People spend money on many apps. Which apps do they spend money on and why?
Understanding this better will allow us to increase our sales in our mobile and web applications or offline businesses.
Why Do We Buy?
Once upon a time, meeting our needs such as food, drink, and shelter was popular. We used to work and spend money to fulfill these needs. Now, this has changed. We have transcended the basic needs in the pyramid of needs. Moreover, we are building a new internet-based pyramid with distinctive variations of the basic needs not included in Maslow's pyramid.
Maslow’s hierarchy of needs
In the Middle Ages, kings did not have Twitter accounts. They would convey their essential messages to messengers who traveled for days or even months to announce these messages to various parts of the world. Today, we can send electronic messages within milliseconds, anywhere in the world. Let alone sending a simple message, we even try to send a high-dimensional document in a faster way. As we all know, each solution presented to us was not a need but perception and sales techniques designed by intelligent people who made us believe that we needed them so that we could spend money.
"We often think of the internet enabling us to do new things. However, people just want to do the same things they have always done." Evan Williams
We have created new specific needs under our basic needs. Our need for food is now followed by the use of various applications to give an online fast food order, find the most budget-friendly house for accommodation, and access prompter transportation, communication, or information.
Mobile payment infrastructures, which streamline all these activities, even let us make payments by only using fingerprints, without entering our credit card information. Paying with a simple finger touch via a device within reach has transformed everything.
Making payments effortlessly both changed human habits and increased spending rates.
How Do Consumers Decide?
Let's assume that there are two types of consumers
System 1: They are unconscious and make instant decisions without thinking.
System 2: They are conscious and make decisions by thinking slowly and rationally.
The crying baby in the picture on the left acts instinctively. His brain is running on autopilot. Any minute, he can remove his warheads and send the missiles. His reactions are instantaneous and reactive without requiring much concentration. Namely, the crying baby's reactions are speedy and intuitive.
However, the system in the picture on the right is slow and requires conscious and rational thinking. This system needs a little effort, attention, and even a pen and paper to solve the problem.
We usually think that individuals only act as system two while making financial decisions such as purchasing. However, that is not the case. In reality, consumers leverage system one while making financial decisions because thinking like the crying baby in system 1 is much easier as it requires less concentration and effort.
We create business models and design payment screens, assuming that consumers always make rational decisions. However, consumers' behaviors are often instinctual and patterned. Personal experiences may sometimes be inaccurate since they are shaped by suppressed psychological elements, emotional, social, cognitive forces, and biases.
Thus, we should never ignore the perspective of System 1.
What Does Make an App Worth Paying For?
· Curiosity and Value: How much do app images, description texts, and user reviews influence our perspective about the app? Would people pay for an app with terrible app images, description texts, and user reviews? Yes, it is possible. The feeling and sense of interest an app's value proposition creates in the user may override everything. You may disagree with this right now. However, you may pay for a terrible app just to see what it is about.
· Popularity: What is the probability of you at least downloading an application that everyone uses? When they are with the users of an app, non-users feel alienated because people usually clear their minds, observe others, mimic them, and distract their minds. Thus, social media apps initially target small markets. After invading those regions, they readily spread like a virus.
· Exploration: Many people spend most of their time browsing app store categories. Thus, they may purchase apps they find intriguing and exciting. The primary weakness of this audience is that they download an app, satisfy their curiosity after a while, return the app, and repeat this cycle. This category can also include early adopters. Despite being lazy, these people can quickly adapt to new technologies.
Why Do We Subscribe to An App?
· Curiosity and Addiction: If the most exciting scenes of TV shows were not spread by word of mouth and advertised by Netflix, how could we discover Netflix? I don't think anyone would Google a paid streaming platform. With the curiosity stimulated by Netflix, making monthly payments has become routine because we now have to pay for a few more months to keep watching the new season of our favorite TV show. While waiting for the next season, we start binge-watching another TV show and fall in love with its heroine. This cycle continues until there is no more content to consume. However, the content never ends. Netflix constantly introduces new TV shows and movies, making users keep paying. A new TV show, a new character, a new season, a new thrill, and money spent on it.
· Value and Gamification
· Value Proposition: Let's say you have been planning to lose weight for a long time and just discovered a diet application in social media ads. Since the opportunity knocks at your door while offering you a 30-day free trial, you download it immediately.
· Gamification: First, the application asks you to enter your height, current weight, age, and goal weight. After receiving all the information, the application creates a 3-month plan for your goal. Moreover, it sends you daily reminder notifications. During your 30-day trial, you complete your daily goals. Namely, you create a new routine.
· At the end of your 30-day trial, you perform above your target. While you should have lost 5 Kg according to the application, you have lost 6 Kg. Now that you have received your reward, you're ready for the next month. You make the payment and continue using the application the next month.
· At the end of your second month, you reach your weight goal and decide to stop using the application. However, you receive a notification the next day reminding you of your old overweight days or the lack of something you used to do. Thus, you continue your diet and eat healthy on that day as well. At that point, you create an emotional bond with the application. Either you will continue your subscription or feel the lack of it.
· Self-Persuasion: Anyone can access numerous online resources and content to learn any language. However, many people unconsciously assume that if something is free, it means it is easy, ordinary, and publicly available, that is, prepared carelessly. Due to this reasoning, people tend to spend money on language courses, gyms, or on needs they think are well-prepared since they make monthly payments for these services. You feel compelled to use such services or force yourself to do them just because you pay for them. The worst part of this situation is that people may even feel uneasy about returning it.
Tips for Developers
Reduce the steps
Make your users' time to access your value/solution as brief as possible because they may change their minds at each step.
Remove anything unnecessary from your apps because including a feature your users do not use may decrease the use of other features.
If you are going to introduce a new feature, test whether this feature is needed or can be used if a need arises.
Focus on Value and User Experience
Most newly-established startups focus on direct sales because they are driven by the urge to make money fast. Thus, they ignore user experience and increase the opportunity cost.
Perform A/B Tests
By performing A/B tests, you can offer your users different prices, pay frequencies, and primary features on your payment screens. Thus, you can optimize your income.
Gamification Boosts Sales
Gamification drives engagement by turning an activity into a habit for users. Thus, you can introduce your users to more paid features and boost your sales.
Set personalized goals for your users and reward them when they achieve them.
Reward your users for their spending amounts or at a particular pay frequency (e.g., motivate them to enter a holiday giveaway)
Sociability is the most natural gamification.
Habits create neurological desires. Most of the time, these desires emerge so gradually that we do not even realize their existence and often disregard their effects. Nonetheless, our subconscious creates a strong desire that triggers a habit cycle as indications are associated with particular rewards.
The Power of Habit, Charles Duhigg
The frequency and duration of satisfying the fundamental needs in our lives transform with the emergence and growth of our next-gen needs. We unconsciously build new habits. Moreover, these habits affect us both materially and spiritually. Thus, we should take control of our lives and protect ourselves and our children against baits besides our real needs. Hüseyin Tamer Innovation Consultant