The Consumer Psychology Behind the Sharing Economy—What Marketers Must Know
By Nicola Brown on March 2, 2018
It hardly needs stating that one of the biggest consumer trends of the past decade has been the rise of the sharing economy. Companies, websites, apps, and online communities that revolve around sharing products and services seem to breed like rabbits in the digital age.
Most obviously, there are the accommodation and ride-sharing giants Airbnb and Uber, but the sharing economy encompasses all manner of products (books, parking spots, Wi-Fi networks, creative projects, business ideas, loans, toys) and services (lessons, neighborly help, house cleaning, grocery shopping).
But why are we so obsessed with sharing? For me, this is one of the most fascinating aspects of consumer psychology today, and the research reveals important insights that extend far beyond the sharing economy when it comes to understanding what drives consumer behavior.
What Is the Sharing Economy, Exactly?
The practice of sharing is as old as humanity. In order to cooperate and grow as a society, we've always relied on sharing knowledge and resources across time and space. Yochai Benkler in the Yale Law Journal calls sharing a "non-reciprocal pro-social behavior."
So what does sharing look like as an economic activity? Investopedia defines the sharing economy as "a peer-to-peer (P2P) based activity of acquiring, providing or sharing access to goods and services that are facilitated by a community based on-line platform."
York University researcher Russell Belk identifies two commonalities in our sharing and collaborative consumption practices. The first is the use of temporary access non-ownership models for goods and services, and the second is their reliance on the Internet to bring this about. The Internet has made it possible for people who have specific things and abilities and people who want those things and abilities to find each other. From an economics perspective, it's a way for people to make money from underused assets.
But there's much more than a utilitarian motivation at work in the growth of the sharing economy.
The Rise of Airbnb
Canadian winters are long. So instead of hibernating at home (read: slowly going insane), I booked a weekend getaway through Airbnb. We arrived at our charming little hodge-podge cottage just steps from the lake in a quaint little town on the shores of Lake Huron. It was far from perfect, but it had character.
We received recommendations from the hosts about their favorite places to go and what to do and see, and we had the whole place to ourselves. We perused their collections of well-worn books and watched VHS classics like GoldenEye. We struggled with a faulty bathroom door lock, cooked family-style meals in the kitchen, and vacuumed up some bugs seeking warmth indoors. It was a fun, authentic, local, memorable, and personal experience.
Airbnb now rivals big hotel brands like InterContinental and Marriott Hotels & Resorts for volume of rooms and bookings. The service has 150 million users across 65,000 cities in 191 countries. Needless to say, Airbnb is one of the most successful companies in the sharing economy, a market purportedly worth $250 billion that could be worth $2 trillion in the future.
So what can marketers learn from this massive growth and the reasons why people seem to be flocking to this economic model?
The Psychological Drivers of the Sharing Economy
1. Experiences over Possessions
Researchers Fleura Bardhi and Giana M. Eckhardt in the Journal of Consumer Research talk about the trend of wanting experiences over possessions: "Instead of buying and owning things, consumers want access to goods and prefer to pay for the experience of temporarily accessing them." This means we'd rather rent a car to go on that trip than buy our own, or borrow a drill from our neighbor instead of purchasing one for ourselves.
Likewise, James Wallman, author of Stuffocation: Living More With Less, says that we have shifted from the twentieth century's big dominant value system of believing that having more stuff will make us happier to the belief that happiness comes instead from experiences.
This bears out in the psychological literature, too. Studies have shown that materialism is detrimental to wellbeing, while investing in life experiences increases happiness. It appears we are starting to figure this out for ourselves.
As marketers, these insights lead to some valuable questions we ought to be asking at a high level: What kind of experiences are we offering through our brands and products? How do they fit into how our customers live their lives? What are the experiential stories we are weaving through our marketing?
2. Community Building and Pro-Social Behavior
Oxford scholar and historian Yuval Harari emphasizes the important role of sharing knowledge and resources for the development and progression of humanity in his book Sapiens: A Brief History of Humankind.
In a study in the Journal of Consumer Behaviour, researchers Pia A. Albinsson and B. Yasanthi Perera interviewed people who participate in swap, gift, and alternative market events. They found that a primary motivation for participation was community building, and that this was often connected with a protest against "hyperconsumption" and an overly "marketized" society.
This kind of reactionary engagement isn't surprising considering our hard-wired drive for community building in contrast with the twentieth century's culture of individual consumerism and an increasingly digitally mediated existence that removes much of the face-to-face social interaction we've always relied on. We're just reinstating one of our most basic sociological building blocks.
The importance of community building can't be overstated from a marketing psychology perspective. We should begin by a creating marketing strategy with large community-building components and ensure we are creating opportunities for our customers to interact with each other. We need to figure out how we can make our touchpoints more human.
Image attribution: Jens Johnsson
3. Agency and Self-Actualization
We know by now that our audiences won't accept mere appeasement when it comes to customer service. People want to feel truly heard, and they want to feel that companies take their opinions seriously. They want to feel that they have some control (or agency) over their relationships with companies and organizations.
As we've seen with the sharing economy, people are beginning to take control in other ways too by taking their assets and value into their own hands. It's an entrepreneurial spirit rooted in the desire to have more control of your life personally and financially. In the psychological world, it's called self-actualization, and it sits at the top of Maslow's hierarchy of needs, which are the five psychological drivers he identified as motivating all of our behavior.
One of the most challenging things as a marketer is finding the balance of control between you and your audience. Instinctively, you want to control your brand image and the trajectory of your marketing, but in some cases it may be better to relinquish some of that control to your audience who are operating on a desire to shape their own experiences with your company.
These psychological drivers fueling the growth of the sharing economy extend far beyond it, too. They describe our motivations as consumers and as people. We want experiences over possessions, we want to build and belong to communities, and we want to have control and an ability to grow and fulfill our potential.
It all comes down to how we really feel about what we choose to invest our time and money in. No amount of expensive pillow-top mattresses and Egyptian cotton linens can beat the cheaper experiential pleasure of finding a stack of old James Bond VHS tapes at your Airbnb and spending the evening devouring them and reminiscing with friends. Even with the bugs.
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Featured image attribution: Elaine Casap