vente privée, or private sale. Online flash sales that were available only for
a day. Fischman decided that this was the perfect way to put a unique spin
on his business.
And it was. Rue La La hit the ground running because it smartly
leveraged the urgency factor. Part of this started by accident. Every morning
the site posted new deals at 11:00 a.m. But in the first couple of months
demand was so much higher than expected that by 11:03 a.m. everything
would be sold out. Gone. So customers learned that if they didn’t get there
right away, they’d miss out.
As it has grown, Rue La La has maintained this limited availability. It
still sells out 40 percent to 50 percent of items in the first hour. Sales have
grown, but it’s not that revenue gets bigger across the course of the day. The
traffic spikes at 11:00 a.m. have simply reached higher and higher levels.
Going to a membership-only model also made the site’s members feel
like insiders. Just as with the velvet rope that prevents regular partygoers
from just walking into an exclusive nightclub, people assumed that if you
had to be a member, the site must be really desirable.
Rue La La’s members are its best ambassadors. They proselytize better
than any ad campaign ever could. As Fischman noted:
It’s like the concierge at a hotel. You go down to the concierge to find
out about a restaurant and he tells you a name right away. The
assumption is that he is getting paid to suggest that place and the
restaurant is probably mediocre. But if a friend recommends a place
you can’t wait to get there. Well when a friend tells you you’ve gotta
try Rue La La, you believe them. And you try it.
Rue La La unleashed the power of friends telling friends.
—————
While it might not be obvious right away, Rue La La actually has a lot in
common with Please Don’t Tell, the secret bar we talked about at the
beginning of the chapter. Both used scarcity and exclusivity to make
customers feel like insiders.
Scarcity is about how much of something is offered. Scarce things are
less available because of high demand, limited production, or restrictions on
the time or place you can acquire them. The secret bar Please Don’t Tell has
only forty-five seats and doesn’t allow more people than that in. Rue La
La’s deals were available for only twenty-four hours; some are even gone
within thirty minutes.
Exclusivity is also about availability, but in a different way. Exclusive
things are accessible only to people who meet particular criteria. When we
think of exclusivity, we tend to think of flashy $20,000 diamond-encrusted
Rolexes or hobnobbing in St. Croix with movie stars. But exclusivity isn’t
just about money or celebrity. It’s also about knowledge. Knowing certain
information or being connected to people who do. And that is where Please
Don’t Tell and Rue La La come in. You don’t have to be a celebrity to get
into Please Don’t Tell, but because it is hidden, only certain people know it
exists. Money can’t buy you access to Rue La La. Access is by invitation
only, so you have to know an existing user.
Scarcity and exclusivity help products catch on by making them seem
more desirable. If something is difficult to obtain, people assume that it
must be worth the effort. If something is unavailable or sold out, people
often infer that lots of other people must like it, and so it must be pretty
good (something we’ll talk more about in the Public chapter). People
evaluate cookbooks more favorably when they are in limited supply, find
cookies tastier when they are scarce, and perceive pantyhose as higher end
when it’s less available.
Disney uses this same concept to increase demand for decades-old
movies. It takes prime animated features like Snow White and Pinocchio off
the market and puts them in the “Disney Vault” until it decides to reissue
them. This limited availability makes us feel like we have to act now. If we
don’t we might miss the opportunity even if we might not have otherwise
wanted the opportunity in the first place.
*
Scarcity and exclusivity boost word of mouth by making people feel like
insiders. If people get something not everyone else has, it makes them feel
special, unique, high status. And because of that they’ll not only like a
product or service more, but tell others about it. Why? Because telling
others makes them look good. Having insider knowledge is social currency.
When people who waited hours in line finally get that new tech gadget, one
of the first things they do is show others. Look at me and what I was able to
get!
And lest you think that only exclusive categories like bars and clothes
can benefit from making people feel like insiders, let me tell you about how
McDonald’s created social currency around a mix that includes tripe, heart,
and stomach meat.
—————
In 1979, McDonald’s introduced Chicken McNuggets. They were a huge
hit and every franchise across the country wanted them. But at the time
McDonald’s didn’t have an adequate system to meet the demand. So
Executive Chef Rene Arend was tasked with devising another new product
to give to the unlucky franchises that couldn’t get enough chicken.
Something that would keep them happy despite the shortages.
Arend came up with a pork sandwich called the McRib. He had just
come back from a trip to Charleston, South Carolina, and was inspired by
Southern barbecue. He loved the rich, smoky flavor and thought it would be
a perfect addition to the McDonald’s menu.
But contrary to what the name suggests, there is actually very little rib
meat on the McRib. Instead, imagine a pork patty shaped into something
that looks like a rack of ribs. Subtract the bones (and most of the higher-
quality meat), add barbecue sauce, top it off with onions and pickles, toss it
in a bun, and you pretty much have the McRib.
Lack of rib meat aside, the product test-marketed quite well. McDonald’s
was excited and soon added the product to the nationwide menu. McRibs
were everywhere from Florida to Seattle.
But then the sales numbers came in. Unfortunately, they were much
lower than expected. McDonald’s tried promotions and features, but not
much worked. So after a few years it dropped the McRib, citing Americans’
lack of interest in pork.
A decade later, however, McDonald’s figured out a clever way to
increase demand for the McRib. It didn’t spend more money on advertising.
It didn’t change the price. It didn’t even change the ingredients.
It just made the product scarce.
Sometimes it would bring the product back nationally for a limited time;
in other cases it would offer it at certain locations but not others. One month
it would be offered only at franchises in Kansas City, Atlanta, and Los
Angeles. Two months later it would be offered only in Chicago, Dallas, and
Tampa.
And its strategy worked. Consumers got excited about the sandwich.
Facebook groups started popping up asking the company to “bring back the
McRib!” Supporters used Twitter to proclaim their love for the snack
(“Lucky me, the McRib is back”) and to learn where they could find one (“I
only really use Twitter to find out when the McRib is available”). Someone
even created an online McRib locator so fans could share locations that
offered the sandwich with others. All for what is mostly a mix of tripe,
heart, and stomach meat.
Making people feel like insiders can benefit all types of products and
ideas. Regardless of whether the product is hip and cool, or a mix of
leftover pig parts. The mere fact that something isn’t readily available can
make people value it more and tell others to capitalize on the social
currency of knowing about it or having it.
A BRIEF NOTE ON MOTIVATION
A few years ago I went through a fundamental male rite of passage. I joined
a fantasy football league.
Fantasy football has become one of America’s most popular unofficial
pastimes. For those unfamiliar with the game, it’s essentially like being the
general manager of an imaginary team. Millions of people spend countless
hours scouting players, tweaking their rosters, and watching their
performance each week.
It always seemed funny to me that people spent so much time on what is
essentially a spectator sport. But when a group of friends needed one more
person and asked me if I’d play, I said why not.
And sure enough, I got sucked in. I spent hours every week scanning
through cheat sheets, reading up on players I’d never heard of, and trying to
find sleepers other people hadn’t drafted. Once the season started I found
myself watching football, something I had never done before. And it wasn’t
to see whether my local team won. I was watching teams I knew nothing
about, checking out which of my players were doing better, and tweaking
my roster each week.
But the most interesting part?
I did this all for free.
No one paid me for the hours I spent, and my friends and I didn’t even
have a bet riding on the outcome. We were just playing for fun. And, of
course, bragging rights. But since doing better than others is social
currency, everyone was motivated to do well. Even without a monetary
incentive.
The moral? People don’t need to be paid to be motivated. Managers often
default to monetary incentives when trying to motivate employees. Some
gift or other perk to get people to take action. But that’s the wrong way to
think about it. Lots of people will refer a friend if you pay them a hundred
dollars to do so. Offer people the chance to win a gold Lamborghini and
they’ll do almost anything. But as with many monetary incentives, handing
out gold Lamborghinis is costly.
Furthermore, as soon as you pay people for doing something, you crowd
out their intrinsic motivation. People are happy to talk about companies and
products they like, and millions of people do it for free every day, without
prompting. But as soon as you offer to pay people to refer other customers,
any interest they had in doing it for free will disappear. Customers’
decisions to share or not will no longer be based on how much they like a
product or service. Instead, the quality and quantity of buzz will be
proportional to the money they receive.
Social incentives, like social currency, are more effective in the long
term. Foursquare doesn’t pay users to check in to bars, and airlines don’t
give discounts to frequent flier members. But by harnessing people’s desire
to look good to others, their customers did these things anyway—and
spread word of mouth for free.
PLEASE DON’T TELL? WELL, OKAY. MAYBE JUST ONE
PERSON . . .
How do we get people talking and make our products and ideas catch on?
One way is to mint social currency. People like to make a good impression,
so we need to make our products a way to achieve that. Like Blendtec’s Will
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