INNOVATION

The Persuasive Pressure of

Peer Rankings
by Robyn Bolton
MAY 13, 2014

Introducing a new product is essentially an exercise in persuading people to change their

behavior. Many companies try to tackle this challenge by making the functional benefits of
the new seem so much more compelling than the old. But this approach rarely works. After
all, how many of us as children enjoyed eating our vegetables just because our moms said
they were better for us than dessert?

But how much quicker would your attitude have adjusted if your best friend had dared you
to eat them? Or if eating broccoli had suddenly become the newest craze in your fifth-grade
class?

A new form of social data that harnesses the power of peer pressure is emerging as a
potentially powerful way to change behavior and spur the growth of new categories of
products. It works because peer pressure data goes beyond demonstrating the functions of
a product to satisfy deeply powerful emotional or social needs we may not even realize we
have.

Many people are aware by now, for instance, that utility companies across the U.S. have
been taking advantage of peer pressure to reduce energy consumption by including charts
in electricity bills showing how energy efficient you are compared to your neighbors.
Companies such as Opower and My Energy have developed these data systems, and they
can now point to studies that show the combination of data and social pressure
reduces home energy use.

Presented in the right way, peer data can also be effective in changing consumer financial
habits, such as encouraging a higher savings rate. Voya Financial (formerly ING U.S.) has
one such application, called CompareMe, that promises to increase retirement savings
rates by drawing on survey data to compare your rate to that of people with similar
incomes, and to the average in your state. Putnam Investments has developed a “How Do I
Compare?” feature for its 401K clients. Academic studies are showing that the peer effect
works in motivating people to save more.

And consider what happened the first time consumers who’d bought a FitBit to track how
much they exercised and slept saw the “Friends” tab on their app. Suddenly, users were
invited to take part in a friendly competition to rank themselves against their friends and
colleagues in weekly step counts. Here’s what you might see on (what you’d hope is) a
typical week:
Competing wearables offer a variety of peer data, differentiating themselves from the
mechanical activity trackers and pedometers that have long been on the market. Taken
together, the power of all that peer data has helped transform a small, sleepy category into
a hot product segment. Forecasts are calling for annual sales of activity trackers to balloon
to more than 45 million by 2017. And this figure is almost certainly too low, considering
that Apple is expected to include fitness tracking in its iWatch this fall, and some
forecasters
The are
Persuasive predicting
Pressure that
of Peer Apple will sell more than 60 million units in the first year.
Rankings

In our experience, when evaluating whether peer data can be harnessed to change the
behavior of your customers, you would do well to apply these three lessons:

Know what behavior you want to change. This sounds straightforward, and in a company
with a clear strategy it is. Walgreens, for instance, which has widened its mission from
operating pharmacies to improving people’s overall wellness, would naturally want people
to get more exercise and live healthier. So employing peer data to encourage consumers to
get more exercise would certainly be desirable.

The next step, though, is not as straightforward, even in this simple case.

Identify all the compelling functional, social and emotional jobs that might motivate
someone to alter that behavior. The best way to find those unmet jobs is to spend time
observing current habits of consumers. Walgreens, for instance, knows that its customers
are motivated by discounts (which is why it has its Balance Rewards program, which trades
discounts for loyalty). So last year, it created the Steps program, which lets FitBit and Up
users synch their devices to the Walgreens app, offering 20 rewards points for every mile
walked (250 miles earns a $5 discount). To harness peer data, the apps let you invite Steps
members that you know into your league via Twitter and Facebook.

In selecting which data to socialize, strike a balance between people’s need for privacy
and their desire to share things in public. This is a tricky line to walk. Walgreens customers
can share their step counts, but not their calorie counts. Sometimes the best approach is to
make all the data anonymous (as the energy companies do). Other times, it might be more
effective to give people control over what they share, as FitBit does (if you don’t want to
share, you just don’t turn the feature on).

If this seems obvious, consider this cautionary tale: A school in Massachusetts posted
student test scores, together with the first and last names of the kids who earned those
scores, as a way to harness peer pressure. The idea was to encourage those at the low end
to work harder. Sadly, this was a dubious premise that had not been previously tested.
Even worse, the school posted all this information without even telling people they were
going to do it, let alone giving them the option of not associating names with data. Not
surprisingly, complaints ensued, no one was motivated to work harder, and the project was
mercifully abandoned. Meanwhile, the Walgreens Steps program has been wildly
successful, with 1.3 million people signing up so far, despite little advertising for it.
Finally, make the data actionable. Suppose you know, for instance, that your neighbors are
using far less electricity than you are. Even if that spurs you to want to conserve, you’d still
need to know how to do it. As you motivate people, you must also consider how you will
follow through with steps to improve, or help their friends reach their level. Walgreens
made sure that as part of its Steps program, the app and website would suggest additional
ways to stay well (including suggestions of products and services that could help).

Soon just presenting peer data will no longer be enough. The social network Fitocracy goes
further, assigning a human coach who creates a tailored exercise and diet program for you,
then measures your headway toward your goals while also comparing your progress to
your friends’. Given how new such programs are, it seems likely that innovative firms will
find opportunity in devising ways to apply the power of positive peer pressure to behaviors
we haven’t thought of yet.

Robyn Bolton is a partner at the innovation strategy consulting firm Innosight.

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G a year ago
"Academic studies are showing that the peer effect works in motivating people to save more." >> It says the
empirical findings are is mixed if you read the research (or even the abstract)

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