Overcoming Customer Resistance to Innovation, by Paul Sloane

Sometimes the biggest resistance to innovation comes from the person who should benefit most from it – the customer. Customers can be very conservative. When you come along with an unorthodox new product or service they are often initially unimpressed. Why should the buyer take a risk with your unproven new gismo? He knows that new products often have bugs and he does not want to be the guinea pig on which you experiment. He is familiar with the current method – why should he change?

Who would want to be the first customer for a fax machine or indeed for a telephone? It seems ridiculous now but selling the first few telephones must have been really difficult. And how about laser eye treatment? How would you find the first person to try it when there was a safe alternative in a pair of spectacles?

This is understandable and needs careful handling. Your sales people will doubtless be adept at explaining the benefits of your new products but the customer is right to be sceptical. You need to find ways to reassure him and to mitigate his risk.

At the same time you need early adopters so that you can get some traction in the market, customer feedback and positive references for your innovation. So acknowledge the client’s concerns and put offers in place to allay them. You cannot just use your standard terms and conditions for a radical new product. You have to be innovative in your sales approach too. For example you could:

  • Allow them a free trial of the new product
  • Continue to provide the old service so that they can go back to it at any time.
  • Offer a money back guarantee.
  • Provide a special service level that gives them immediate access to your top support experts.
  • Agree joint service level agreements.
  • Stress the payback and benefits they will receive and even make payment dependent on their being achieved.
  • Promise to arrange a positive PR result for them in the trade press if the trial succeeds.

Above all you must choose the right early customers. Some people love new technology and others hate it. Select the best early adopters from among your top clients. Appeal to their sense of pioneering adventure. Stress the prestige that goes with early success – for both of you. Make sure that they share in the recognition of a successful launch. If all goes well then ask them for a testimonial. You can help them be seen as an industry leader in trade journal stories and at conferences. You are in it together and it must be a win/win for both parties.

Significance to our readers: No World Borders specializes in unlocking the value in your organization by facilitating change and maximizing innovation that develops value.  We have helped early stage ventures launch new products, and enterprise companies transform process.  Paul Sloan, our advisor is available for speaking engagements.  Contact us for more details.

Paul Sloane is the founder of Destination Innovation. He writes and speaks on lateral thinking and innovation. His book, The Innovative Leader, is published by Kogan-Page.

Michael F. Arrigo

Michael Arrigo brings four decades of experience in the software, financial services, and healthcare industries. In 2000, Mr. Arrigo founded No World Borders, a healthcare data, regulations, and economics firm with clients in the pharmaceutical, medical device, hospital, surgical center, physician group, diagnostic imaging, genetic testing, health IT, and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations who provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and medical billing, fraud damages, as well as electronic health record software for the U.S. Department of Justice. He has valued well over $1 billion in medical billings in personal injury liens, medical malpractice, insurance fraud cases. The U.S. Court of Appeals considered Mr. Arrigo's opinion regarding loss amounts, vacating, and remanding sentencing in a fraud case. Mr. Arrigo provides expertise in the Medicare Secondary Payer Act, Medicare LCDs, anti-trust litigation, medical intellectual property and trade secrets, HIPAA privacy, health care electronic claim data Standards, physician compensation, Anti-Kickback Statute, Stark law, the Affordable Care Act, False Claims Act, and the ARRA HITECH Act. Arrigo advises investors on merger and acquisition (M&A) diligence in the healthcare industry on transactions cumulatively valued at over $1 billion. Mr. Arrigo spent over ten years in Silicon Valley software firms in roles from Product Manager to CEO. He was product manager for a leading-edge database technology joint venture that became commercialized as Microsoft SQL Server, Vice President of Marketing for a software company when it grew from under $2 million in revenue to a $50 million acquisition by a company now merged into Cincom Systems, hired by private equity investors to serve as Vice President of Marketing for a secure email software company until its acquisition and multi $million investor exit by a company now merged into Axway Software SA (Euronext: AXW.PA), and CEO of one of the first cloud-based billing software companies, licensing its technology to Citrix Systems (NASDAQ: CTXS). Later, before entering the healthcare industry, he joined Fortune 500 company Fidelity National Financial (NYSE: FNF) as a Vice President, overseeing eCommerce solutions for the mortgage banking industry. While serving as a Vice President at Fortune 500 company First American Financial (NYSE: FAF), he oversaw eCommerce and regulatory compliance technology initiatives for top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls IT audit for the company, supporting Section 404 of the Sarbanes Oxley Act. Mr. Arrigo earned his Bachelor of Science in Business Administration from the University of Southern California. Before that, he studied computer science, statistics, and economics at the University of California, Irvine. His post-graduate studies include biomedical ethics at Harvard Medical School, biomedical informatics at Stanford Medical School, blockchain and crypto economics at the Massachusetts Institute of Technology, and training as a Certified Professional Medical Auditor (CPMA). Mr. Arrigo is qualified to serve as a director due to his experience in healthcare data, regulations, and economics, his leadership roles in software and financial services public companies, and his healthcare M&A diligence and public company regulatory experience. Mr. Arrigo is quoted in The Wall Street Journal, Fortune Magazine, Kaiser Health News, Consumer Affairs, National Public Radio (NPR), NBC News Houston, USA Today / Milwaukee Journal Sentinel, Medical Economics, Capitol ForumThe Daily Beast, the Lund Report, Inside Higher Ed, New England Psychologist, and other press and media outlets. He authored a peer-reviewed article regarding clinical documentation quality to support accurate medical coding, billing, and good patient care, published by Healthcare Financial Management Association (HFMA) and is published in Healthcare IT News.

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