How People Think About Buying New Products

Why do consumers resist changing from their current products and services, even when the new solution presented is superior? Answering this question requires understanding that emotions drive consumer decision making. Too many marketers ignore this fact: For example, market researchers commonly ask people whether they’d be open to switching to a new solution in the future. But rational speculations regarding future actions rarely match consumers’ actual decisions, which are colored by emotions – especially fear. 

“Switching solutions is more emotional than logical and rational. Consumers are not even aware of the emotional and mental processes at work influencing their decisions.”

People generally weight potential risk more than potential reward. Marketers can therefore assume that an opportunity to switch solutions – say, from an existing password management system to a new one – feels risky to the average consumer. This is why marketing strategies which focus solely on an offer’s pluses underperform: They fail to help consumers overcome their “loss aversion” and “status quo bias.”

“Marketing a new solution with a focus on the features and benefits misses the behavioral dynamics of how consumers evaluate benefits.”

The “Switch Mountain Hypothesis” suggests that consumers’ decisions to switch solutions are like getting them to climb from one outlook on a mountain to another higher up. When a consumer is considering whether to climb, they make that decision from a particular “reference point”  – that is, their existing solution. Because consumers worry about risk and tend to assign more value to things they already possess, the initial comparison between the new and existing solutions is advantageous for the status quo. 

“Consumer decision making for solution switching starts from a reference point (the current solution) and evaluates the gains and losses from that point. Losses are more painful than gains so they are weighted more than twice as heavily in the consumer’s mind. Design and market for this.”

However, marketers can slowly shift consumers’ perspectives from their initial reference point to a position where the new solution appears preferable. As crucial events occur in a consumer’s life – for example, a friend becomes a hacking victim – switching to a password management service which promises a better solution begins to appear less risky. Marketers can leverage these events by presenting the new solution as better and easier (“acquisition utility”), by providing additional information about the problem that the new solution solves (“availability heuristic”) and by encouraging the consumer to feel that by switching they will be less at risk from the problem than others (“optimism bias”).