Designing Products for the (Long-Term) Customer Lifecycle

The ten-year anniversary of the Apple iPod and the recent release of the Kindle Fire have me thinking about how product design can help to create loyalty and to generate customer revenue over time.

The iPod was a great innovation in product design – an elegant simplification of the user interface for music players that made it enjoyable to use a portable player. But its success was linked to the iTunes Store, which extended the usefulness of the device by providing convenient access to downloadable content. In the Apple ecosphere, the content provided by the store spurred sales of the devices (iPod, iPod Touch, IPhone, and iPad) and was a decent profit center in its own right. The combination of well-designed products and the convenience of instant shopping has allowed Apple to be extraordinarily profitable by avoiding having to discount its products.

Contrast that with Amazon, whose Kindle line of e-readers has continued to evolve, most recently into the Kindle Fire, a 7-inch Android-based multimedia tablet, priced at $199, well below that of similar devices. In the days that followed its release, visitors to Amazon.com were greeted by an announcement that openly declared Amazon’s commitment to pricing its devices aggressively.

Why? It’s clear that Amazon sees these devices as a way to sell more of the digital content (books, music, apps, and video) that comprises a growing and important portion of its revenue. Amazon is pursuing what is sometimes called the razor-razorblade model: sell a product for a low price, and make money from the consumables that the product requires.

While it may be easier to develop convenient consumption for media devices – after all, the consumables are digital products, which are simple to buy and to deliver – I always wonder why other manufacturers don’t do more to try to retain more of customers’ spending over the lifecycle. I recognize that there are hurdles – in product design, communication, and distribution – but surely greater convenience can be built in.

Here are two things I thought about in the kitchen this morning that I would be willing to pay for:

• A refrigerator that would sense when the water filter needs replacing and that would order a new filter
• A coffee machine that would track how many cups I’ve brewed and order a new supply when needed

Now, I know the technology of “smart” appliances has been floated for years, and that the challenges in connecting devices to networks have been difficult to overcome. But millions, probably tens of millions, of U.S. households have wireless networks, on which ordinary consumers are connecting all sorts of gadgets. How difficult would it be to incorporate Wi-Fi Protected Setup into products, thus letting them connect across the Internet? Connected appliances will further grow the manufactures ability to convert consumers to consumable subscription services or extended services. The growth of this coveted long term customer revenue should be considered a part of overall product strategy, the same way Apple and Amazon factor in the value of their add-on services.

This is the thinking behind several initiatives that manufacturers have been talking about. For example, LG Electronics announced LG Thinq at the Consumer Electronics show in January, 2011, but while promising, the technology still delivers fairly trivial functionality (like letting me see whether a load of laundry is done from my smartphone) or still requires me to do a lot of the work (like making me manage refrigerator inventory manually).

Still, it’s a step in the right direction. But it will be important to move such functionality from simply being gee-whiz gadgetry that can be easily copied by a competitor to a service that introduces such a degree of convenience that I’ll be brand loyal and be willing to pay for the convenience.

Feel free to leave a comment on products that you would like to see deliver more service. Or if you think this is a future we’ll never see (or isn’t worth the effort, if we do), leave those comments, too.