Product Psychology: How Scarcity Made Clubhouse the Hottest App of 2021
In social psychology, scarcity is the idea that we value things that are scarce more than things that are abundant. The more exclusive or difficult to attain, the more we appreciate it. This principle is seen in our life all the time — whether it’s trying to get a table at the restaurant that requires a reservation months in advance, or feeling the need to buy a limited edition item that really isn’t that special. Brands that incorporate scarcity tend to do very well, and Clubhouse is no exception.
Clubhouse, launched in April 2020, is a social network app that facilitates connection through audio conversations. Conversations are scheduled and organized into “rooms” with topics, speakers, and moderators; users can jump from room to room and listen to any conversation. You never know who you might find yourself in a room with, and many people have turned to Clubhouse as a way to learn about interesting topics, network, and hear from celebrities and CEOs. It is currently invite-only, and has a $1 billion valuation. Clubhouse’s impressive launch was bolstered by the scarcity principle — both in its admission process and in the conversations it hosts.
Invite-Only: Are you on Clubhouse yet?
Clubhouse gives users 3 referrals (called invitations) when they initially join. Once users go through all of their invitations, they can earn more by participating in rooms and using the app frequently. Clubhouse also periodically drops 3 additional invitations in users accounts.
Why is this effective?
Typically referral programs operate on a “the more, the merrier” basis, by giving users unlimited referrals (UberEats, Soulcycle). By limiting the number of invitations, they are making the invitations seem more valuable and covetable — as if it’s special to receive one. This association is actually really powerful in creating both a reputation and a brand image. While some people may view the process as a bit elitist, at the end of the day, Clubhouse is still getting the buzz and press that will push their product engagement to the next level.
Further, Clubhouse uses invitations as a variable reward for continued usage. Users do not know how much they have to use the app to get more invitations, so when they do receive the invitations, it is a pleasant surprise. Rewarding usage (and thus incentivizing usage) also has a secondary impact: the more users use the app, the more likely they have a positive experience that keeps them coming back to the app. These positive experiences also create a ripple effect when people talk about Clubhouse in the future — as we all know, word of mouth is powerful and we trust people in our circles.
Giving more invites to people with higher usage also benefits Clubhouse’s user base. In theory, these heavy users would have better quality referrals, since they understand the value Clubhouse provides and who might benefit from joining most.
FOMO: You had to be there!
Clubhouse’s conversations also implement scarcity by prompting FOMO (fear of missing out) in users. Everyone wants to get into a conversation with Tiffany Haddish or Elon Musk, and they’re not on Clubhouse all day. Because the conversations happen infrequently, and the spots are available in limited quantity, people feel an urgent need to be part of the conversations when they do happen. This desire is a bit irrational though, considering a lot of these buzz-worthy conversations are posted on Youtube afterwards.
The desire to be a part of these conversations in real-time can be interpreted from another perspective: the need for social-belonging. The isolation caused by the pandemic this past year has only exacerbated this need. Hearing someone’s voice in a Clubhouse room sounds more authentic than watching an Instagram story or reading a tweet from them. It’s easier to imagine that you’re actually in that conversation. Further, there are a lot of smaller rooms for more intimate conversations with like-minded people — ones where you can participate, rather than spectate.
Takeaways: Applying Scarcity in Your Product
Granted, not every new product wants or benefits from having an exclusive launch strategy like Clubhouse. Some products want as many users as possible, as soon as possible! Even so, the principles of scarcity can be implemented effectively in subtle ways. This principle is especially relevant in e-commerce, food delivery, ride-sharing, social media, or any app with a subscription model (Spotify, LinkedIn). Some examples:
- Giving incentives, offers, or freebies, to the first 100 (or 1000) users that sign up
- Having limited-time offers or discounts
- Having a badge for top contributors or influencers (like on TikTok, for instance)
- Use “low stock notices” which incentivize people to purchase, in fear of something selling out
- Display an offering’s popularity/demand among users, to incentivize purchase (ex. ‘122 people viewed this listing today’)
The scarcity principle is a powerful and prevalent marketing principle, incentivizing users to action by sparking the fear that they are about to miss out on something. Clubhouse took this principle to the next level by incorporating scarcity in both its launch and within the conversations themselves. As the app becomes more widely used, thus decreasing the spirit of scarcity, it will be interesting to see how they maintain their brand image and user engagement.
