Three-card Monte is a classic street hustler’s game. The dealer shows you the target card — say, the ace of spades — then leisurely shuffles it with two other cards and places them in a row, face-down. Your job is to pick the target card. Pick right and you win.
The game starts out shockingly easy. You’re offered the chance to play a few rounds for free — or at a very low cost — just to get the hang of it and you win each hand. Not only does your confidence rise with each turn, but you find yourself amped-up from playing the fast-paced game on a bustling street.
With your adrenaline rising, you reach into your pocket, pull out your wallet, and drop $20 on the table to up the ante.
And just like that it’s gone.
The dealer introduced a sleight-of-hand to increase the difficulty of the game — free to play, nearly impossible to win.
The job for the Three-card Monte operator is to build your confidence enough to entice you to reach into your pocket and overcome any second thoughts you might have. Mobile game makers have a word for the obstacles that stand between the player and the designer’s objectives — they call it “friction”.
Let’s try to imagine what would happen if friction were greatly reduced in the real world. If you merely needed to press a button on a piece of glass to put your money down, it might look something like this…
Of course this isn’t just hypothetical — it is emblematic of how a large swath of app developers generate revenue through in-app purchases. Known as “freemium” apps, these games and services are free to use at first, then charge for upgrades via in-app purchases as the user advances.
While this can often be a good deal for discerning consumers — after all, it amounts to a free trial — it opens the door for potential coercion. Street hustlers, arcades, casinos, video games and even supermarkets, have all utilized the power of the impulse purchase to drive sales.
These industries know customers are more likely to buy when they are:
- In a state of heightened competitiveness
- Cognitively drained (e.g., by a fast-paced challenge)
- A kid who hasn’t personally earned the money they are spending
- Using an intermediary currency (e.g., poker chips, in-game “coins”)
- Building an attachment to something before they’ve learned the price
- Already invested time, money, or effort into something
Unsurprisingly, free-to-play game creators weave these conditions into the very fabric of their games. To boot, game creators benefit from people’s natural overconfidence bias, whereby players irrationally overestimate their ability to succeed in a game without the aid of in-app purchase.
These conditions are why we hear stories of kids who racked up thousands of dollars to their iTunes bill, or why Apple agreed to pay $100M to parents of kids who in-app-purchased a hole in their parents’ wallets. While kids are often the victims of aggressive tactics in free-to-play games, adults are hardly immune.
Mike Rose’s excellent survey of the free-to-play industry highlights adult gamers who play with a gambler mentality.
“There were nights where I’d be up until 3 am drinking beer and playing Team Fortress and chasing those silly hats with purple text, ignoring the gambler’s fallacy and swearing that if I dropped another $50 I’d be sure to win this time,” he adds. “Then I’d wake up the next morning and see that I’d not only spent over a hundred dollars on digital hats, but failed my only objective …”
As this account suggests, a game player can be aware of the pitfall and still succumb to coercion while in the heat of gameplay.
If these dynamics are not familiar to you, I’ve created a few illustrations of what the real world would look like if it had free-to-play in-app purchases sprinkled throughout your day. This should hopefully evoke some of the visceral anxiety experienced by game players when they hit an in-app purchase wall.
In-app purchase required to keep playing beyond 15 minutes
Virtual currency hiding real prices
The threat of sunk resources
Offering life-saving measures when most vulnerable
Failing to disclose arbitrary pricing schemes
Paying your way to defeating your friend
Free-to-play games profit more than any other app genre through in-app purchases. A snapshot on August 8th found that 8 out of the top 10 grossing apps in the Apple App Store are free with in-app purchase.
I predict we are going to see more of these tactics used outside the gaming sphere. Our devices will soon be so connected and responsive to our real-world environment, they’ll know the moment when we’re most willing to make a purchase. As evidence of this trend, consider the news from Google that their new flagship Android phone, the Moto X, is “always listening”. Microsoft recently announced it is developing a smartphone systems that can predict your mood with up to 93% accuracy. Nokia is working on technology that can predict your physical location within a 20-meter radius 24 hours into the future.
As Anil Dash once put it, only half-jokingly:
“If you know where everybody is, where they’re going, and what they’re going to do when they get there, and you can’t make money on that, you’re a fucking idiot.”
By extension, the software on our devices will be better able to predict when we are most likely to transact. The digital services of tomorrow will be able to utilize our data to help make the world easier and more efficient, appearing, as Robert Scoble and Shel Israel have described, in the moment when the service is most needed.
But as apps collect more data about our daily routines, we can expect them to alter our behaviors in unexpected ways. Unlike games of Three-card Monte played on urban street corners, our devices are with us at all times. Consumers will need to be more mindful of how they transact on their devices, as we can expect the apps of the future to entice us when we are most vulnerable.
Top Consumer Psychology Articles
- The One Fitness App That Hooked Me For Good
- Here’s How Fortnite ‘Hooked’ Millions
- How Apps Can Shape Your Future Self
- How Netflix’s Customer Obsession Created a Customer Obsession
- Want to Design User Behavior? Pass the ‘Regret Test’ First
- How to Trigger Product Usage that Sticks
- How to Get People to Help Each Other, Online and Off
- Here’s How Amazon’s Alexa Hooks You
- How to Use Psychology to Make Persuasive Video
- How to Use Personality Science to Drive Online Conversions
- The Unbelievable Future of Habit-Forming Technology
- The Secret Marketing Power of Evolutionary Psychology
- Don’t Ask People What They Want, Watch What They Do
- How Cognitive Biases Can Help (and Hurt) Your Business
- What Most People Don’t Know About Behavioral Design
- How to Start a Career in Behavioral Design
- Your World is Full of Placebo Buttons (and That’s a Good Thing)
- How to Build Technology that Feels Like a Friend
- 3 Pillars of the Most Successful Tech Products
- Here’s How to Ethically Manipulate Other People
- How Two Companies Hooked Customers On Products They Rarely Use
- How to Hook Users in 3 Steps: An Intro to Habit Testing
- Die Dashboards, Die! Why Conversations Will Reinvent Software
- The Secret to Sending Emails and Notifications That Work
- How to Win Your Competition’s Customers
- Hooked for Good: How Habit-Forming Products Improve Lives
- Good Products Start With Good Questions
- Human + A.I. = Your Digital Future
- Why ‘Assistant-As-App’ Might Be the Next Big Tech Trend
- People Don’t Want Something Truly New, They Want the Familiar Done Differently.
- 4 Ways to Win Your Competitor’s Customer Habits (Slides)
- Here’s Why You’ll Hate the Apple Watch (and the Important Business Lesson You Need to Know)
- The Secret Psychology of Snapchat
- The Psychology of Notifications: How to Send Triggers that Work
- How Technology Tricks You Into Tipping More
- The Limits of Loyalty: When Habits Change, You’re Toast
- 4 Ways to Use Psychology to Win Your Competition’s Customers
- The Real Reason “Stupid” Startups Raise So Much Money
- The Psychology Behind Why We Can’t Stop Messaging
- The Psychology of a Billion-Dollar Enterprise App: Why is Slack so Habit-Forming?
- Framing Reward is as Important as Reward Itself
- A Free Course on User Behavior
- It’s Not All Fun And Games: The Pros and Cons of Gamification at Work
- Getting Traction: How to Hook New Users
- Designing for Behavior Change Book Review
- The Sneaky Trick Behind the Explosive Growth of the Kardashian Game
- How Successful Companies Design for Users’ Multi-Device Lives
- The Link Between Habits and User Satisfaction
- What Triggers The Best Word of Mouth Marketing?
- What Tech Companies Can Learn from Rehab
- The Secrets of Addictive Online Auctions
- Teach or Hook? What’s the Real Goal of Online Education?
- Using Mind Control to Raise Startup Cash
- How To Build Habits In A Multi-Device World
- How To Cope with Your Insane Jealousy Of The WhatsApp Deal
- Why Do Fads Fade? The Inevitable Death Of Flappy Bird
- You’d Be Surprised By What Really Motivates Users
- Nostalgia: A Product Designer’s Secret Weapon
- How You Can Help Users Change Habits
- Is “Lean Startup” Right for Your Idea?
- Hunting for Habits: Keying in on smart design to make a product irresistible
- Are Companies Too Obsessed With Growth? How to Measure Habits
- Refresh: The App a Secret Agent Would Love
- Angel or Devil: Who’s Really Investing In Your Start-Up?
- In 10 Years, We Won’t Use Personal Technology
- 4 Simple Things I Did to Control My Bad Tech Habits
- “Yes, And”: The Two Words that Created a #1 App
- From Laid to Paid: How Tinder Set Fire to Online Dating
- What if In-App Purchases Came to Real Life?
- Hooking Users One Snapchat at a Time
- How To Save Your Startup From The “Spotlight Effect”
- Bible App: Getting 100 Million Downloads is More Psychology Than Miracles
- How to Boost Desire Using the Psychology of Scarcity
- Marketplaces & The Curse of the Network Effect
- Today’s Behaviors, Tomorrow’s Startups
- Venture Capital and The Superstitious Investor
- The Future is Driven by Interface Changes
- Why Business is Addicted to Habits
- Viral Loops Or Viral ‘Oops’?
- Making a Marketplace
- What Killed Turntable.fm?
- What You Don’t Know About Human Intuition Can Hurt You
- Designing to Reward our Tribal Sides
- New Video – “Hooked: Building Habit-Forming Products”
- How Technology is Like Bug Sex
- Ways To Get People To Do Things They Don’t Want To Do
- The Network Effect Isn’t Good Enough
- Mass Persuasion, One User At A Time
- How Investment Drives Engagement (Slides)
- Getting Your Product Into the Habit Zone
- Where Have The Users Gone?
- Infinite Scroll: The Web’s Slot Machine
- Designing User Habits Video
- Psychology of Sports: How Sports Infect Your Brain
- This is Your Brain On Boarding: How to Turn Visitors Into Users
- User Investment: Make Your Users Do the Work
- Behavior by Design Video
- When Designing for Good Is Bad
- Stop Building Apps, Start Building User Behaviors
- The Next Secrets of the Internet
- User Growth and Engagement: A Hacker Metric
- Spotting the Next Facebook: Why Emotions are Big Business
- The Billion Dollar Mind Trick: An Intro to Triggers
- Why Everyone Hates I.T. People
- Hooking Users In 3 Steps: An Intro to Habit Testing
- Abolish The Reference Check
- Variable Rewards: Want To Hook Users? Drive Them Crazy
- How to Design Behavior (The Behavior Change Matrix)
- How To Design For “Normals”
- Hooks: An Intro on How to Manufacture Desire
- User Habits: Why Startups Must Be Behavior Experts
- What Is, and Is Not, Your Product’s Job
- Pinterest’s Obvious Secret
- Personalized eCommerce Is Already Here, You Just Don’t Recognize It
- Where is the Web Going?
- The Developer Divide: When Great Companies Can’t Hire
- Being a Quitter Makes You a Good Entrepreneur
- Behavior by Design
- Why You Should Run Your Business Barefoot
- Are you a Startup Star, Wacko, or Wannabe?