Commitment in the Marketplace
What is the price you pay for making your service a "no-commitment" option for your users? While most start-up experts will tell you that less commitment is key to get new users to try a service/product, is there a flip side?
Recently, I read Influence: Science and Practice by Robert Cialdini. While the entire book was packed with interesting insights, one of the most profound was the effect commitment has on a person. Cialdini gave numerous examples, ranging from cults to volunteer efforts, that showed how people will reinforce their belief that they made a good decision, once it's been made. I recently saw this first-hand, having to make a significant career choice. It was a difficult decision, as my two options were not directly comparable. I actually went back and forth a few times, even after I had thought my mind was made up. However, as soon as I called and made a commitment to one company, the turmoil vanished, and over the past several weeks, I have become more confident that I made the right choice. At least some of this, I am sure, is due to the commitment effect mentioned above.
One of the most common themes I've seen among new startups this summer has been businesses that bill themselves as the "eBay of XXXXX", where XXXXX is something other than a material good. The companies are aiming to provide a marketplace for intangible goods, much like a consumer version of the B2B exchanges that cropped up in the late 1990s. Some of the players in this market are Ether, IPSwap, etc.
While each of these want to be the next eBay, it's important to examine how the intangible nature of their goods may affect the attitude of customers towards their service. If I want to sell my expertise for instance, I can use Ether to connect me to buyers. However, I can also use several other services to do the same thing in parallel. By contrast, in the early days of eBay, if I had a single collectible Beanie baby, I could only sell it in ONE place. Each time a person listed something on eBay, they were making a commitment to that platform. This had a reinforcing effect, as they convinced themselves that eBay was the right place to sell, and made them more likely to use it again in the future. True, these days, eBay does much of it's business with sellers that have several of the same item that they sell through multiple channels. However, this occurred only AFTER eBay hit it's critical mass, and became a de facto retail channel. When building that initial traffic, I believe it was the commitment effect that was a strong driver of success.
Without this commitment effect, customers are less likely to become the passionate evangelists you want them to be. This can obviously be overcome with a great product that does something that no one else can, but when your service is counting on a network effect to differentiate itself, it makes it much easier if your network is wedded to your service alone.
So how can this be overcome? I think the key lies in building a secondary relationship with a user, one that can create commitment over time. For marketplace systems in particular, the development of a reputation is one possible approach, as it helps a customer commit to one platform, to avoid spreading the benefits of a good reputation too thinly. This however, may be a short term solution, as portable reputation systems like Rapleaf may soon prevent this from being a focus of commitment.