Simply, sticky products use the data a user creates while engaging with the product as fuel to make the experience even more engaging for that user (accruing benefits), and at the same time harder to leave (mounting loss).
A product has accruing benefits if a user would say “the more I use the product, the better it gets.”
For example, Facebook uses both explicit and implicit actions to create accruing benefits — the more friends you connect with (an explicit action), the better your newsfeed experience is. The clarity of this action creates the incentive to invest in the product — I know if I connect with a friend, I’ll see their content in my newsfeed. And by investing in the product, I get the pay-off of a more rewarding newsfeed experience.
At the same time, Facebook uses implicit actions to optimize the accruing benefits — your feed wouldn’t actually be more engaging if it gets overwhelmed by one person’s non-stop sharing. So Facebook looks at what status updates you read, what you ignore, etc., to tune what they show you in the newsfeed.
Leveraging the combination of the explicit and implicit actions is a one-two punch to create strong accruing benefits. It’s why Instagram is pursuing this strategy, as is Twitter. A product should always get better the more you use it.
Mounting loss happens as a product becomes something you depend on, part of your identity, or a product in which you’ve accrued value of some sort (e.g., a following). “I’d have a lot to lose if I left this product” is the claim to test.
Back to Facebook, think about everything you’d have to leave if you killed your Facebook account: all your friend connections, access to what’s happening in your friends lives, the photos you’ve posted, not being able to log-in with Facebook Connect, etc. The combination of Facebook’s accruing benefits and mounting losses makes it incredibly sticky.
Evernote is another example of a product that has both accruing benefits and mounting loss. The more I store in Evernote, the more likely I am to get value when I do a search. The accruing benefits continue, and I just keep on adding more and more to Evernote and realizing more and more value from it. The flipside of this is that I can’t ever imagine leaving Evernote — it’s truly become an extension of my brain.
Many products fail at this level. For example, anonymity apps like Secret and Yik Yak saw incredible growth of engaged users when they first launched (level 1 of my hierarchy), but because neither have persistent identity, their products aren’t inherently sticky and neither have been able to retain users. I could sign up for Secret, read some posts, delete it (as I often did), and sign back in three months later, and my experience would be essentially the same. Twitter on the other hand achieves the aim of anonymity (you can create a profile under a fake name), but because identity is persistent, users can have accruing benefits (new follows/followers) and experience mounting loss (losing the investment they made in their followers).
In non-transactional products, real value will be created when you create accruing benefits and mounting losses. Focusing on those areas will help you get to level 3, and put you on the path to building an enduring company.