Jan
20
As of this writing, Mark Zuckerberg isn’t budging: Facebook will still run but not fact-check political ads. Not to worry, however: it will continue suspending users for remarks and images its algorithm deems unseemly.
This isn’t the first time that Zuckerberg and his brainchild have stepped on a steaming pile of bad PR. Not to be overlooked are the 2016 election interference thing, the collecting and marketing of personal data thing, the addicted-to-Facebook thing, the ugly online arguing thing, the unwelcome ads thing, and on, and on.
Surely the time would seem ripe for Adam Smith’s invisible hand to intervene, first by raising up a suitable challenger, and second by moving FB customers to it. And indeed, there has been no shortage of challengers: WT.social, Google+, DailyBooth, iTunes Ping, Meerkat, Friendster, YikYak, to name a few. Haven’t heard of some of them? Perhaps that’s because most are floundering or, worse, have foundered.
Apps like Twitter, Instagram (which Facebook purchased in 2012 for $1 billion), and Pinterest have only somewhat dented Facebook’s numbers, having overall proved more supplemental than threatening. As The Financial Brand staff writer Craig Guillot has pointed out:
No one truly thinks Facebook will go the way of Myspace. It has immense legacy power in the world of social media and is used by three-fourths of the U.S. adult population to connect with friends and family, read the news, share ideas, and learn about products and services. And the fact that Facebook owns Instagram rules out the idea of a direct head-to-head war for users and advertising revenues.
This is not to say that Facebook is topple-proof. As I have written before, no giant is.
But for now, it seems that Facebook has managed to tie Smith’s invisible hand behind his back. A look at how and why—and at how to do it better—may prove useful in today’s digital banking world.
“Sticky” products and services are “sticky” in that they’re more inconvenient to exit or replace than to keep. In banking, there is no more classic example than salary paid via direct deposit. Once you’ve set it up, it’s easier to keep the receiving account than to take the steps and brave the potential foul-ups involved in moving it. Hence, many people “stick” with their bank, or at least with the account in question, like it or not.
Facebook is a lot like that. To defect to another app, frequent Facebook users would have to persuade their hundreds of Facebook friends to move with them, which, given inertia and other impediments, is a long shot. They would have to master the new app, which, user-friendly and self-explanatory though it may be, can daunt in the face of an app they already know well. They would have to bid farewell to their groups. They would need to believe that they won’t regret switching, that they won’t miss Facebook features they have come to enjoy. It’s simply easier to continue with Facebook.
Last year, PRI asked users why they don’t defect from Facebook.
We got dozens of responses, with most of you telling us you’re sticking with Facebook for one or more of four reasons: keeping in touch, using the “groups” feature, using it for work or fear of missing information, events or birthdays.
PRI cited some revealing comments:
“I want to disconnect entirely from the divisive, egocentric and artificially idealized culture Facebook has fostered, but not at the price of being disconnected from the people I care about.” … “I have taken breaks, but it sometimes has cost me jobs.” … “I view it as a tremendous negative spot in my life, otherwise, but like an unhealthy relationship, I keep coming back for the good parts, even though it mostly brings me down.” … “Yes, I want to quit Facebook! My productivity tanks when I am on it but they have brilliantly tapped into the human instinct to ‘connect.’ Plus FOMO is so successfully triggered by this platform as well.”
Here’s how Vox put it:
… the growing pressure that many people feel to abandon Facebook altogether fails to take into account both Facebook’s position in modern society and the stakes involved for anyone who chooses to leave a network that has spent more than a decade trying to make leaving it impossible.
So it is that Facebook prevails. But here’s the thing about sticky products.
Whether we’re talking Facebook or banking, sticky products prevail not by virtue of a loyal user base but by virtue of being damned difficult to leave. They don’t win customers. They mire them.
That’s all well and good—assuming one thinks it’s all well and good to have unhappy customers as long as they’re stuck—until someone comes along with a convenient way out of the mire. In digital banking, ways out of the mire are coming fast. You can set up a digital banking relationship and transfer funds from your old accounts to your new in minutes. Myriad posts (like this one, for instance) exist to guide you and help you avoid pitfalls. Digital banks like Simple facilitate switching with a few clicks.
You have to wonder if it’s only a question of time before an app lets you move everything with a single click. Among others, Monzo appears headed that way. When sufficiently simplified account-switching arrives, even the stickiest financial institutions may be in for a mass exodus. When it comes to savings accounts, for instance, The Financial Brand’s Bill Streeter reported that “among those consumers surveyed [by Consumer Bankers Association and Novantas] who are already comfortable with online-only providers, four out of five (79%) would consider saving with a big tech company if they could.”
I suggest that stickiness is fast wearing out the welcome it never had. I’d share some examples of great things some financial institutions are doing to earn-not-entrap, but Jim Marous has already done that in a piece he wrote for The Financial Brand.[1] I recommend giving “Reinventing the Retail Banking Experience in a Digital World” a read now, while it’s on your mind.
[1]You could do a lot worse than to subscribe to The Financial Brand. You may have noticed that I have thrice cited it today alone.