Cool consumer electronics brands are much more choosy than banks when it comes to their marketing strategies. Significantly more than any financial brand, they have a sense for spotting what will make consumers tick, and they build everything around it, keeping in mind that the world has long gone digital. For instance, try to buy a OnePlus 2 with your credit card, and think how heavily credit card brands have been marketing their m-commerce solution as the only way for banks to thrive in an increasingly mobilized ecommerce world. No way. After struggling a few weeks for an invite as a repeat buyer, I was once again allowed to make the purchase using only PayPal.
This answer is much easier than it is for most consumers to decide whether they will stay with their bank when they can get a better offer from the bank next click. Why? Because my iPhone is much more than one of the best smartphones on the market. It’s an entry door to an entire ecosystem that Apple is constantly building around its hardware, implementing the clear strategy and consistent design that the digital world demands. Switching would imply that I won’t be using my Apple Watch for quantifying myself, receiving subtle notifications during the endless meetings I attend every day, or sending my heartbeat to my significant other with the tap of my fingers. Nor will I be able to listen to my music on Apple Music, or remote control my Apple TV, or initiate a task on my MacBook and continue it on my iPhone.
Lock-in factors – building an ecosystem
Just like banking, in the increasingly commodified world of consumer electronics, in order for you to survive there are only two options: either you start competing on price, reducing your cost and more often than not your margins (Samsung knows how painful this can be), or you refuse commodification altogether, and change the rules of the game by creating a broader experience around your products. This is what Apple did so greatly. An experience isn’t about putting your product in a nice package, ready for the unboxing, eventually to be posted on YouTube. Creating experiences is about designing lock-in factors that will deter consumers from leaving your brand. It’s giving consumers a reason to stay with you, treasuring their time, and doing your best to gain a growing share of it, acting as an invisible companion throughout the day.
Non-banks such as Moven in the US or Number26 in Europe are building on this strategy, crafting an experience that consumers find more compelling than what traditional banks have to offer. OTT players such as Facebook are playing with the idea of offering payment services as part of their experience just to reduce friction, and lock in their users. In the European Union, the law will create the precondition for this by ruling that banks should make available to third parties APIs granting access to account information and payment initiation. This is an inroad into financial services for OTTs. Competing on margins will then not be enough.
Image: Vector Open Stock