
Customers You Do Not Want - prlin
http://insight.kellogg.northwestern.edu/article/the_customers_you_do_not_want/
======
te_platt
This was not what I expected. I thought it would be about toxic customers.
It's actually about a set of very good customers who happen to like products
that are doomed to failure. The idea is that some people have a distinct out
of the mainstream taste. Kind of like when I tell my daughter I like her
outfit so of course she won't wear it again.

~~~
judk
It's really about a basic misunderstandingof statistics.

Some people prefer to buy novel products. Most novel products fail to get
popular. Therefore, there is a correlation. There was no finding that such
customer prefer _unpopular_ new products over _popular_ ones.

~~~
PeterisP
I interpret the article as a finding that there exists some "bland/mainstream
vs novel/unique" scale that actually is objective - i.e., corresponds to
measurable and consistent preferences for groups of customers.

There actually _was_ a finding that the analyzed customers historically
preferred novel-flavor products over mainstream ones. This means, that if
those customers really like your product, then that's some evidence that it
may fall into the same group as the other niche products

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amirmc
Two things strike me.

1\. Are these people just general 'early adopters'? Anyone who's willing to
try new stuff is going to use products that ultimately fail in the
marketplace. This is the whole 'Crossing the Chasm' story.

2\. Are these people merely flitting from product to product? In other words,
they drink the new Cola A now but will immediately switch to even newer Cola B
tomorrow. Thus, they're not really reliable long-term customers. The article
gives the impression that this is not case but it's not that clear to me.

In any case, this comes down to a question of market size. If that niche is
big enough, there may still be a profitable business in it. For example, how
many people do you think need a service that makes Bingo Cards?

~~~
ephemeralgomi
From the article: "The worst of the harbingers? Repeat customers, those with a
tendency to purchase a product like Diet Crystal Pepsi not just once, but over
and over again. These customers really, really like the products that end up
failing. Harbingers with a history of making four or more repeat purchases of
a failed product are nearly twice as likely as other customers to buy another
product that fails."

So no, it doesn't seem like it's as simple as early adopters or novelty-
seekers.

~~~
ronaldx
The stats (as they are quoted here) are just exactly what you would expect to
see if you looked at early adopters.

New products typically fail. If you are a consistent early adopter, you will
buy a lot more failures than someone who sticks to tried-and-tested products.

If anything, "twice as many" is lower than I would have thought. In my
opinion, this suggests that early adopters are rare - that there isn't a
novelty-seeker type of person who goes around trying new products for the sake
of it.

What they should be measuring is slightly different than this. If these people
buy a new product, does that make the product more likely to fail than it
would otherwise? (Given that the product is likely to fail anyway)

As I've understood, this stricter statistic is not seen in the article. Even
if we could identify people like that, I would put those people into the
category of "temporarily unlucky early adopters" and would not expect them to
have predictive power.

With that in mind, the conclusion of the article seems nonsensical.

~~~
PeterisP
The conclusion is that if you make a new product, you should ignore data from
"typical early adopters" but look at "boring people with strong habits".

If people who ordinarily don't try new stuff are buying your product, then it
will be a mainstream success.

If they don't, then noone cares if the consistent early adopters think that
your product is great.

------
rgbrgb
This is pretty interesting but may not be so relevant in the context of
digital products or doing a startup. Yes, we want our products to be mass
market from day 1 but if your low-capital 2-person company can get traction in
a 1% niche market then you'll have money to focus, retarget, and grow to 2%,
4%, 8%. Pepsi, on the other hand, needs to pay for inventory, shelf space,
marketing, and distribution so their profit margins probably depend on mass
market adoption. They're also in a position where it's more profitable for
them to just axe less popular products and try again rather than steal shelf-
space and mindshare from their big sellers.

~~~
cortesoft
Yes, I had a similar issue with this article; sometimes, appealing to a niche
market IS a path to success. There are countless successful business that
cater to smaller market segments.

~~~
fleitz
The article is about product development in retail. If you're not planning on
selling your product via a major retailer then this article doesn't apply to
you.

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slyall
I wonder if this works for TV shows.

I know plenty of people who like all/most of Firefly, The Sarah Connor
Chronicles, Dollhouse, Defying Gravity, Almost Human, etc.

All shows that got cancelled after a season or two because they failed to
attract a wide enough audience.

~~~
bsder
SciFi is niche to begin with. I can think of _very_ few SciFi shows that ever
achieved mainstream appeal (call it 3+ seasons).

Of course, when you think about it, what's the percentage of normal shows that
actually get 3+ seasons?

The difference may not be the percentage but the rabidity of the fanbase.

------
vacri
"Harbinger of failure" seems to be a misnomer, given that the article does
show any way to pragmatically identify these users - the only way seems to be
with the benefit of hindsight. A 'harbinger' requires predictive value, not
post-mortem value.

Edit: To be a bit clearer, they do mention a sort of weeding out of users, but
this requires deciding beforehand what 'mainstream' is and then (effectively)
looking for confirmation bias.

~~~
stan_rogers
This seems, at least, to be aimed primarily at market research professionals
at the sort of level who would be able to access things like loyalty program
data and so forth to provide an initial pool for focus groups, etc. The advice
is predictive in the sense that it says "eliminate people whose purchase
patterns have consistently exhibited product loyalty to failed products in the
past from the pool", and that the people who insisted that "butterscotch
sardine supreme" would be a _killer_ flavour for potato chips in your last
market test, losing you millions (since your hundred positive testers were the
_entire_ market for the flavour), probably shouldn't be part of your next
market test.

Product tests are a lot like private software betas - people who actively
participate and provide more than the minimum feedback tend to be called on
again and again. The advice here is to stop calling on people who tell you to
do stupid things.

~~~
vacri
Your explanation makes _far_ more sense than the article: when you're looking
at your pool of informants, weed out the ones with a track recording of
previously liking failed products. Basically you're selecting for selective
fitness. The article doesn't put this very clearly at all.

~~~
ams6110
I felt the same way. I basically got that point from the article, but there's
a lot of verbiage to weed through. Could have been much more concise and
direct.

------
rahimnathwani
It's worth skimming the (still incomplete) paper rather than just reading the
article. The article misses a key point made in the paper: repeat purchases by
'harbingers' was found to be an informative feature, in predicting whether or
not a new product would succeed.

[http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2420600](http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2420600)

~~~
danieltillett
tl;dr but did they actually show that the 'harbingers' were predictive or were
the 'harbingers' just correlated with failure? It is really easy to find
correlation when you start trawling through a large dataset but which all
dissipate to nothing once you start using the correlations to make
predictions.

~~~
rahimnathwani
Predictive, not just correlated.

------
namuol
A grain of salt: these insights don't strike me as relevant if your market is
over-saturated (i.e. end-user mobile apps, web frameworks, etc).

Appealing to a niche is -- as far as I understood it -- a good way to stand
out in a "me too" marketplace.

Assuming the niche is large enough and isn't already satisfied by your
competition, the real challenge is retaining those niche customers.

------
RachelF
These are the customers that you do not want for a product with fixed costs
(like Pepsi).

For an web-based product, the customer you do not want is the free user who
uses up huge amounts of tech support time.

------
at-fates-hands
It seems to me yes they are niche customers, but also having ever changing
tastes in things. Not like early adopters, but will buy a unique product for
short time until they find the next unique product they like or get bored and
move on.

More like short attention spans more than anything. I mean, how long can
someone who's never had diet crystal Pepsi drink until they get bored with it?
Or until their friends stop asking them what it is their drinking and hop on
the next "cool" product coming to town.

------
jrochkind1
Sounds to me like they just analyzed a bunch of data and found that there were
some people, in that historical data set, who consistently bought products
that fail.

For this to be science, instead of just finding random correlations, they'd
have to take those people and see if they _continue_ to buy products that
fail.

Otherwise, sure, I have no doubt in any big enough data set, there will be
some people that happen to have done whatever you want to find. Doesn't mean
there's any predictive power in it.

------
dave_sullivan
I suppose the basic thesis is: given support by a potential prospect for a new
product, check what other products they have lent support to. If those
products are still around, great. If not, you might have a problem. Or more
succinctly: "You don't want people that buy failed products to buy your
product--and if they want to, you should change your product"?

I suppose I could believe this. But there's probably a lot of ways to
interpret that data. And it seems to be about CPGs (not that that makes it
worth more or less, just that CPGs have different dynamics than a lot of other
industries).

Parallels to software industry: fickle users that don't want to give you
negative feedback for fear of discouraging you (when in reality, they may be
saving you from blowing your life savings on an ill fated concept)? Be careful
with interpreting the results of customer development (or the CPG parallel--
focus groups) Certain types of early adopters should be avoided (how does this
square with Crossing the Chasm concepts?)

Maybe similar to how some people find themselves consistently in bad
relationships, some people find themselves buying products that are doomed to
fail time and time again? Perhaps they wonder why they can't just find a good
product that's willing to stick around for awhile...

------
paul_milovanov
The general idea is reasonable ("in product study, make sure your sample is
representative") but the recommendations are problematic.

Obviously if you just put a product in a store for a certain period of time,
only pay attention to the sales numbers, and then try to make claims about the
number of potential buyers in a larger population, you're going to have a bad
time. (hello selection bias)

But watching out specifically for people with niche preferences in some area
is not at all the answer. Barring some very strong data showing otherwise,
there's absolutely no reason to suppose that a person with niche movie tastes
also has unorthodox tastes in dish cleaning liquids. Now, of course, if you're
about to market a Swiffer-lookalike product, whether a certain study
participant likes Swiffer is an interesting variable to record. But then, you
probably don't need that study all that much in the first place compared to
someone who's about to bring to market a bold new product.

And of course this is just basic statistics -- do a good job randomizing your
sample, and pick sample size that's large enough for your desired confidence
interval.

~~~
paul_milovanov
Oh ok, there's a linked research paper and it's more nuanced. It might
actually have some data to support their claim that if a buyer has kinky
tastes in toothbrushes, it also spreads to toilet paper.

------
jameshart
I think there's a lesson here that might be applicable to, say, JavaScript
frameworks, devops tools, or maybe even programming languages. If you're
building a new JavaScript library, and you're getting lots of positive
feedback from people who have tried everything except jQuery, you're probably
not creating something with mass appeal...

------
pyk
My guess is that the "harbingers of failure" are just anti-popular-item folk.
They like an item because other people (read: the huge market a company
actually wants) don't like it, or because it's "different." Not because it has
actual inherent new value, or actually tastes good. Perfect setup for failure
-- tons of people dislike your product, and the only ones who like it are the
ones who like it because others don't. Cases in point my guess are Crystal
Pepsi (as the article uses), another is Zima[1], a third is Orbitz[2].

[1] [http://en.wikipedia.org/wiki/Zima](http://en.wikipedia.org/wiki/Zima)

[2]
[http://en.wikipedia.org/wiki/Orbitz_(soft_drink)](http://en.wikipedia.org/wiki/Orbitz_\(soft_drink\))

~~~
murf13001230
I hate that they and you use Pepsi Crystal as an example. I loved it!!!

------
joezydeco
_" These customers do not seem to be shopping at odd hours, and they are not
any more likely to pay full price for the products, both of which might
indicate that they are less alert or savvy than other customers."_

Did anyone else read that as "too drunk or stoned to know the difference"?

------
epo
Fairly trivial article which fails to state its primary assumption: it is
talking about mass-market FMCG (fast moving consumer goods) which want
immediate success. This is why we have tens of varieties of instant coffee but
no 'cold concentrate' type liquid coffees.

Claiming that niche consumers are the kiss of death is obviously news to many
makers of luxury goods (and companies like Apple who do not cultivate mass
markets but end up creating them because the niche users ended up being
right).

------
sireat
On the other hand such products could sustain a lifestyle business with a sort
of 1000 True Fans model.

Obviously for a mega corp stocking shelves at a B&M store such niches are not
going to be viable, but for e-tailer that should be less of an obstacle.

------
porter
Let's be clear: this is about bringing mass-market products to market, not
niche products like most people on HN are building. This article considers a
niche product to be a failure.

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kevando
If this is true, seems like a good idea to go through everyone that backed my
Indiegogo and check on the status of the other projects they funded...

------
EGreg
Hmm where is the data behind this?

~~~
sureshv
The original research paper is linked at the bottom:

[http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2420600](http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2420600)

------
lurkinggrue
This explains why many products I love go away. Dammit.

------
GFK_of_xmaspast
I was promised a long tail.

~~~
mantrax5
Here: [http://www.curiositiesbydickens.com/wp-
content/uploads/cat-w...](http://www.curiositiesbydickens.com/wp-
content/uploads/cat-with-long-tail-feathers1.jpg)

The idea that the Internet will bring the long tail of products and services
is bullshit and shows scant recognition of how economics works.

If anything, the Internet will serve to cut our existing tail shorter.

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mantrax5
> Just as positive feedback from lead users signals that a new product will
> likely succeed, positive feedback from harbingers signals that a new product
> is likely to fail.

Straight from the "creepy similarities" department:

[https://news.ycombinator.com/item?id=7706539](https://news.ycombinator.com/item?id=7706539)

Vocal geek minority supporting your product for righteous reasons means your
product will fail.

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kimonos
Nice post!

