estimates for the two brands were very similar to the
ROI results for the feature’s actual implementation.
Implications of Our Findings
As companies place more emphasis on long-term relationships with customers, they should also attempt to
understand the role features play in retaining customers. Many companies don’t just care about attracting
new customers; they also think about lifetime customer
value. And while subscription-based services may try
to woo new customers with free trials, they need to
convert as many as possible to become repeat users.
Thus, the ability to distinguish between features that
attract new customers and those that retain customers
is critical. Our research uncovers a few key insights:
Consumers are likely to overestimate the likelihood that they will use features. In our work
with the hotel company, we observed a pattern of
overestimating use of the three features we examined closely as well as most of the other 47 features
for which we measured expected and actual use.
Executives should accordingly 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. In our work with electronic products,
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. For
example, our research with the hotel company
showed that the effects of both bottled water and fit-
ness center features on initial choice were much
smaller than their effects on repurchase. Thus, man-
agers 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. Managers have developed many tools
for increasing customer lifetime value, such as loyalty
programs and sophisticated customer relationship
management systems. Like other initiatives that increase customer retention, 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.
Putting Our Insights Into Practice
Given what we have learned, companies shouldn’t
rush to add new features that seem promising. Rather,
they should begin by asking a series of questions:
Why should I add this feature to my offering?
When considering a new feature, think about whether
the feature is likely to attract new customers, retain ex-
isting customers, or both. If your company’s proportion
of new customers is high and is likely to remain high (as
is the case of distinctive tourist destinations that many
customers only visit once), features that are likely to
attract new customers should receive priority. In con-
trast, if a large proportion of business is from repeat
customers or if your company would like to increase
its proportion of repeat customers, more attention
should be given to features that retain customers.
Do my competitors offer the feature? Feature fatigue and amenity creep often result from managers
wanting to match competitive offerings. Although
benchmarking is important, it is more important
with features designed to attract customers (
including getting them to switch from competitors) than
with features designed to retain customers. When
customers are unfamiliar with your brand, they may
conduct comparisons of features across brands. But
When considering a new feature, think about whether the
feature is likely to attract new customers, retain existing
customers, or both.