The Persuasive Pressure of Peer Rankings

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 desert?

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:

Data Example Photo

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 are predicting that Apple will sell more than 60 million units in the first year.

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.

Persuading with Data
An HBR Insight Center
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