Retaining Customers Requires Innovation

November 13th, 2015

Retaining Customers Requires Innovation

If you run any kind of business, you need to be constantly improving your product or service. Or at least considering what your customers need—which includes how their needs may have changed over time.

By 1927, cars from Ford Motor Company accounted for more than half of all automobiles in the world. But it was also in the 1920s that Alfred Sloan at General Motors applied trends in the fashion world to the automotive world and introduced the annual model year change. Henry Ford was hesitant to make any changes to his two decade-old vehicle, and thus Ford began to lose market share.

And it should go without saying that it’s in your best interest to provide more features, not fewer, as you grow your product. There aren’t many customers who like waking up to find out that you’ve removed some of their favorite features or reduced the options they previously had.

So, imagine the shock when users of Microsoft’s online storage system OneDrive discovered that things would be changing. OneDrive is part of the package that comes with Office 365 Home and Personal, Microsoft’s cloud-based subscription SaaS offering. One of the benefits is that Office 365 users got unlimited storage on OneDrive. But Microsoft discovered that people were actually using it.

So what did they do?

They revoked the unlimited storage option from OneDrive users, dropping it down to 1TB. What’s more, they’re replacing the old 100GB and 200GB plans with a 50GB plan for $1.99 a month, and Free Storage has been cut from 15GB to 5GB.

This seems counter-intuitive when storage prices are dropping and larger storage options are becoming the norm. And especially when Microsoft has begun focusing its strategic efforts more solidly on on cloud-based services. The official explanation (that some people were storing insane amounts of material on it, thus ruining it for everyone) has not satisfied anyone, nor does it make complete sense from a business perspective.

If you want to make customers happy and earn new ones, it’s a good idea to innovate, not devolve. 

And if you’re unsure of how a fundamental change to a product or service will be received, just look at consumer behaviors and trends to get a sense—or (gasp!) ask some of your customers what they’d think of your changes. They’d be happy to tell you.

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