA) is 3X greater than the price they’re willing to pay. This means, a customer may be willing to pay $2.50 for a cup of coffee but would only sell THEIR cup of coffee for $7.50 (2.50 x 3). This was observed in a multitude of studies; one of my favourite gave some customers bananas and other customers apples, both fruit were valued at the exact same price. When researchers asked customers if they’d sell their product in exchange for the other (i.e. sell your banana in exchange for an apple, or vice versa), no customer was willing to sell the product they owned because they under-valued the product they didn’t own. This effect can even be observed if a person just obtained a product a few minutes ago. In order to overcome this bias, unowned products must be 3X less expensive or offer 3X more value.

There are a number of other factors that influence a customers decision to buy a product but if you ONLY consider these two factors, you’d need to produce a product that is 6X better — just to overcome the Mere Ownership Effect and Endowment Bias. When all aspects of a purchasing decision are considered, you need to offer 10X the value of an owned product to motivate a customer to “fire” their current product and “hire” your product instead.

Selecting the right aspect to optimize

Ok, so we want to create a 10X better product. The trick is figuring out what customers really care about. This can be done using jobs-to-be-done (JTBD) style customer interviews. In order to conduct these interviews, we’d want to recruit customers who’ve recently “hired” or “fired” your product (or a product from a competitor.) We’d talk to these customers and find out what caused them to “fire” their owned product and “hire” their new product. This style of interview takes some nuance and skill to get at the real reasons customers hire/fire products. That said, it’s rare that you’ll see a correlation rate of 100% (meaning everyone hires/fires a product for the same reasons). So, it’ll usually become a prioritization exercise; where a few features or aspects of the product heavily influence a purchasing decision. These are the aspects you should focus on making 10X better.

Will this really result in a 10X better product? The term “better” is a subjective term, so, an improved product may be 10X better for some and less-so for others. Any change to a product could result in a loss of customers but understanding the forces at play, and knowing how to listen to your customers, is a great way to mitigate that risk.

This is why we’re able to build products customers really like and are willing to “hire”. Many shops talk about building products customers love; at Hostile Sheep we’re doing it all the time. Not only that, we don’t claim to have magical abilities to create desirable products. We’re an evidence-based shop with the skillset to uncover why customers would buy a product and build out an experience that offers customers a 10X better product than the competition.

Have you tried to build a 10X better product? How did you determine if it was actually 10X better?