Usage matters more than distribution; Or why every startup will start to hire “psychology majors”

The usual challenges that entrepreneurs face with a new idea is first the execution of the idea itself. I.e. come up with a product / service that solves a problem or does something new and different.

Then the problems of gaining customers (or users) becomes top of mind. “How do I increase awareness of our product?” is the irst big question. Which is why most potential investors ask questions around “marketing & distribution” model, which primarily is a way to find out how are customers going to a) find out about and b) gain access to the product.

Awareness is still a large challenge for most companies, but digital marketing (SEO, paid search, facebook advertising, etc.) helps solve that problem for most startups in a way that can scale.

For companies who target audiences who are not primarily on the Internet (which is rare, but still those audiences do exist) their options are still old school (newspaper ads, radio, etc.)

Distribution typically becomes the next challenge after awareness. Now that people are made aware of your product, how do they consume it? Channels help solve the problem in some ways. E.g. If you are building a smartphone application, app stores are a great way to ensure your customer’s can access the product via the store. Now the only challenge is back to awareness, which can be solved by the mechanisms mentioned before.

The new age challenge though is all about usage or “customer engagement”. Assuming awareness and distribution are solved, the problem is purely one of getting people to use your product.

Which is why with most new products the selling starts after the sale is done.

After a customer buys and downloads or signs up for your product, you have to get them to use it. Which although is within your control, is a huge issue. Why?

Primarily because there are way too many things competing for the users attention.

The best ways companies have solved this “usage and engagement” problem is to focus on answering the question – how can I make the product a natural fit into the users “habit loop” – which is cue, routine, reward.

I think going into the future every startup will start to have a psychology or human sciences major to understand how to deeply ingrain their product into users natural habits.