What Pandora taught me about personalization and switching costs

Michael G. Cohen
Mar 19, 2016 · 2 min read

I used to work at a company that had a US IP address and while there I started using Pandora as my streaming music service of choice. Only after leaving that role did I realize the lesson Pandora taught me about relevance, personalization and switching costs.

Let me explain.

Pandora is actually a great lesson in how to show your customers you listen and learn about them. When you start a personal station the first thing you are asked to do is pick some artists you like. This is not dissimilar to companies asking what categories of product or what types of alerts you want but Pandora immediately shows you they listened because the first song you hear on your station is from one of the artist you told them you liked. That may seem obvious but it makes the user much more likely to tell them that the next song is either great (👍) or is not (👎) and that allows them to build your profile and hone your station.

So what?

Well after 3+ years of listening and thumbing up or down I decided to take a role at a different company and lost my access to Pandora (we cannot access the service in Canada) and it was then that I had the aha moment. I was lost without Pandora not because there were no other options but because I didn’t want to have to spend the time to teach someone else about my tastes and preferences. The switching costs felt incredibly high and that’s the lesson for companies and marketers. Spend the time to listen to your customers, reflect back to them that you listened and they’ll tell you more. Once they do your job is to have the system in place to keep listening and personalizing their experience. It sounds simple but relevance is more important than reach and with some forethought and the right machine learning in place you too should be able to create Pandora like switching costs in your industry.

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