Playing To Win
Strategy for Generating Trial
I had a conversation last week with the Regional SVP of a luxury hotel chain in charge of opening a brand-new hotel in his region. We had an interesting discussion, and it was apparent to me that he wasn’t thinking entirely systematically about generating trial. It is such an important subject for every sort of startup, I thought I would dedicate my 45th Year II Playing to Win/Practitioner Insights (PTW/PI) piece to Strategy for Generating Trial: Vanquish Friction with a Promise. You can find the previous 97 PTW/PI here.
The Trial Challenge
The initial challenge for any new business offering, whether a new company, new product/service, new geography, new customer segment, or new whatever is generating trial. If you can’t generate substantial trial, you can’t build a business. It is the first rung on the proverbial ladder. If you generate trial, your offering has a chance of creating repeat purchase behavior, enabling you to build the business. But, of course, customers can’t repeat a behavior that they never initiated.
Generating trial is a challenge because of the steely grip of the status quo. It is said that possession is nine-tenths of the law. That estimate is probably low when it comes to the possession of the status quo.
Habit is the enabler of the status quo and underpins its unwavering grip. Humans are highly habit-driven. All the behavioral research over the past two decades has reinforced just how hard it is to change a habit. For every new business enterprise, there is currently a habit that involves not utilizing the offering of that business enterprise — otherwise it wouldn’t be new. If it is a new player in an existing competitive space, potential customers already have a habit of using one of the existing competitors. If it is an innovative new product, potential customers already have a habit of using an existing product — or perhaps a habit of using nothing at all.
The Friction Problem
The fundamental problem in generating trial for any sort of new offering is friction. The status quo benefits from low friction. The customer of the status quo offer knows and accepts its cost, knows how to purchase and use it, and knows what benefits it will provide. Even if the benefits aren’t great; they are well-understood. That all makes it dead easy to keep utilizing the status quo. The status quo may not be awesome: but it is largely frictionless.
For your new offering, potential customers are discouraged from trial by three types of friction. The first is monetary friction: uncertainty over the value of the offering relative to the cost of buying it. The value equation of the current offering is well-understood — and hence low friction. The value equation of the new is more speculative — hence high friction. The second is temporal friction, uncertainty over the time that will be required to learn how to buy and use the new offering. For the status quo, time required is known and, thanks to the learning curve, is low. For the new offering, the threat of it requiring far more time is high. The third is emotional friction, concern that this untried idea will turn out to be a bad one. The status quo is completely predictable, while the new is anything but predictable — high friction.
If the gradient between the low friction status quo and the high friction new offering is too steep, even potential customers who are intrigued with the new offering are unlikely to give it a try, resulting in yet another triumph of the status quo.
The Promise Antidote
The antidote for the friction problem is a promise. To generate meaningful trial, you need to make a promise to the potential customer that your offering will minimize the monetary, temporal, and emotional friction of your new offering, so much so that your new offering will be compelling relative to the status quo offering.
As mentioned, the status quo has a well-understood value equation in the mind of the customer. To overcome the monetary friction associated with the new offer, it must promise a dramatically improved value equation. As with strategy in general, it can promise similar value at significantly lower monetary cost, or much more value at similar monetary cost. Because customers don’t break habits for a lateral, it requires more than a similar monetary value equation to break a habit.
The classic way to deal with monetary friction is to make trial free. CPG companies historically put a sachet of shampoo or detergent in your Sunday newspaper making trial free and promising that you will like the value so much, when you buy, the price will be more than justified.
Free, of course, has become the staple reducer of monetary friction for Internet companies. Although here a distinction needs to be made. Facebook and Google aren’t offering free trial to customers. When the service is free to you forever, you are the product, not the customer. Facebook and Google need to generate trial in different ways for their real customers: the advertisers who pay them. Freemium models, like Dropbox, use free to induce trial so that when customers overcome monetary friction and understand the true value of the offering, they are willing to pay for the upgraded offering.
Strategy consulting firms have begun to use free aggressively to promote trial. They give out the initial study for free — and that study finds lots of things that need to be fixed, which generates the follow-on work that pays for the ‘free’ initial study. I don’t much like the cynical underbelly of the approach. But the approach illustrates an understanding of the monetary friction dynamics of trial.
Short of free, there are lots of ways to reduce monetary friction of trial. When P&G launched Swiffer in 1999, it dramatically subsidized the mop in order to induce trial of its system of electrostatic floor cleaning and create the demand for the disposable pads that the Swiffer utilizes. It promised enormous value in ease of cleaning compared to the status quo of traditional mop and bucket of soapy water and ensured that trial would be low in monetary friction. As a result, Swiffer joined P&G’s illustrious list of billion-dollar brands.
The entire SAAS movement is a manifestation of lowering monetary friction of trial. Instead of paying a huge upfront licensing fee for software that the customer can’t be entirely sure will work, the customer just pays a monthly SAAS fee, which it can stop doing if the trial doesn’t work out. That lower friction helped make Salesforce a giant.
Structuring your trial to promise low monetary friction is a key component of generating trial. It is a double challenge. There needs to be a promise that trial will have low monetary friction and so too will ongoing purchase. That is why, if your free sachet of shampoo didn’t deliver a noticeably superior experience, it wasn’t a successful trial.
Temporal friction represents the added time necessary to adopt the new offering. The new offering will have start-up costs and a learning curve to manage. Customers will be willing to try something new if you promise that the temporal friction will be acceptably low. If you don’t explicitly promise, they will fear temporal costs will be high.
Steve Jobs well understood temporal friction and went to great lengths to make the temporal cost of trial lower than that of competitors. In due course, Apple customers came to assume that any Apple product would be easy out-of-the-box.
Swiffer invested hugely in in-store demonstrations to speed the learning curve of customers and its ad copy promised easy adoption. Salesforce worked relentlessly on making temporal costs of trial and adoption much lower than SAP — which seemed to revel in how hard it was for clients to ‘fix themselves’ to be able to adopt its solution. Lego’s detailed instructions ensure that temporal costs of getting to the finished product are sufficiently low to stave off frustration.
I think that many online companies make a fundamental temporal friction mistake. They want to get all your personal information so that they can spam you forever and sell your details to third parties for extra revenue/profit. I can’t remember the number of times I have aborted trial because I didn’t want to fill in the laborious form for my ‘free trial.’ They would be better served to make it dead easy to sign up for the trial, then impress the hell out of customers, and ask for the form-filling later. They aren’t confident enough about the trial results, I fear.
Emotional friction is a huge challenge. Habit is strong because new things are often a disappointment. Plus, behavioral economics has taught us that loss aversion dominates our thinking. When we try something new and it turns out to be a failure, we focus on the pain of wasted money and time. This means that it is critical to make a promise that trial of your new offering won’t produce emotional friction.
Many of the online success stories understood and adopted this practice. Warby Parker promised to send you five pairs of glasses so that you could pick the one you liked best and return the other four with an easy send-back process (note the clever link to temporal friction reduction). When online mattress-in-a-box companies, like Tuft & Needle, Casper, and Purple, arrived on the scene, they gave customers 100 days to use their mattress before deciding with to keep it — reducing emotional friction to nearly zero.
In the car business, Kia created a breakthrough for its now highly successful US business by introducing the 10 year/100,000 mile warranty. It totally trumped the rest of the industry and eliminated the emotional friction regarding product quality, reliability and durability (QRD). Assessing QRD didn’t matter anymore because Kia would fix it for free if theirs wasn’t up to snuff.
If you can’t make a promise that mitigates emotional friction, good luck to you on adoption. What was the promise of Google Glass? It is cool. Great. Because they saw me as an ‘influencer,’ Google shipped me the product to try. I had really no idea what to use it for, it took forever to get set up, and when I got the damn thing working, I still couldn’t figure out any value. Free didn’t help — free in exchange for numerous frustrating hours and no value make for high emotional friction.
Trial is the start of everything. Without it, you don’t have a business. To generate trial, you need to make a promise that you will minimize monetary, temporal, and emotional friction. It has to cover all three because the weakest link of the chain will determine trial success. Make trial a bargain, easy, and worry-free, and you will build a business. But you must signal that three-part promise, otherwise the potential customer won’t be motivated to act, and the status quo will win. Put yourself in the potential customer’s position to better assess whether you have managed the monetary, temporal, and emotional friction.
Then you need to thoroughly project your promise to your target customers. For a new offering, the biggest problem is not customers who think you suck; it is customers who don’t know you exist.
Finally, deliver on the promise. If you don’t, word of mouth will catch up to you fast in the modern world — as with Google Glass where when asked, ‘influencers’ like me responded a la John McEnroe, ‘you cannot be serious.’ If you can’t deliver on your promise, don’t waste your time on launching in the first place