If you are in the business of building products, especially ones that you’d like to make recurring revenues off of, you probably know what stickiness means. It basically means users of a product or service want to (or, have to) keep coming back to use your product .
They come back for multitudes of reasons — but mostly because the product has at least one feature that solves a problem they periodically face.
Think Facebook, Uber, the scores of Instant messaging apps that people use everyday. They are all designed to be sticky.
Facebook’s stickiness is a direct result of people’s urge to share, and curiosity to know whats going on with other people. It is a recurring problem, that manifests itself in various ways — and when it does, Facebook is the place to go.
Facebook solves our “curiosity to know about others” problem better than any other product in the market today.
But why do people keep going back to use Facebook?
Because with every visit people create value, and that value accrues over time.
Sooner than people realize, they’ve created enough value at Facebook to switch to a different social network or delete their accounts . In fb’s case, this value is created in the form of a growing social network of friends and family.
To generalize , the thing that drives repeat usage is wether or not there is enough value for the user to keep using it more and more. A very lucrative by-product of this value creation by the network is increasing switching costs.
There is a reason why you HAVE to log into Facebook— to see your friends’ and family’s posts, photos and other content they have created. There is a reason why you never signed back into Ello. Because no one you know is on Ello. You’d be all alone there.
So, Here’s a summary
To create a sticky product
a. Identify a recurring user problem that is strong enough to solicit user action
b. Build a product with features that solves this recurring problem
c. Overtime, accrue switching costs for your users so they don’t/can’t leave. Build a moat around them.
Building Stickiness in your product makes total sense, because the math is simple.
Stickiness = $$$.
Sticky products and services ensure that people have to come back to use them over and over again. And this repeat usage pattern results in direct and indirect monetization opportunities.
Here’s an example of how fb monetizes our engagement on their platform.
Ok, so here is the next question.
What happens when the core value proposition of a product is that you don’t even have to use it?
What if it automagically solves the problem its supposed to while you can go about your day , totally unmindful of its existence?
There are some examples that come to mind, that fall in this product category — e.g. IoT enabled hardware products.
Roomba, the vacuuming Robot cleans your house so don’t have to worry about cleaning your house everyday. WiFi Thermostats that learn your preferences so you don’t need to adjust or set your climate comfort anymore. Just set a smart schedule and these smart products will do the rest.
Advances in Machine Learning and Artificial Intelligence today make it possible for these products to go about doing their job without you even noticing it. Which means you can forget about your recurring problems such as ‘clean the house everyday’ or ‘maintain indoor ambient temperature’ 99% of time — so long as your Roomba is working well and your Wi-Fi Thermostat is maintaining your home temperature.
It appears that these technologies are great for the end user experience — but do they directly attack product stickiness and monetization models?
It’s counter-intuitive, but worth a thought.
If these products really do what their core value proposition is, there might be a day when you no longer need to log into the smartphone app for your Roomba. You would no longer have to assign any mindshare to these ‘smart’ products and forget that you even bought them until they need maintenance.
What happens to monetization in this case?
Now that the end user doesn’t have to use the app periodically at all , how can a IoT device maker such as iRobot monetize the recurring problem that its solving for the end user ?
Have a monthly fee for the smartphone app maybe? But thats hardly a sustainable solution. What if a competitor comes up with the same functionality and offers it for free? What will make the end user keep using your paid app?
On that note, How do you even build switching costs into such products? A moat, that prevents your customers from leaving you for a better/cheaper one?
One monetization model is to harness and monetize user data , but unless you are google you probably don’t have a big enough corpus of data for any meaningful bottomline impact that is also recurring.
Sure you might use the data to make the learning algorithms better. But again, does the end user care? Would people be incentivized to log into your app repeatedly, or even tell others how great your product is all the time? If anything, smarter algorithms should ensure that the end user is ever more carefree and doesn’t need to bat an eyelid.
Traditional monetization models are under threat.
It is increasingly obvious that technological advancements such as Machine Learning , Artificial Intelligence, Blockchains will give rise to new monetization models for IoT products. Perhaps ‘back end network effects’ that are not immediately visible, or micro-services where several devices talk to each other in a trustless fashion, exchange value and get things done.
Models such that even though the end-user is not thinking about your product or is not periodically returning to your app, the machine to machine network continues to generate back-end monetization opportunities.
As I write this, that future is being built somewhere.
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