In the past fifteen years, content for DIY investors has taken off. To continue growing into household names, these platforms must leverage behavioral science, using the methods of Facebook and Twitter to get users hooked on their platforms.
Free websites and mobile apps have democratized the stock market, giving DIY investors tools that were previously reserved for institutional investors at hedge funds and big banks. While the number of these platforms has skyrocketed, the market remains highly fragmented, with many smaller players struggling to grow. Yahoo! Finance remains one of the top resources for investors, thanks to its most important innovation: the “watchlist” feature, which keeps its millions of users sticky to the platform, some ten years after they built their first watchlist.
Since 2005, hundreds of new content platforms have popped up, but none have managed to grow into household names. So why is there is no “Facebook of finance?” The answer involves a bit of behavioral science.
Right now, the #1 bestseller in product management is “Hooked: How to Build Habit-Forming Products.” It identifies the “hook” that gets users addicted to platforms like Facebook, Instagram and Pinterest, to the point where they check these sites as soon as they have a moment of free time. This simple feedback loop consists of four steps:
- Trigger: something that gets the user onto the platform
- Action: A user-initiated action that anticipates reward
- Variable reward: leaves the user wanting more
- Investment: a reason for the user to seek another trigger (Repeat cycle)
For any stock-market content, the hook looks more like this:
- Trigger: finding a stock they want to buy
- Action: buying that stock
- Variable reward: watching its value go up or down
- Investment: searching for a new winning stock (Repeat cycle)
The good news for financial publishers is that step three takes care of itself. Once the user buys a stock, its value is bound to go up or down and provide a variable reward. The bad news is that to take action, the user must leave the publisher platform complete a trade on their broker’s platform.
Because of this, the user subconsciously attributes both the action and the variable reward to their broker, even though the publisher provided the original trigger/trade idea. By requiring their users to take action on another platform, financial publishers are missing out on the full value of their content. Additionally, user departure severs the “hook,” deactivating the addicting feedback loop that leads 1/5th of the planet to log into Facebook every day.
To build a base of sticky & engaged users, financial publishers must reclaim the user hook with a bridge to action. By offering the ability for users to transact and manage their portfolios, financial publishers can become the one-stop-shop for stock market research, transactions and monitoring of returns. In other words, they can reclaim the Action and the Variable Reward, igniting the “hook” and building a base of users who can’t beat the urge to keep returning to their site.
Financial publishers work hard to create triggers. It’s time they use a bridge to action to finally get their users hooked.