Learning

I've recently been thinking about starting a new business, and have been thinking specifically about how customers learn to do different things. It's my strong belief that consumers are largely creatures of habit. If you want to go buy groceries, you have a specific path that you follow. For some people, it means looking in your fridge, writing down a list, and heading off to Giant Eagle to pick up the things you need. For others, it means hopping in the car right away, going to Costco, stocking up, then heading to Shop'n'Save to pick up everything that they didn't have at Costco. For others still, it means heading to the local produce shop, picking up your vegetables, then going to the butcher and picking up your meat, then heading to CVS to pick up anything that was missed.

In short, most customers have their habit, and changing that habit to fit a new business model is an extremely complicated and difficult proposition. Luckily for us, however, it is possible to change the consumers habits that they have learned over many years. This was shown very recently by the dot-com boom. Granted, many dot-coms were here and gone so quickly that we don't even remember them at this time, but the rise of the dot-coms that have stuck around has totally shifted the way many companies do business. I will highlight a few of these.

Insurance
Shopping for term life insurance used to be a complicated process. You had to visit agents, have meetings with them, get individual quotes, and then compare them. This was time consuming, so most consumers simply went to one agent and took whatever price they were told. Here's the thing, though. A $50,000, 10-year term policy from Nationwide is exactly identical to a $50,000, 10-year term policy from New York Life. Or Aflac. Or MetLife. So this was an issue. Customers had virtually no way to compare price, which should be the main factor in their decision, on identical "commodity" products. This is where the internet changed everything. The internet brought about websites that brought together pricing information from all of the major insurers, and forced them to start competing on price in order to get business. This reduced the price of life insurance dramatically, and gave consumers a greater ability to be well informed about their purchases.

A similar effect has been seen in a number of other insurance markets, and in markets for cars and many other products. Now, comparing prices on almost any product is simple.

Online Shopping
Most people traditionally made large purchases in "Big Box" stores such as Sears. Teaching customers to start making purchases online, using their credit cards, and allowing that merchandise to be delivered directly to their house, was a large learning process that had to completely change the way people thought about shopping. There were many obstacles, such as confusing ordering processes and the perceived insecurity of using a credit card online. After combating these hurdles, though, people found online shopping to be a useful, convenient way to get many of the things they normally had to go to the store to buy. While this was a process that took some time for customers to learn and become comfortable with, the online shopping world is now growing larger every day and will become more and more pervasive in the future.