The IKEA effect and customer experience
Founded in Sweden but currently headquartered in the Dutch town of Delft, IKEA is more than a furniture maker. For starters, the company is almost 80 years. A company that has existed since the mid-forties and still going strong deserves our collective respect. Apart from the fact that the company has succeeded where many else have failed, I daresay IKEA is more of a phenomenon. After all, how many businesses are there that have a psychological phenomenon named after them?
The IKEA Effect simply asserts that people place greater value on things they have worked to create. As a matter of fact, it is claimed that we irrationally value our efforts. The more effort we put into something, the higher the value we place on that very thing. So why refer to this as the IKEA Effect?
The global furniture maker, worth 18 billion U.S. dollars in mid-2021, is known for designing and selling Ready-To-Assemble furniture (RTA), also known as Knock-Down furniture (KD). These are the furniture that are sold not as whole pieces but come in their separate components. Customers receive the pieces, together with instructions on how to assemble the pieces. With a simple tool such as a screwdriver, the customer is able to put some easy work into assembling the furniture.
According to a working paper released in 2011, people placed high values on the items they participated in assembling. Even though these creations were at best amateurish, people valued them as high as those put together by experts. Titled, “The ‘IKEA Effect’: When Labor Leads to Love”, the study was under the auspices of the prestigious Harvard Business School.
According to the study, regardless of the customer’s level of enthusiasm in Do-It-Yourself (D-I-Y) projects, the IKEA Effect was always present. It did not matter of the customer was someone who naturally really liked to build things on their own or if the one was not interested in such things. So long the one put in just enough effort in putting together the product, the one fell in love with the final product. In other words, labour led to love.
The tendency for individuals to appreciate the efforts and skills they put into a venture has been observed since the 1950s. A classic experiment was carried out in 1959, in which women were made to go through some strenuous tests to join a group discussion on the psychology of sexuality. As a kind of initiation, these women were divided into two groups and were made to read certain words out loud. It came to light that those individuals who were made to read words that were more vulgar, and thus more embarrassing, claimed to love the group more than those individuals who exerted very little effort. This gave birth to what is referred to as the Theory of Effort Justification.
Human beings, by our very nature, are made to work. The need for one to labour to make ends meet is hardwired into our DNA. This is why people who lose their livelihoods tend to suffer beyond the loss of income. The psychological trauma that comes with being unemployed can be very damaging. In short, labour and wellbeing are directly related. Regardless of the kind of work, people still have such a high regard for what they labour in.
We so love to work that if someone were to make our lives too easy, we would not really appreciate that act of kindness. This propensity for putting in labour became apparent when attempts were made by businesses to simplify the lives of consumers a couple of decades ago. Marketers found that people did not want too much ease and comfort.
Customers, human as they are, want things to be made easy for them. That is what they are spending their hard-earned money for. However, they do not want things to be so easy that they really do not make use of their skills and efforts. Customers want to feel like they can also contribute to their own satisfaction.
The interesting thing about the IKEA Effect is that one would have thought that customers would want to pay less for something they used their efforts to put together. However, interestingly, people do not really seem to mind. On the reverse, customers would even pay more. It is clear that the experience of putting their skills and efforts to use makes customer feel that the venture is worth more. The positive psychological impact of the IKEA Effect puts customers in such a good mental state that makes the transaction a lot easier. This is where the IKEA Effect can really impact the customer’s experience.
The IKEA Effect can be put to good use by customer-centric companies. The knowledge that customers who have invested some effort into a relationship will really value that relationship should give smart companies smart ideas. A smart business should be able to look at its products or services and find out how its customers can be made to put some effort into the final product or service.
An eatery can find a way of getting customers to put in some minimal effort into getting the food prepared. There are some places were customers on vacation take part in the harvesting of the food that is prepared for them. When a customer helps in catching the fish that is prepared for dinner, the feeling would be different for the customer when consuming that fish.
A beads maker can let customers come behind the scenes to have a feel of how the beads are produced. A customer can even be made to do something small such as stringing a few beads together. A potter, making a product for a customer, can get the customer to perform a small action. Getting the customer’s hands a little dirty can do the trick.
Sometimes, all it takes for the IKEA Effect to go into full force is for the customer to be the one who chooses the colour or makes a little contribution to an aspect of the product or service design. Those little efforts could be the game changer. That customer would forever have a special relationship towards that product.
A business that is able to “put customers to work”, in such a way that will make customers appreciate whatever effort they put into the product, will be in the position to reap the rewards of the IKEA Effect. Customers who put in effort will develop an irrational love for what they have helped create.
It is however important for businesses to recognise that when it comes to customer effort; just about enough effort is all that is needed. Customers should not be made to put in more than enough effort. That will certainly backfire. IKEA knows its strategy will backfire if customers have to do more than just assembling with basic tools. If the customer has to cut, saw or plane a plank of wood, it would be too much effort. The customer is not a carpenter. Just a little effort is what works the magic. Since there is no one-size-fits-all formula to use in gauging the level of effort, it behoves on each and every organization to find out what that little extra effort is.
The researchers behind the IKEA Effect study were however quick to point out that the IKEA Effect was only effective when the effort that the individual puts into the assembling resulted in the successful completion of the task. Products that ended up being discarded or destroyed were obviously not going to be valued as much as those that were successfully assembled.
An extension of the IKEA Effect is that when people put effort into a venture, not only do they fall in love with the outcome of that venture, but they tend to stick to it to its logical conclusion. This explains why some customers will continue to patronise a particular company or brand for years, even when that particular brand is not the best on the market.
Sometimes, the service or product might be the worst on the market but customers will still not abandon it. There is another term psychologists employ for that kind of behaviour. It is referred to as the Escalation of Commitment. It is simply our tendency to stick to something even when it is failing, simply because we have invested some effort into it. What this means is that a customer sticking with a business might not necessarily mean the business is doing well. It could just be the Escalation of Commitment at play. An astute competitor who understands the IKEA Effect can easily use customer effort to get a barely-satisfied customer to switch allegiance easily.
It is important for all businesses to understand that when it comes to the customer’s experience, the seemingly insignificant really matters. Businesses need to understand the motivations behind the actions of their customers. Smart businesses are those that put in the work to really understand the psychology of their customers. These businesses know that customer psychology is something that must be clearly understood by business owners, managers, supervisors, etc. To do so would mean that business managers and leaders must put in some work and from the on-going discussion, we now know what happens when we put our labour into something. The IKEA Effect takes effect.