(click thumbnail)The effect of tech features on profits. Source: R.T. Rust, D.V. Thomson & R.W. Hamilton, University of Maryland Robert H. Smith School of Business, 2006Consumers are fickle, and electronics shoppers are poster children for that problem your mom warned you about: "Your eyes are bigger than your stomach." Now, University of Maryland business school researchers have quantified the problem of "feature fatigue," validating that high-tech gizmos have too many bells and whistles for their own good.
More significantly, the studies show that consumers may think they want dozens of features in their new digital devices, but eventually resent paying too much for functions they cannot use or do not even know are available.
Independent industry reports on the "retail return rate" of high-tech gear-sometimes as high as 50 percent-further supports the feature fatigue study, which was conducted by Professor Roland Rust, Rebecca Hamilton and Debora Viana Thompson of the Robert H. Smith School of Business at the University of Maryland.
The research found that customers annoyed by feature creep take their business elsewhere when they replace equipment. Moreover, unhappy customers vocally complain about the company to other consumers.
WHIZ BANG EFFECT
In their research summary "Defeating Feature Fatigue," published in the Harvard Business Review early this year, the marketing academics skewer over-complicated consumer technology ranging from Mercedes-Benz cars to dual-firm mattresses. But the focus of their research is on home electronic devices-especially digital video and audio recorders and players-that frustrate consumers.
"As faster and faster chips offer ever-increasing memory capacity at lower cost, engineers can't resist the temptation to equip existing electronic components with more functions," Rust and his colleagues write.
They acknowledge that software-based features incur virtually no incremental costs, hence increasing profitability "is purely a matter of increasing revenue."
Rust and Hamilton were even more specific when we chatted about their study. Rust pointed out that new video devices are typically sold on the basis that they contain a couple dozen functions. Ultimately, he noted, consumers use only about seven.
Advertising and in-store spiels convince customers that they want all the functionality-but when they get the products home, customers are satisfied with that useful handful of features.
As a result, digital customers feel ripped off by the avalanche of unused-or unusable-functions. By analyzing usage and purchase patterns, the Maryland team created a marketing/business model that demonstrates how to optimize the number of features.
Their formula is built on an equation R = C - D, in which R is incremental revenue from extra features that derives from two perceived effects: a capability bonus (C) and a usability penalty (D).
Chart 1 shows that adding features or functions generates maximum initial sales, but that curve (red) tapers off very quickly. In follow-up products (dotted line ), fewer features actually become more attractive.
The center curve, which reaches higher levels (i.e. a more favorable customer response), is the one that should be product makers' target, said Rust, who chairs the Smith School's marketing department and is executive director of the Center for Excellence in Service.
He concludes that this approach can help companies "discover the optimal number of features" that accommodate financial requirements and customer loyalty.
PERPLEXED YOUTH
One aspect of the Maryland study's methodology is particularly disconcerting. Like many academic studies, the professors used the handiest consumers they could find-students.
That demographic potentially skewed the results to represent tech-savvy users. Nonetheless, the finding that this tech-tolerant, cadre of 20-somethings was frustrated by feature fatigue underscores the problem.
If they were turned off by too many bells and whistles, what does it mean for older, less competent consumers?
The electronics industry's continual mea culpas do little to reassure consumers about the ease of use of digital products. For several years at the January Consumer Electronics Show in Las Vegas, the chief executives of companies from Intel and Microsoft to Panasonic and Sony have publicly admitted their products are too complicated. (Notably, this past year that verbal self-flagellation disappeared, possibly a multilateral decision to stop publicizing the problem.)
Fee-based installation for new digital TV products and services is also a reminder that these devices are still very complicated. One of my favorite personal experiences was at a tradeshow when I asked an exhibitor how many buttons were on the TV remote control she had been using for three days.
She said "17"-but I had already counted the buttons and knew there were 48. Neither of us understood how to use at least two-thirds of those buttons, or knew precisely what services could be available if we clicked the right connections.
The Maryland researchers compliment the Apple iPod as a product that does one thing very well, which raises questions about impending complexity as video and phone features may be added to that simple device.
The vaunted friendliness touted by so many electronics makers can be overpowered as feature creep makes easy products downright surly.
For example, Rust and his colleagues point out that Mercedes-Benz packed some of its cars with so many electronic features that important parts began to malfunction and annoy drivers. The extra capabilities also made it more costly to test for failures. As a result, the carmaker eventually removed more than 600 electronic features from its vehicles, with relatively few consumer complaints.
"Too many companies today are endangering their brands, and their customer relationships, by adding feature upon feature to their products," the Maryland researchers conclude. "They are increasing product capability at the expense of product usability."
That is an incisive lesson as electronics makers expand the digital environment. The jokes about old VCRs that always flashed "12:00" become paltry in an era where customers cannot find multicast channels or services they think they are paying for but do not know which button to push.
After all, customers usually had another clock if they wanted to know what time it was (and were probably not using the VCR's time-shifting function, which was why the clock was there in the first place).
As the University of Maryland study affirms, "less" actually means a lot "more" for most viewers.
