HOW ADDING MORE VALUE CAN KILL YOUR PRODUCT

HOW ADDING MORE VALUE CAN KILL YOUR PRODUCT


So, in my last video about the 5 questions
you must ask to price a product, I mentioned that sometimes you can add too many features
to your product, resulting in a lower likelihood of purchase, a lower achievable price, or
even killing the product entirely. Even if all those features are awesome.
And it might sound counterintuitive, but it’s the truth. So, if you’d like to know more
about this surprising phenomenon, keep watching! You see, products can have three types of
features when it comes to value generation: “Yes!” features, are those behind the
reason why you buy the product. They are your must-haves. The ones that make you open up
the wallet, and gladly throw your money at the seller.
“No way!” features, are those that when present, not only don’t make you want to
spend more, but actually make you not want to buy the product at all.
And then, there are those “meh” features that are nice to have, but don’t really
convince you to pay more for the product. You might pay a little, but they’re not
the ones making you want to hand your money to the seller. And they’re a lot more dangerous
to have than most people realize. So, let’s take a closer look at each of
these types, and the impact they may have on your product. Let’s start by looking at the “yes”
features. So, these are the ones that sell your product And they don’t need much explanation. You
know what they are. But make sure that you understand which of
your product’s features are the “yes!” ones for each of your target customer segments.
You must pay attention to these features and put them at the center of your value communication
strategy. Remember that these are the ones that convince people to reach for their wallets
and buy your product. And a note of caution here: segmentation is
crucial when it comes to understanding the value of each feature.
What is a “yes!” feature to one customer segment, may be a “meh” for another, or
even a “no way!” for some. Always remember that some people don’t like chocolate! (weird
if you ask me, but it happens). So, if you have different customer segments,
each with a different set of “yes!” features, packing them all together in a product may
not be a good idea. You risk ending up with a product that doesn’t please any of those
segments. And as we’ll see below, having features that the customer isn’t excited
about, may be worse than not having them at all. But let’s move on to “no way” features.
In this case, the problem is that we’re developing the wrong features, or at least
we are targeting the wrong segment. So “no way” features can be dangerous.
But they don’t necessarily have to be. Because just as not everyone likes chocolate, not
everyone hates brussels sprouts. If some features that are likely to be “no
way!” ones for some of your customers, and they cannot be avoided, segmentation becomes
key. You need to find the right customer segment for your product, target those for whom these
now way features are at least acceptable and forget about all the others.
But you must make sure that at least one large enough segment finds that “no way!” features
at least acceptable. Otherwise, you may end up with a product that nobody will buy. Or, that some will, but not in enough numbers
to make it profitable. Unfortunately, “no way!” features become
a huge problem when you insist on trying to sell a product to the wrong segment. And this
happens a lot more often than it should. One episode I’ll never forget, happened
a few years ago while I was out shopping for a winter coat. So, I went into a store and I saw this beautiful
winter coat. The only problem was, that it had this furry collar that kind of looked
like fox fur. So, when the seller approached me and asked if I had any doubts, I asked
what the collar was made of, and she said really proudly
“Oh! It’s real fox fur!”. And I said: “oh, ok… I’m sorry but I
don’t buy real fur. Do you have something similar without fur on it?”.
To which she replied: “But it has a great price! This coat is a great deal!”
“Well… yes… it does have a great price, but… I really don’t want fur.”
“Don’t worry! The collar is detachable!” “Yeah… but I really don’t want to pay
for a dead fox.” And you might think that after this she showed
me a different coat. But no. She kept on insisting on selling me the same coat that I had already
said I was never going to buy! And she kept on insisting, until I had had
enough, and left the store. So… what went wrong here?
To begin, the sales assistant was clearly expecting the fox fur collar to be a “yes!”
feature for me. So much so, that when I stated that it was a “no way!”, she refused to
accept it. In other words, she misjudged the market segment I belonged to, and when I clarified
it, she ignored the information. Then, she tried to convince me that my “no
way!” feature was actually a “meh” one. The issue is, people often feel very strongly
about the “no way!” features. That’s why they are “no way” features. Otherwise
they’d be just “meh”. In those cases, trying to change perceptions about them is
a lost battle. After that, she tried to convince me that
the price was too good for me to fixate on a single feature I didn’t like. The issue
here was, price wasn’t the problem. So, it could never have been the solution. I mean…
I agreed that the price was great. To end, she failed to show me a product that
matched the characteristics I was asking for. Only she knows why. That’s what made the
whole situation so surreal. She had plenty of coats in the store and put all her energy
on selling one that I had already said that had a feature that was unacceptable to me. Finally, to add insult to injury, the feature
that was unacceptable to me, is highly valued among other customer segments. I know a lot
of people to whom she would have sold the coat easily. But she chose to spend her time
on someone who was never going to buy it. And that had been clear about it. Now… clearly, this situation was a bit surreal.
That’s what makes it unforgettable But… in milder forms, it happens to me quite frequently. And, in this case, we’re just talking about
one sale. But, if this lady was developing a product with this same attitude, I mean…
we can all see where that ship would go, can’t we? Anyway… let’s move on to the “Meh…”
features: the silent product killers And this is where things get trickier.
Having too many features that nobody is excited about can kill a product. And if you’re
thinking “But these aren’t “no way!” features, they shouldn’t be that harmful,
right?” Well, wrong. They are. You see, the more features the product has,
the harder it becomes to explain what it’s good for in a sentence. And, if you’re tempted
to promote features beyond the “yes!” ones, the value proposition may become weak,
and too confusing. So, if you’re bundling a large number of
features hoping that at least some will be “yes!” ones to a part of your potential
customers, you need to be very careful when promoting it to them.
You must adapt the product’s value messaging, to match what the customer segment you are
targeting at each point values most. Otherwise, you’ll be trying to sell a product based
on “meh” features that people don’t really care about. And won’t pay for. In a different situation, if the “meh”
features fall into that category not because they’re not something customers value, but
because when it comes to these features your product has a less than outstanding quality
vs. competitor products, if you communicate them, you risk having these less than great
features dilute the value of your awesome ones. Then, we must remember that developing and
producing features has a cost. Even digital products, that don’t really
have a cost for producing each additional unit sold, require time to develop additional
features. Time that could be invested elsewhere. So, if you are using resources to build features
that your customers aren’t willing to pay for, and that aren’t essential to be able
to make the sale, you are damaging your bottom line.
In extreme cases, you can even end up with a product that just to avoid losing money,
would have to be priced at a level at which nobody would buy it… because of its price. And (and this is the saddest one): By adding
more features to your product, you can be rewarded by your customers with… a lower
willingness to pay. And I’m not referring to mixing great features
with weaker ones, so that the weaker features dilute the perceived value of the great ones. Here, I’m really referring to the NUMBER
of features, not their quality. Having too many features, even if all of them are great,
can decrease the customer’s willingness to pay.
And why does this happen? Well, the issue here is that we are wired
to believe that a higher value comes at a higher cost. After all, you can’t get something
for nothing, right? So, when you see a product with a lot of features
you don’t need, the immediate reaction is: “I’m paying for stuff I don’t want. If the product only had the features I need,
it would be cheaper”. And, because we suck at assessing a product’s
value in absolute terms (we really need a reference to compare it to), even if the product
is a bargain, we may not be able to see it. We fixate on the features we think we are
paying for and don’t want. So, your own product’s price becomes an
anchor, in this case, to make us think that we could get a cheaper alternative. If only
we could buy just what we needed! And… down goes the willingness to pay. Oops… So, this means that the belief that the more
features, the higher the value, and thus, the higher the achievable price, is wrong.
It seems like a reasonable thing to assume, but in real life, it doesn’t necessarily
work. The thing is, if you add too many features
to a product, hoping that everyone will want it because of at least some of those features,
you may end up developing a product that is just waaaaaay too special (not to mention
expensive to produce). So, the next time you are thinking about what
to include in your product, keep this in mind. Make sure you don’t develop something that
is bound to be unprofitable, have a confusing value proposition, or create a perception
that it could be cheaper. And if you’d like to know what 3 things
must be at the core of your product development and product management strategies to make
sure that we create profitable products, make sure you don’t miss next week’s video. Anyway, do you think you may have made the
mistake of building too many features into one of your products? And had you ever thought
about how overdelivering on a product could decrease customers’ willingness to pay?
Let me know all about it in the comments! See you in the next video! Bye!

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