When I first started working in the financial industry over a decade ago, the bank that I worked for talked about making their products “sticky” for their customers. They explained that the more products we sold, the stickier our company would be for them and the harder it would be for them to leave. Stickiness was their main customer retention strategy.
I now fully understand what they mean and why they focused on "stickiness." In fact, I still bank with that organization even though I haven’t worked there in nearly a decade.
But why? Because the services I have with them truly are sticky - it would be a major headache to switch banks.
Defining a Sticky Product
The idea behind a sticky product is that the customer becomes tied down to a product or service and can’t easily leave. This is a slightly different concept from customer retention, such as getting customers to return to a restaurant.
With sticky products, they aren’t necessarily locked in (like glue), but switching to a competitor would take an investment to leave.
For example, banks do this all of the time. Once you have a checking account, you also get a savings account and possibly a loan or credit card. In addition, you have automatic payments coming out of your account and your debit card information is saved on a number of websites.
So what happens if you want to switch banks?
You have to decide if it is worth switching all of this information that has caused a “sticky” factor in your relationship with the bank.
Yes, you can choose to switch banks. But switching all of the things tied to your bank is not something you want to do every month.
Why a Product Should Be Sticky
A product should be sticky because we don’t want our customers to be able to easily switch to our competition. We aren't making it impossible and not even saying we don’t want them to switch, we just don’t need it to be so simple that they can switch on a whim.
For example, let’s consider banking. How difficult would it be to switch banks?
To switch banks, most consumers would have to replace or deal with things like:
- Getting new checks
- Updating automatic payments with a new account number
- Update any online banking information
- Opening and paying off credit cards, car loans, and possibly mortgages.
- Downloading new apps
- Switching direct deposits
And the biggest challenge of all is to ensure that it is all done at the same time so that an account does not get overdrawn or a bill not paid.
You see, our bank accounts become very sticky over time.
3 Easy Ways to Make Products Stick
Just as the banking industry has learned how to make their accounts sticky, we can also work to make our products and services - regardless of our industry - sticky. The following are three ways we can make our products sticky:
One of the best ways to make a product sticky is to have a recurring charge from the customer.
Gyms and fitness centers figured this out a long time ago and now base their business models off of this. They charge a monthly fee and, in order to cancel the membership, one must go into the physical location to sign a form to cancel.
How many of us have paid for gym memberships longer than we otherwise would have, just because there was an automatic charge we had to cancel?
Or, another example of recurring payment options is yearly service plan for your heater and air conditioner. I pay a modest monthly fee and a technician comes out twice a year to service my heater and then my air conditioner. In addition, if I have a problem throughout the year, I get a few perks of this monthly service plan.
The result is that I have been using the same company for nearly eight years, even though I have been disappointed with the service on a few occasions. The monthly payment is something that makes my relationship with the service company sticky, and I have to have a really good reason to cancel my service plan.
Now, you might be thinking that recurring payments are great for some industries, but you don’t have any products that require a monthly fee.
Well, why not? Just because your industry doesn’t typically charge recurring payments doesn’t mean that you can’t offer a value proposition that your customers want.
Besides helping with cash flow, recurring payments can help with customer retention as they add a sticky factor to the relationship.
Discounts and Incentives
Another way to make products sticky is to offer discounts to your existing customers.
My wife tells me that when she empties out a box of cat litter, the brand she buys always has a coupon at the bottom. This coupon gives her an incentive to repurchase the same brand as she was just handed a discount right when she needs it - she just ran out of cat litter and is going to be purchasing more.
In addition, she likes purchasing this brand of cat litter as she always knows that there is going to be a coupon at the bottom of the box. While she doesn’t use it every time, this incentive helps her decide to stay loyal to the band she has been using.
Another example of an incentive that helps to make a product sticky is a loyalty rewards program. For example, most coffee shop chains like Starbucks and Biggby offer a loyalty program that provides free drinks after a certain number of purchases.
These loyalty rewards programs give customers an incentive to stay with the same coffee chain as they will loose out on their free drinks if they jump from chain to chain. Basically, when they get thirsty, the loyalty rewards program helps customers to always purchase their products at the same company.
These types of incentives can be found in many industries like airlines, razors, restaurants, hotels, and rental cars.
If your industry doesn’t typically offer discounts or incentives, consider ways you could implement this sticky hack into your business model.
The final way to make your business sticky with your customers is to connect with them.
I was recently talking to Brent Kelly from www.bizzgrizz.com and he was talking about his experience in selling insurance. He explained to me that he became interested in why his longtime clients did business with him. To his surprise, the answer that he heard over and over was: “because I like you."
Because I like you - not because you have better products and not because you have cheaper rates - but because I connect with you and trust you.
And this is how many of us make purchasing decisions as consumer. If we are going to spend money, don’t we want to spend it with someone we like?
If someone feels a connection with you or your business, it is going to be more difficult for them to switch to a competitor with whom they don’t have a connection with.
Connecting with people doesn’t mean that you have to personally talk to every customer or greet them in your store.
Relationships can be built through marketing efforts. E-mails, videos, blogs, and even commercials and advertisements can help to tell a personal story that customers can connect with.
The truth is, are customers are likely to do business where they have a connection
A Question For You
What steps can you take to make your products or services more sticky?