Why do people end up buying or adopting a new innovation?
Is it because the new innovation is better than all the previous versions?
Is it because they are early adopters in a market?
Is it because they have compared the new innovation to everything else in the market?
It is because they perceive more value by having the innovation than by not having it.
Perceived value is how a potential consumer will evaluate whether it is worth investing time, money and effort into changing their current situation in order to get the alleged benefits of the new product or innovation.
This will include a number of aspects for each individual to consider, such as:
- “What are the supposed benefits, and what are they worth to me?”
- “Do I see myself as having the problems which the benefits should solve?”
- “Am I confident it will work?”
- “What is the monetary cost?”
- “What do I already have which addresses the problem? How much did I already invest in that? How much do I need to continue to invest?”
- “Do I know what effort I would need to put in to change if taking on the new innovation?”
- “Am I willing to undergo the hassle and effort of changing?”
- “What does it say about me if I start using this innovation?”
All of these will contribute to the unique Perceived Value Threshold of each individual.
Only if an innovation exceeds that threshold will that individual then consider investing in the new innovation. They perceive enough value to change and invest.
To complicate the matter further, the criteria ratio and threshold levels will be different for each individual. Some may perceive more value in lower cost, others in higher proven reliability, and others in uniqueness and innovativeness.
And the individual will not look at your innovation in a vacuum. They will always see it in the context of all of the competition in the market, their current solution, or even the fact that they are not using a solution at all.
So in order to increase the success rate of your potential innovations, consider what the perceived value criteria and thresholds for your potential customers may be, and find ways to increase the perceived value.