Archive for August, 2012
August 14, 2012
At High Peaks we spend all of our time looking at investment opportunities in the application layer of the web. Mostly it’s business apps (though for us that generally means very lightweight, “consumer-ish” business apps), but we also get excited about data-rich, consumer analytic applications.
In the context of evaluating applications, we consistently end up in discussions about stickiness. I’ve found that when entrepreneurs talk about their applications and why they will develop valuable, enduring customer/end user relationships, they consistently overemphasize features – their app is cool, and that’s going to bring people back.
The reality is that coolness – or even directly addressing a customer pain point – is not a driver of stickiness. Certainly not an enduring one. Applications – be they business or consumer applications – that successfully build the deepest, most enduring, most valuable relationships with their users require a lot more than the right features.
Here’s a simple framework that we use when thinking about application stickiness. We consider three types:
- Feature stickiness, where the delivery of application features that are tightly aligned with user needs brings users back.
- Data stickiness, where user data becomes deeply embedded in the application.
- Network stickiness, where multiple users and networks of users actively interact within the application.
Within that framework, we have a clear point of view as to the hierarchy of these differing types of stickiness.
- Feature stickiness is table stakes. If you don’t build applications that your users find compelling, that make their lives easier, then you’re dead before you’ve started. But features on their own will not keep users coming back again and again. Your application will always be at risk of being usurped by the next big thing, as there won’t be much reason for users not to switch to the shiny new penny. As a result, feature stickiness is illusory, and not enough to drive overall application success.
- Data stickiness is a great step forward from feature strength. With data sticky applications, users actively, or by default, build more and more of their personal and usage data into an application as they use it. That data becomes a valuable asset that makes their user experience more powerful. When combined with a solid feature profile, data stickiness can make for powerful, enduring relationships. Users of Mint.com are familiar with data stickiness. When you register and begin using mint, you put a lot of energy into connecting your accounts, inputing data, and building a personal profile within the application. And then they’ve got you. How much better would a new personal finance application need to be, feature-wise, to get you to switch from Mint? The same holds for business applications like finance programs and CRM systems. Once your data is in Salesforce.com, it can be god awful painful to leave. That said, it’s doable. Given a compelling enough reason to move, some portion of users will do the work to pack up their data and go.
- Which is why network stickiness is the most powerful, but also the toughest to build. Network sticky applications get their power from users interacting with each other within the application. The power of the application is the power of the network. Skype, LinkedIn, Yammer (and all the successful consumer social apps). These applications have features that draw you in, but then it’s the network of people you interact with there that keeps you there. Even in the Web 1.0 world we had apps with network stickiness – think of the MSFT Office suite? Why did we all end up using Word and Excel? Were they definitively the best word processor and spreadsheet? Not at all. But they were what everyone else used, and once email made file sharing a daily experience, the world collapsed onto one “standard.”
The very most powerful and enduring apps manage to play to all three types of stickiness. Think of LinkedIn. Lots of great features that get us engaged. Then from a data standpoint we’ve got our core electronic CVs, which have grown and evolved over time, plus probably some recommendations of us and by us. So there’s some data work to be replicated if we want to move. But then the network stickiness would stop any would be LinkedIn abandoner in her tracks. Similarly, Salesforce.com and other historically data sticky apps are increasingly building in network stickiness both within and outside of the enterprises they sell to. This success is a big part of why I think they will continue to dominate their market.
As we look at new applications every day, the three flavors of stickiness is an important framework for us. We see a lot of applications fall far shy of having even two strong flavors of stickiness, let alone the elusive third, and when they do, they’re an easy pass. But on the rare occasions when we find all three flavors of stickiness being driven by a strong founding team, we’re all over it.