Nir’s Note: A few weeks ago, I wrote a brief post summarizing some thoughts for a potential book chapter. I asked my readers for help and you delivered! The comments were fantastic and I received several insightful emails. Therefore, I’ve decided to continue with the experiment with the article below. This week’s post is much shorter and less developed than my previous essays and is intended to solicit more of your thoughts and feedback for a potential book chapter. Give it a quick read and tell me what you think. —
The world has become harder to resist. Products are getting better at giving people what they want and – for the most part – that has been good thing. Yet, the historical trend-line shows products are also becoming more habit-forming.
All products alleviate customers’ pain. Even products used to gain pleasure must first generate desire, a unique form of discomfort, which the customer will pay to satiate.
The engine driving the evolution of marketing and advertising for the past 125 years has been the increasing speed with which companies adapt products to better meet customer needs.
The Age of Scarcity (prehistory – 1930s): For the majority of human history, the basic necessities of life were expensive and rare. Human populations growth was mediated by the limitation of resources. Keynes formulation of Say’s law was that “supply creates its own demand” and in a time of scarcity, goods sold quickly to those who could afford them. Though commercial communication traces back thousands of years, the term “marketing” only made its debut in 1884. Prior to the industrial revolution, products attracted consumers mostly by being available. The limited supply meant high prices and only the well-off had any discretionary spending power.
Recently, MessageMe announced it had grown to 1 million users in a little over a week’s time. The revelation captured the attention of envious app makers throughout Silicon Valley, all of whom are searching for the secrets of customer acquisition like it’s the fountain of youth. “Growth hacking” has become the latest buzzword, as investors like Paul Graham profess it’s functionally that matters.
Clearly, everyone wants growth. To someone creating a new technology, nothing feels better than people actually using what you’ve built and telling their friends. Growth feels validating. It tells everyone the company is doing things right. At least that’s what we want to believe.
Good Growth, Bad Growth
Sometimes viral loops drive growth, because the product is truly awesome, while in other cases growth occurs for, well, different reasons. As an example of good growth, it’s hard to top PayPal’s viral success in the late 90s. PayPal knew that once users started sending money to each other, mostly for stuff bought on eBay, they would infect one another. The allure that someone just “sent you money” was a huge incentive to register.
PayPal nailed virality. Both sides of the transaction benefited from utilizing the platform and a classic network-effects business was born. In order for users to get what they wanted, they had to open an account and the product spread because it was useful and viral.
We are a species that depend on one another. Scientists theorize humans have specially adapted neurons that help us feel what others feel, providing evidence that we survive through our empathy for others. We’re meant to be part of a tribe and our brains seek out rewards that make us feel accepted, important, attractive, and included.
Many of our institutions and industries are built around this need for social reinforcement. From civic and religious groups to spectator sports, the need to feel social connectedness informs our values and drives much of how we spend our time. Communication technology in particular has given rise to a long history of companies that have provided better ways of delivering what I call, “rewards of the tribe.”
However, it’s not only the reward we seek. Variability also keeps us engaged. From the telegraph to email, products that connect us are highly valued, but those that invoke an element of surprise are even more so. Recently, the explosion of Web technologies that cater to our insatiable search for validation provide clear examples of the tremendous appeal of the promise of social reward.
The endless search for rewards of the tribe, and the variability that often comes with it, are key components of the Web’s largest technical question and answer site, Stack Overflow. As with other user-generated sites like Quora, Wikipedia, and YouTube, all of Stack Overflow’s content is created voluntarily by its members. In Stack Overflow’s case, over 5,000 questions are posted and answered daily, all of which cost nothing to view. Many of these answers take hours to complete and require a high degree of technical expertise.
This week, thousands of people swarmed the annual Consumer Electronics Show in Las Vegas. Looking from above, the scene resembled an insect infestation of scampering masses in a hive of the latest must-haves.
When considering our complex relationship with technology, perhaps it is useful to reflect upon the plight of one particular bug, the male julodimorpha beetle, who like us at times, can’t get enough of a bad thing. His misplaced desire is so powerful that it threatens the survival of his species.
While in flight, the male scans the dry ground of the Australian outback, looking for love. He seeks out the largest, reddest female he can find because these two traits, size and color, impart instinctual cues about the genetic fitness of his mate. Suddenly, the sight of his dream girl stops him mid-air. He composes himself and approaches the sultry beauty.
But the male of the species is not known for subtlety. Genitalia erect, he is ready for action and begins his lovemaking as soon as he lands on her. But his rude advances are rebuffed. However, he is determined to satisfy her, whether she is willing or not. He remains faithful, even as other suitable females pass him by. He wants only the biggest, the reddest and therefore, the most attractive female.
Undeterred, he keeps humping until either the sun bakes him to a crisp or the Australian Tyrant Ants cover his body and begin dismembering him limb from limb. Finally, he dies, never knowing that he unsuccessfully tried to impregnate a ravishingly beautiful bottle of beer.
The first thing Don Draper does when he gets to his office is give his busty secretary a suggestive wink. The second thing he does is take off his fedora. Finally, depending on the severity of the previous night, he completes his morning routine with a stiff drink.
What can we learn from Don’s habits? First, that scotch and submissive secretaries always equal drama. But what of that fedora? There’s a lesson there too.
As any Mad Men fan knows, it was once popular for men to wear hats everywhere they went — except that is, when they stepped indoors. When a gentleman went inside, he removed his hat and placed it on the nearest rack. It was a required social norm, a sign you were ready for business.
Though hats have long gone out of fashion, the custom should be a guide for how we adapt to the increasing pervasiveness of personal technology. It’s high time we started doing with our digital devices what well-mannered men did with their fedoras. We need a digital hat rack.
It seems that whenever people meet in person these days, they do so while separating their attention between the people in the room and the devices in their hands. Somehow, it has become socially acceptable to digitally masturbate in each other’s company. You might say, “but I’m taking notes or responding to an important request!” No you’re not, you are digitally dicking around.
If there is one altar at which Silicon Valley worships, it is the shrine of the holy network effect. Its mystical powers pluck lone startups from obscurity and elevate them to fame and fortune. The list of anointed ones includes nearly every technology success story of the past 15 years. Apple, Facebook, Microsoft, eBay, and PayPal, have each soared to multi-billion-dollar valuations on the supreme power of the network effect.
But today, the power of the network effect is fading, at least in its current incarnation. Traditionally defined as a system where each new user on the network increases the value of the service for all others, a network effect often creates a winner-takes-all dynamic, ordaining one dominant company above the rest. Moreover, these companies often wield monopoly-like powers over their industries.
IN THE BEGINNING
Once, all a company needed to do to leverage the network effect was facilitate communication between a critical number of customers. If enough people used a particular system to exchange information, a leader would emerge and become the de facto platform. Companies who could either form a marketplace or facilitate the flow of information between parties became tremendously powerful as central hubs of data transfer.
In fact, the first network effects platform was Bell Telephone, which established a government-sanctioned monopoly nearly 100 years ago. Since then, successful network effects businesses have sung from essentially the same hymnal.
We are caught in an endless cycle of messaging hell and the pattern is always the same. First, a new communication system is born — take email or Facebook, for example. Ease-of-use helps the product gain wide adoption and reach a critical mass of users. And then things turn ugly.
Some crafty entrepreneur figures out how to exploit the system and starts building a business around it. He reaches millions of people and opens the floodgates to countless others who seek to emulate his methods. Inevitably, the messaging channel is deluged with crap, clogging the pipes of what was once an efficient mode of communication — again, email or Facebook.
The latest messaging onslaught is hitting the notification systems on our smartphones. Those little red badges hovering over our app icons and urgent graphics along the top of our screens incessantly remind us of some task that needs doing. They crowd out real priorities with bits of tiny triviality. Notification spam has many up in arms, but the flood of distractions continues.
This is the story repeated ever since telemarketers started ruining dinners across the land. It was not until federal legislation effectively put them out of business with the Do Not Call Registry did they stop their pestering.
To date, platforms have been responsible for policing spammers on Facebook, Twitter, Android or Apple’s iOS. But keeping exploiters out is only half the challenge. The real problem is keeping the channels useful as they grow. Exhibit A:
Exhibit B – A Google search for “I hate email” returns 586 million results, more than twice the results for “the Beatles.” Very scientific, I know, but you get the point.
“Successful entrepreneurs recommend reading this article about the persuasion techniques companies use to drive engagement.”
Scratch that, how’s this? “Tons of people are tweeting this article. Find out why.”
OK, here’s one more. “This article will only be on the TechCrunch front page for a few hours before fading into the information abyss.”
Perhaps your preference for one of the opening lines above is a matter of taste, but for companies leveraging the explosion of personalized data, it’s very big business.
Marketers are increasingly personalizing their products and services to meet their customers’ changing needs. But customization used in conjunction with powerful persuasion techniques is arming marketers with new weaponry to boost customer engagement and drive profits.
The tools of influence, such as authority (seen in the opening line), social proof (second line), and scarcity (third line), have been used to persuade consumers since Edward Bernays launched the public relations industry during the first World War. Bernays, the nephew of Sigmund Freud, applied his uncle’s theories of the human subconscious to drive consumer behavior. Back then, marketers, including tobacco companies and the CIA, hired Bernays to shape public opinion and influence the masses.
Bernays, and the PR and advertising industries he spawned, sold consumers goods and ideas by tapping deep into the human psyche. For example, Bernays engineered demand for cigarettes among women by associating smoking with the desire for independence and freedom from male domination.
This week, Baba Shiv and I taught a class at the Stanford Graduate School of Business called, “Using Neuroscience to Influence Human Behavior.” The course focused on the science behind how consumers make decisions.
During the class, we walked through my Desire Engine framework, a four-step cycle that creates preferences and usage habits. Readers of my blog will be familiar with the model but I wanted to share some slides regarding one particular part of the Desire Engine, the “investment phase”.
This phase involves customers doing a bit of “work”, which commits them to the usage of the product. Investment makes re-engaging with the product more likely, and with the slides below, I try to explain why.
Slides from the Investment Phase discussion are below and I apologize for not having a voiceover to go with them yet. I’ll be writing more on this topic in the coming weeks but wanted to share some of the research into the topic.
I was honored to present at WordCamp this year but had to make do with the small amount of time allotted. I crammed my talk into a very short intro to the Desire Engine that sounds like I’m talking while on fast forward. Enjoy!