The Challenges of Scaling in the Social Local Mobile Revolution

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Sep 08, 2023
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The Challenges of Scaling in the Social Local Mobile Revolution
Introduction:
In the fast-paced world of technology, companies are constantly striving to stay ahead of the curve and capture the attention of smartphone users. Two articles, "5 Reasons Foursquare Is Losing The Social Local Mobile Revolution" and "Switching Costs: 6 Ways To Lock Customers Into Your Ecosystem," shed light on the challenges faced by companies in the social local mobile revolution. By examining these articles, we can identify common points and gain insights into the difficulties of scaling in this rapidly evolving landscape.
Gamification Doesnβt Scale:
Foursquare, once a pioneer in location-based gamification, struggled to maintain its relevance in the social local mobile revolution. The article highlights how the company shifted its focus away from gamification and towards local search and discovery. This change reflects the realization that gamification may not be as important to smartphone users as previously thought. Instead, users prioritize finding recommendations from a broad range of people, even if they are strangers. This shift in user preferences aligns with the Yelp model, where user reviews and recommendations take precedence.
Locking Customers into an Ecosystem:
Creating a great product is not enough to attract and retain customers in the social local mobile revolution. The second article emphasizes the importance of designing a superior business model that locks customers into an ecosystem. It outlines six different traps that companies can employ to keep customers within their ecosystem.
1. 'Base Product & Consumable Trap':
Companies like Nespresso and Gillette lure customers with a base product and then generate profits from consumables that customers are forced to buy. This strategy ensures a steady stream of revenue and creates a sense of dependency on the ecosystem.
2. 'Data Trap':
Apple, Google Android, and Spotify use the 'Data Trap' by encouraging customers to create or purchase content and apps exclusively hosted on their platform. For example, Spotify threatened Apple and Google's music revenues by offering a vast catalogue of songs exclusively on their app. Switching to another music app would result in losing playlists, illustrating the power of this trap.
3. 'Learning Curve Trap':
Companies like Adobe, Salesforce, and Box can discourage customers when they have to start over and learn how to use a new product. The steep learning curve associated with switching to a new platform acts as a barrier, making it more likely for customers to stick with their current ecosystem.
4. 'Industry Standards Trap':
Microsoft and Adobe leverage the 'Industry Standards Trap' by establishing themselves as the go-to platform for particular industries. This creates a sense of compatibility and familiarity, making it difficult for customers to switch to a competitor's ecosystem.
5. 'Servitization Trap':
Companies like Rolls Royce and Hilti go beyond just selling a product; they offer a complete experience. Competing against such companies means not only competing against their product but also the entire experience they provide. This trap makes it challenging for competitors to lure customers away.
6. 'Exit Trap':
Verizon and AT&T use the 'Exit Trap' by locking customers into contracts that specify a certain period of usage. This creates a barrier to switching to a competitor and ensures a guaranteed customer base for a specified time.
Actionable Advice:
Based on these insights, here are three actionable pieces of advice for companies looking to scale in the social local mobile revolution:
1. Prioritize User Preferences:
Instead of relying solely on gamification, focus on meeting user preferences for local search and discovery. Understanding what users prioritize and adapting your business model accordingly will help attract and retain customers.
2. Build a Seamless User Experience:
Invest in creating a seamless user experience to minimize the learning curve associated with switching to a new platform. By making it easy for customers to transition, you can reduce the barriers that prevent them from exploring other ecosystems.
3. Offer Unique Value:
Differentiate your ecosystem by offering unique value that competitors cannot easily replicate. This could be through a comprehensive experience, exclusive content, or industry-specific standards. By providing something that competitors lack, you can increase the switching costs for customers.
Conclusion:
Scaling in the social local mobile revolution presents numerous challenges. Understanding the shifting preferences of smartphone users and designing a superior business model to lock customers into an ecosystem are crucial for success. By prioritizing user preferences, building a seamless user experience, and offering unique value, companies can navigate this rapidly evolving landscape and thrive in the social local mobile revolution.
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