Secrets of GroupOn, IKEA, FarmVille, and Facebook

Whenever I travel, as I will be to Tampa Bay this Sunday, I pick up these 5 magazines at the airport:

1) Fast Company
2) Inc.
3) Wired
4) Entrepreneur
5) Toronto Life

The first 4 are great for business ideas, the last is a guilty pleasure.

Most of the time, I get small tips, but no breakthrough ideas from the magazines, but the July 2011 issue of Wired is worth picking up for an article from “Predictably Irrational” author, Dan Ariely, on how Amazon, GroupOn, and Zynga (the company that makes FB games) gets us to buy more.

Now if you don’t get a chance to grab the magazine, I’ve summarized a couple of the best insights.

#1 – The good news about the biggest reason GroupOn works is that you can apply the same factor in your business.

And that reason is the deadline, or as Ariely calls it, the “time constraint”.

With GroupOn, you can’t go back and get this deal later. You are choosing to get it now or NEVER.

And so people jump on the deal because they want to avoid regret.

Application for your business: You must emphasize the deadline whenever you are having a promotion.

I know from personal experience that sales on the last day of a regular 3-day promotion will be DOUBLE that of the first day, but only if two emails are sent out reminding readers about the deadline.

It’s that powerful.

#2 – FarmVille succeeds because of the IKEA factor.

A few years ago Ariely and his science buddies did an experiment. Subjects created pieces of origami and then placed a value on their work and on professional origami pieces.

Ariely found that people placed an irrationally high value on their own work – and it was proportional to the time they spent working on it.

And so Ariely gave this the name, “The IKEA Effect”, to reflect how much value we put on the stuff we buy at IKEA and assemble ourselves – and keep for an irrationally long time because of all the work we put into it.

In fact, and I swear this is true…I’m still using a $200 desk I purchased and put together from IKEA in 2003. Seriously.

Somehow it has managed to withstand four moves, and only one of the drawers closes properly, and it wobbles, but darn it, I put it together. And that in itself was a miracle. So I’m keeping it until it collapses on my feet.

And that’s how it goes with the farms in FarmVille.

People put so much work into building them and emotionally invested in the online farm that they continue to play the game compulsively – and the gift-giving component of the game adds to this.

So how do we use this in our businesses?

Well, if your business includes any type of “Application Form”, let’s say for a coaching program, you should actually make this form quite extensive, because the more time prospects spend filling this out, the more emotionally invested they will become in getting into your coaching program.

Alternatively, if you have a membership site with a forum, you want to encourage immediate and active participation in the forum area as an involvement factor. The more involved they get, the longer they will stick around, and the better results they will get (or at least they should get).

#3 – A Brilliant Time Management Tip

Finally, Ariely quickly mentions a brilliant time management strategy that I’ve been using for a long time, ever since I started scripting my days.

As Ariely states, “We let ourselves get gamed every day by one of the oldest technologies – the calendar. Because it displays our nonscheduled time as empty space, our calendar apps encourage us to pack our days with events.

Think how differently we’d interact with our calendars if the default was for time slots not to be empty – if instead they were prepopulated with events like thinking, writing, planning.

We’d be far less likely to neglect the opportunity costs. Every time we accept an obligation, it would be clear that we are giving something up.”

And that’s why I have every day in my calendar pre-planned like so with the FOCUS blocks already spoken for, and not optional to give up:

5:00 am-Read & Internet Independence Email Creation

6:00 am-Dog walk

7:00 am-FOCUS Writing

8:00 am-Workout

9:00 am-Face Book; numbers, emails, blog; dog walk

10:00 am-FOCUS

12:00 pm-lunch

1:00 pm-FOCUS

3:00 pm-FOCUS

5:00 pm-Respond to email and script next day

That’s how you get work done.

One of the best articles in Wired in a long time,

Craig Ballantyne

“The psychologist Sam Gosling has shown you can learn more about people from their possessions than from spending time with them. FB Walls are basically the same – a storefront window to the self.” – Dan Ariely, explaining one reason FB is so addictive.

  • Dan

    Great time management tip. I’ve begun to fill up my calendar with blocks, I especially like the non-optional focus blocks. If I could go through just one or two of those 1 hour blocks focused and without distractions I’d get more done than I do today.

    I’m not seeing myself get up at 5 am just yet, I have my eyes set on becoming a member of the 6 o’ clock club!

  • Mike

    I am running my business from my $39 desk from Walmart that I assembled myself about 7 years ago. Other than the sliding keyboard drawer falling off it’s track once a week it’s doing pretty good.

  • Dan

    You know what, I’ve had trouble getting up in the morning and I might have found the solution through the time management tip. Now when I had time blocked out for specific things it was harder to convince myself I could sleep one more hour, because I knew I would miss a focus block.

    Now I’ve got to focus for a few hours before my girlfriend wakes up!