Companies emphasize long-term relationships with existing customers while also experimenting with adding new features to a product or service that will attract new ones. A trio of researchers recently published a report in MIT Sloan Management Reviewexplaining that many businesses do not adequately understand how the features that attract new customers often differ from those that will retain existing ones.
Their research shows that adding too many features can actually decrease customer satisfaction with products after customers have used them. Although having more features increased initial choice, it had the opposite effect on customer retention — a factor these researchers label “feature fatigue.” The research led to these insights. The full article, entitled “Which Features Increase Customer Retention,” can be accessed at SloanReview.mit.edu (registration is required).
Consumers are likely to overestimate the likelihood that they will use features. Businesses should use caution when interpreting data from self-report methods such as surveys, interviews and focus groups suggesting that customers want more features.
Customers tend to be better at identifying features that will attract them than features that will retain them. Consumers consistently chose products with a high number of features, but these products left them less satisfied than similar products with fewer features. Moreover, some features do not provide discernable value to customers until they have used them. Thus, managers should consider using research methods suited to uncovering the boost in retention that some features provide, such as longitudinal usage studies and field studies, to avoid missing out on providing potentially profitable features.
Consider features as an investment in customer lifetime value. Offering features designed to retain customers may produce savings due to lower customer acquisition costs and reduced servicing costs. Clearly identifying the effects of features on customer retention will allow managers to evaluate features against other potential investments geared toward increasing customer lifetime value.
