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Benefit Buffet Fallicy

14.04.2016

When launching a product (especially when you are a small startup), there is a common mistake that most everyone makes the first time around: benefit inflation.  The problem arrises when someone thinks of a small Buffetchange that could be made to the product that might appeal to a particular group of users.  As they add more and more features/benefits, the hope is that the product will appeal to a larger and larger audience and better justify its price point.  The reality is that additional features/benefits do the opposite: they restrict your market and reduce the perceived value of an otherwise good product.  To explain how this happens and how to avoid it, we will make a few mind experiments:

Let’s imagine I open an all-you-can eat buffet.  Most of what I offer is not prepared the way you like it or it is foods you don’t like.  The Lasagna, however, is one of the best you have tasted in any restaurant.  How do you describe my restaurant to others?  Likely, you describe it as a terrible restaurant with great lasagna.  (Not the kind of endorsement that is likely to get me too many new customers) From my perspective, I see that I am not getting enough customers and notice that the Thai and Chinese restaurants nearby are doing ok, so I decide to add even more items to my buffet in hopes of attracting incremental customers.  However, from your perspective, have I made the dining experience better or worse? No matter how cheap my buffet is, you will always feel like you are paying for things you are not using.  The more I add, the worse you feel about the value you are getting.

Likewise, let’s imagine that you prefer vacations by car but have just won a once-in-a-lifetime trip for you and your partner to go to Figi island in the Pacific.  You need a guide book for your trip.  On Amazon, there is a 35page book on Figi and another book with roughly the same number of pages on Figi but it is part of a 900 page book on all of Asia Pacific.  Assuming neither is from a company you know, how much cheaper would the 900 page book need to be before it would be your selection?  In your mind, there is no way that they can give you Australia, Japan, and China, etc without it affecting quality of the Figi section.

What this means is that each feature/benefit you expose to your potential customer is a potential source of reducing the otherwise great product’s perceived value.  Additionally, the only person prepared to pay the ‘fair’ price for our 900 page book is someone who wants to go to 4 or more destinations in Asia-Pacific.  That group is far smaller than those who want to go to a single location.

Another way to think of this problem is from a traditional sales perspective.  “Need” is often defined in sales as a customer problem that is disproportionately big.  Needs are what trigger urgency, justify pricing, and basically answer the questions of “can’t we just put this off for another year?”.  Most sales opportunities have zero or one need.  The other “problems” (not big enough to be needs) perhaps help make the deal feel even better in a small way.  Non-problems, however, are what the customer throws back at the salesman to push the price down or justify whey they will walk away at the set price.

If you are entering with a new product into a market where you are otherwise unknown, your best strategy is to focus on one Benefit (two if you must).  This will allow you to target your customer (MVS) better and maintain the highest value.  Later, as you establish your product in the market, you can expand your reach.  For many companies, this means you will need a strong product owner that can say no.  Democracy is great for identifying new ideas, but product launch requires a dictator and a brutal focus on THE one benefit.

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