Many years ago I was at an agency where we were pitching for a health care client.
We were at the tissue session stage, that stage where you give raw indications of the ideas you have. Mainly so they can be killed early without wasting too much time developing them, usually your favourite ideas, hence the tissues.
For this session, we were presenting ideas in a refreshingly minimal way. Each concept was just written up on butcher paper. This showed that ideas were still in their infancy, which wouldn’t be the case if we presenting a bunch of well photoshopped concepts. This would make the client feel the ideas were still fluid and open to their input.
The client was brought in and taken through each of the three ideas on the wall. The meeting then moved into a separate room so we took the ideas with us. Given how few were in the meeting, the client’s Chief Marketing Officer (CMO) was asked to carry one of the ideas into the room. Later in the meeting, the same client was asked which idea they were favouring. They said the second idea, the one they carried into the room.
Now who knows, they could have chosen this idea anyway. It was the agencies favourite idea so it probably was delivered with more passion. However, it was also influenced by the endowment effect. A behavioural bias that means you value something more if you have some form of ownership of it. By carrying the idea they were given ownership of it.
So why does this happen? This bias links back to evolution. As hunter-gatherers, we didn’t always know what was useful or valuable. However, seeing someone else with an item meant it must be useful and therefore has value. Even if it’s use wasn’t clear.
So we if we see something that others value, we value it too. If we own it, we value it disproportionately, as we now own an item that others value.
The item must have social value though, and in the context of this meeting, ideas were shown to be the currency. They were revered and it was the whole focus of the meeting.
By giving the client something socially valuable, an idea, they valued it too as they were given responsibility for it.
We see examples of the endowment effect all the time.
If you’ve bought a car you may notice some car dealers just let you take the car without them. It allows you to treat the car as if you owned it. Which means you start to value it.
For many years software developers have had the concept of beta tests. The final trial versions of big software releases. The draw of this isn’t just to get a prerelease version of the product, developers love the caché of saying they beta tested a big product. It gives them a sense of ownership of the final product. But it also means they are far far more likely to promote the product, despite any bugs they detect, as they have a sense of ownership.
We’re probably all familiar with a close cousin of the endowment effect, the Ikea effect. Whereas the endowment effect mainly looks at ownership, the Ikea effect also looks at effort.
The Ikea effect is when we value something we make ourselves. An early example of this was Betty Crocker cake mix in the 1950’s. The product wasn’t initially that popular. A researcher then suggested removing the powdered egg from the ingredients and to direct cooks to mix an egg into the mixture. The belief was that, in 50’s housewife culture, the mixture was seen as too easy. Whereas adding an egg constituted some meaningful work. In essence, they valued the outcome more, as they had invested some effort into its production. After that, sales of Betty Crocker took off.
Today we happily pay to construct Ikea bookshelves and we even tell war stories about our Ikea failures.
If you ever watch an episode of Shark Tank or Dragons Den you see entrepreneurs with unrealistic valuations of their business.
Even Facebook owner Mark Zuckerberg knocked back a $10m offer when the site had only been running for 4 months. A valuation that most of us would jump at for something that only a few thousand people were using at the the time. However as well a Zuckerberg’s stead fast belief that Facebook would be “The Internet” he was probably also experiencing a dose of the Ikea effect. Things we create we have a excessive connection to.
Today modern services such as blue apron, where people get sent ingredients but prepare the meal themselves, are a good example of the Ikea effect. People could easily get the same food via Uber Eats but a meal with some element of work is valued more… and may “taste” better.
The Ikea effect means we value something disproportionately more, if we’re involved in making it.
It’s worth thinking about.
In our current world may feel counter intuitive for a brand to do less and yet achieve more. However in an age where real world experiences are eschewed for digital ones, it’s worth considering. I’m not suggesting you make the UX of an online experience deliberately harder, although one US retail store actually did that and anecdotally felt it not only weeded out the less motivated but those that did “work” on their application took the process more seriously.
I am suggesting though that you experiment giving a customer ownership of something. Maybe you want people to switch from an iPhone to a Samsung? Give them the device for a week. Want people to buy your running shoe? Set up a race event and let people test drive a pair. Want members of your sports club to feel that they are part of something bigger, get them involved in painting the club house. I’ve seen this example in person and it changes volunteers into ambassadors as they feel a sense of ownership.
And if you’re trying to influence a potential new employer or investor why not ask them to help with your side project idea, and even get them to test drive it for you. If they feel responsible for shaping it they may feel a lot warmer towards funding it.
Whatever it is, play around with how you get them meaningfully involved.
I hope you enjoyed my thoughts on another behavioural bias, I’d love to hear yours and any suggestions on what to write about next.
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