Unlocking Retention and Sustainability with Psychological Ownership

Psychological ownership -- or making users feel like owners -- is the missing ingredient to unlock retention and sustainability for web3 projects.

My new piece is out with @HarvardBiz https://t.co/Xh9dBDnpcx

— Li Jin (@ljin18) April 4, 2023

Psychological ownership is the feeling of possession or "mineness" over a product/service. It’s distinct from legal ownership: you can *feel* like an owner without actually owning something (my sports team, my social media profile), and vice versa.

— Li Jin (@ljin18) April 4, 2023

Psychological ownership is important for product builders because it changes behavior. It can increase loyalty, word-of-mouth growth, and willingness to pay. In digital communities, feeling ownership leads to increases in satisfaction, self-esteem, and contribution quality.

— Li Jin (@ljin18) April 4, 2023

Psychological ownership has become a core part of how we engage with digital products.

Everything from Twitter to TikTok to music streaming apps tap into psychological ownership to get users to stick around in the face of alternatives being just a click away.

— Li Jin (@ljin18) April 4, 2023

In each of these instances, users feel a great deal of ownership over their apps and profiles, because they invest time into customizing and mastering them, and feel an alignment between their own self-concept and what those brands stand for.

— Li Jin (@ljin18) April 4, 2023

That’s the opportunity for crypto builders, too. Crypto ownership is a new, internet-native form of ownership.

Giving users ownership through tokens or NFTs has led to projects that can grow meteorically — but it’s also led to notable flameouts and rampant speculation.

— Li Jin (@ljin18) April 4, 2023

I argue that those adverse effects have happened because psychological ownership has been relatively missing and underexplored in web3, with the result being tokens attracting mercenary users and ultimately undermining projects’ long-term success.

— Li Jin (@ljin18) April 4, 2023

Simply giving users tokens isn’t enough; users need to *feel* like owners in order to be aligned with the success of those networks, contribute to their growth, and stay engaged long-term.

— Li Jin (@ljin18) April 4, 2023

Historically, most tokens have been utilized to juice growth with little consideration for facilitating long-term sustainability. This is a weak strategy for creating feelings of attachment.

— Li Jin (@ljin18) April 4, 2023

By identifying key drivers of psychological ownership and making token rewards contingent on users taking those actions, tokens can be used to reward psychological ownership, reinforcing attachment and building engagement habits.

— Li Jin (@ljin18) April 4, 2023

That strategy mirrors the web2 approach of using targeted incentives designed to instill user habits and to build mastery of products in order to boost long-term retentionhttps://t.co/RD8vcE5zPI

— Li Jin (@ljin18) April 4, 2023

Another opportunity is around co-creation: studies have shown that companies that involve customers in the development process enhance their positive word-of-mouth, enjoyment of a product, willingness to defend it in public, and willingness to pay.

— Li Jin (@ljin18) April 4, 2023

In crypto, user governance is often a benefit accorded to token owners, rather than a prerequisite.

It may be worthwhile to explore flipping that: making collaboration and co-creation a prerequisite for becoming an owner.

— Li Jin (@ljin18) April 4, 2023

The opportunity in crypto is to couple asset ownership with psychological ownership to engender stronger engagement, retention, and healthier communities.

A user-owned internet not just technically but emotionally

— Li Jin (@ljin18) April 4, 2023

There’s precedent from this in the equity world: a study found that when users selected certain brands/stores to receive stock from once they shopped there, users’ weekly spending jumped by 40% at those brands.https://t.co/z3MkJhhfrP

— Li Jin (@ljin18) April 4, 2023

In other words, this experiment cultivated a sense of "mineness" with the brand, through giving users a feeling of control over the company, triggering deeper knowledge, and causing users to invest time and money. Stock ownership catalyzed loyalty through psychological ownership.

— Li Jin (@ljin18) April 4, 2023

This is the potential for crypto builders: when asset ownership is distributed more broadly — and coupled with psychological ownership — it is a new, powerful tool to enable products to grow faster, drive retention, unseat incumbents, and build long-term sustainable networks.

— Li Jin (@ljin18) April 4, 2023

Lots more detail & ideas in the piece:https://t.co/Xh9dBDnpcx

— Li Jin (@ljin18) April 4, 2023

Thank you to everyone whose feedback made this piece better @jessewldn @AlanaDLevin @masonnystrom @Jad_AE @joey_debruin @badkidsdream @cyounessi1. And my editors @carmeldea @tom_stackpole!

— Li Jin (@ljin18) April 4, 2023