September 27th, 2009

Mint, Aggregators and the Cost of Changing Habit

I worked at small web companies before business school. This meant that anything I did not know how to do, which was a lot, I made up as I went along. Terms like EBITDA, ROI, and value proposition were all foreign. This is why I came to business school – it’s finishing school for those of us who have never spent time as consultants.

I am fascinated by the term “customer acquisition cost”. Like many other b-school terms, to me it reflects the core narcissism of many businesses. Because it’s not just you, the business, that must “pay” (whether in dollars or otherwise) to acquire me, your customer. I have to pay as well to move over to your product. Maybe it’s not necessarily money, your product could be cheaper than whatever I’m using now.  But I need to change my habits to adjust to whatever it is you’re offering. And this cost is MUCH MUCH higher than I think many new businesses realize.

Why?

Because I, the consumer, am lazy and averse to change.

This is the problem that I have with aggregators. You think you’re making life easier by pulling together various “feeds”, but really you’re making it harder by giving me a new interface I have to get used to and yet another account to manage. If there’s no value-add (b-school term in action!) what do I gain from shifting?

Example: weather widgets. Seems like they’re everywhere – on my desktop, taskbar, cell phone and anywhere else you can think of. But I check the weather on weather.com.  Every time.  Just because it’s habit and it’s reliable. My eyes already know where to find the information on the page and it’s always there. In order to sway someone to change his/her habits whatever you’re offering has to be an order of magnitude better than what’s already out there. And even then it still takes time.

Because there’s been a decent amount of buzz lately around the Mint acquisition, I’ll use that site as an example. I attribute the popularity of Mint not to the fact that it aggregates one’s bank accounts, or because it has a fancy UI, but because it was so, so much better than what already existed and gave so much *new*, valuable information to its customers.

The internet has been around long enough that people have developed habits.  This is great – you can afford to be a bit riskier with design simply because you can assume a baseline of familiarity that is much higher than it was even five years ago. But be warned: the cost of disrupting habit is high and not necessarily always welcome. What you’re offering has to be exponentially better than what’s already out there, or completely integrated into existing habits. Otherwise it will be hard to convert people.

Especially lazy ones like me.