Recent research suggests that if consumers perceive that their freedom of choice is limited, they will often switch to a new product from one with which they are already familiar, (”Why Dominant Companies Are Vulnerable“, MIT Sloan Management Review,Winter 2012). The researchers, Kyle B. Murray and Gerald Häubl, explain that this phenomenon might be one important reason why market leaders such as Microsoft lose dominant market share over time. For example, consumers might opt to switch to the Firefox web browser and endure the cost of learning a new software simply to exercise their freedom of choice. Not only that, Murray and Häubl found that consumers might make the switch to the competitor even though the competing product is not as good.
The experiment consisted of websites with different interfaces that allowed users to search for new stories. Some participants were allowed to choose the website to use while others were not. Specifically Murray and Häubl found:
51% of consumers who had no choice in selecting the interface they learned to use switched to a competing website as soon as it was available. By contrast, among consumers who were free to choose the website they would learn to use, only 23% switched to the competitor, despite the fact that other users rated the competitor’s website superior on several dimensions (including ease of use, fun, efficiency and effectiveness)… [We] found that the market leader’s advantage in being able to install a set of nontransferable user skills in its customer base is offset by psychological reactance, a force that motivates people to act against perceived constraints on their freedom of choice.
Murray and Häubl go on to explain:
As people learn to use a particular electronic interface associated with information search or online shopping, for example, they often become locked in and develop extremely high levels of loyalty even when otherwise equivalent competitors are available; the cost of switching outweighs the benefit of using another product. However, our research indicates that the depth of loyalty weakens when consumers feel that their freedom to choose is restricted. Specifically, as people feel that their choice is constrained and that one interface dominates the market, they react against the constraint by turning away from the market leader’s offering, thereby subjecting themselves to the associated costs of switching.
What does this mean for product strategy? Strong-arming customers to stick with a particular product might actually alienate them rather than foster their loyalty.