Beating the Sunk Cost Trap
How smart positioning helps you cut unnecessary features.
When you're building and updating products, it's easy to fall into a tricky trap known as the sunk cost fallacy. This happens when we keep pouring time and money into a feature just because we've already spent a lot on it, not because it’s really helping the product. It’s like refusing to throw out a lumpy old sofa just because it was expensive back in the day. Smart product positioning can help you cut through the clutter and make better choices about what to keep and what to let go.
What’s This Sunk Cost Thing Anyway?
Sunk cost fallacy is when you keep spending money on something that’s not giving you much back, just because you already spent a bunch. It’s like finishing a bad movie just because you’ve already watched an hour, or holding onto jackets you don’t wear but can’t let go of. Instead of clinging to these features because of past costs, we should focus on what will bring us value in the future.
A Tale of Tough Decisions
Consider this story from my previous role: we had a feature that was supposed to outdo a similar one from a big competitor, designed to give users a significantly better experience. Despite numerous experiments and loads of effort, adoption just wasn’t happening. It turned out, our ideal customers barely cared about our competitor’s, let alone our feature. Trying to push this feature was like trying to sell hairdryers to bald gentlemen.
The tough decision? Pull the plug. It was a classic sunk cost scenario — hard to let go, but necessary. Once we realigned our efforts towards truly differentiating our product based on what our ideal customers actually needed, and not what our competitors were doing, everything clicked. It made things much simpler for our team, our product, and most importantly, our customers.
Using Positioning to Fight Off Sunk Costs
Positioning is all about figuring out where your product fits in the market and why it rocks for your customers. It helps you see clearly which features are really making your product shine and which ones are just hanging around taking up space.
Steps to Use Positioning to Your Advantage
Check Your Product Vision: Start by remembering what your product is all about and who it’s for. Have these things changed? Has our Ideal Customer Profile (ICP) changed? This helps you stay in tune with what your users actually need now.
Do Your Homework: Fresh market research can show you what features your customers love and which ones they could live without. This keeps your decisions based on solid facts, not just gut feelings, or competition panic.
Look at How People Use Your Product: Data on which features get the most and least love from your users can guide you on what to axe.
Talk to the Team: Get insights from people in different parts of your company like marketing, sales, and customer service. They can tell you which features really click with customers and help meet your business goals.
Make Choices Based on What Fits: Use all this info to decide which features to drop. Focus on what will help your product do better going forward, not what’s already been done.
Telling Everyone What’s Up
When you decide to cut features, be open about why you’re doing it with everyone involved, from your team to your customers. Explain how these changes will make the product better. This way, everyone’s on the same page, and it shows you’re thoughtful and proactive about improving the product.
Wrap-Up
Positioning isn’t just for selling; it’s a roadmap for making your product the best it can be. By focusing on what makes your product unique and valuable, you can smartly choose which old features to drop and move past the sunk cost trap. This keeps your product fresh, relevant, and ready to win in the market
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