Humans value things relative to the amount of time, energy, and money we personally invest to complete them. This psychological phenomenon is one of the primary reasons behind IKEA's success. The time and effort taken to build a piece of IKEA furniture is built into the value that people place on it.
Insight: Ask customers for too much effort and you might drive them away, too little and you lose the opportunity to build attachment.
Insight: More effort does increase attachment, but only when the effort leads to completion.
Insight: When we make physical things ourselves we value them more. The same is true of ideas.
Insight: We believe our own ideas and creations are more important that similar creations and ideas from other people.
Definition: The more time energy and effort we invest in something, the more value we tend to put on it.
Insight: In business, adding work in sign-up may decrease conversion rates but increase retention.
Insight: Objectively IKEA products use relatively low-quality materials and require assembly, but the work taken to build the furniture increases our attachment to the items.
Insight: We value things more then we make them ourselves.
Insight: We tend to forget that effort leads to enduring satisfaction from completion.
Reference: Research from Harvard and Duke: assembly of IKEA storage box made participants value the item 63% higher than those provided with a preassembled box.
Example: Add an egg.
Insight: The more time energy and effort we invest in something (to completion), the more value we tend to put on it.
Insight: Ego risk in projects: the belief that one's involvement makes a project more valuable or likely to succeed (IKEA EFFECT).
Insight: We feel a strong sense of attachement and pride when we make something ourselves.
Key Insights & Principles
Decision Making
We tend to overvalue our own ideas and creations.
Our ego can lead us to make irrational decisions by overvaluing our own ideas.
Research before you buy and weigh up how much effort is required.
Include the value of your time in your decision making.
Get an independent opinion.
Product Design
Ask customers for too much effort and you might drive them away, too little and you lose the opportunity to build attachment.
Value to customers can be created from their own involvement in customisation, personalisation or building the product.
Give customers the ability to be involved in building the product.
