Friday, May 24, 2013

Consumer loyalty comes from listening, not lock-in

Here in Silicon Valley, we love to focus on "sustainable competitive advantage."  We talk of moats, barriers to entry, and lock-in.  If a product is "addictive," that's considered a good thing.  The highest praise is to be compared with crack cocaine.

It's not a pretty picture.

I would argue that loyalty comes from listening, not lock-in.  I was struck by this recent post, which cited the ideas of political theorist Albert Hirschman:
"Against the backdrop of civil strife and war in the late 1960s, Hirschman wrote that when faced with declining institutions, consumers have two choices: Exit and go elsewhere with their support or dollars, or use the power of voice to generate change from within. These two choices are mediated, he explains, by members' loyalty to the institution. Loyalty makes people more likely to stay and work for change from inside. But loyalty is also a product of how effective a consumer's voice is likely to be; it does not stem from feeling locked-in or having no possibility of exit."
I've experienced the power of loyalty in my own startup life.  Time and time again, I found that my willingness to engage my users/customers and listen and act on their concerns produced much greater loyalty than strictly cost/benefit analysis would dictate.  This includes loyal TargetFirst users like Mike Feury, early Ustream broadcasters who helped us shape the service, as well as the businesspeople who first began helping us transform a simple consumer wiki service called PBwiki into an enterprise-grade service called PBworks,

Just today, I saw a story about how 94% of teens use Facebook, but the majority of those users dislike the service.

Are those teens loyal to Facebook?  They might be locked-in, but they're definitely not loyal.

As you build your own base of users for your startup, make sure you spare some time for really listening, rather than simply trying to engineer lock-in.

No comments: