The Social Ripple Effect
In social products, a drastic change in the behavior of a single user will ripple through that users's network, causing others to change their behavior as well. This is true, even when those other users aren't given the same motivation as their friend.
A study in Canada wanted to find out how a neighborhood reacts to one of their own winning the lottery.
Researchers found that the neighbors of lottery winners tended to begin spending more on ostentatious and flashy products, such as cars and jewelry, much like their newly enriched neighbors. The researchers hypothesized that the human need to compete is what caused people to spend more. A rise in social status for one individual in a group, causes others in that group to work harder to keep up.
The problem was that, unlike their lottery winning neighbor, they did not have any extra income. It is for this reason that neighbors of lottery winners tend to have a much higher bankruptcy rate than those with less lucky ones.
The social ripple effect gives us a glimpse into the psychology of social products.
In an office setting, giving one or two employees an incentive to dress up, say a small budget for suits, will make others in the office dress up as well, even without extra cash.
Online, it's worth letting some customers go premium for free. If the setting is such that others can see how well they are doing, more users will likely invest in your premium option, than otherwise would do.
And, of course, in any system with social gamification mechanics, users will always want to level up to catch up with their peers. Even if leveling up takes a little more work, or costs a small fee.
The social ripple effect is all about trying to keep up with those perceived as having more. If your product is social, and allows for users to compare themselves to others, it is often worth making sure some people have a little more.