I’ve often come across the following business problem:

You have a thing.  You have gone to great efforts to craft your thing over the last several years, and it is on average an enjoyable experience for your users.  You have not spent a great deal of time fleshing out the usage metrics for your thing, but you can at least track statistics on how many people are using it.  Your thing also has competitors, for you are not the only one to have realized that there is money to be made in the space your thing occupies.

Things are going along pretty well for your thing, and your user base is increasing in size.  However, you notice that you have some churn in your thing – that is that people are leaving your thing and trying other things.  Your  churn isn’t so great that your user base numbers are actually in decline, but you’d like to come up with a way to improve retention – to keep your thing sticky (this is what the business people tell you anyway).

In response, your team comes up with this very common solution.  Your users need a sense of identity within your thing.  You want them to think of your thing as their thing, to give them a sense of ownership over their corner of the space.   Since that identity only exists within the context of your thing, and they’ve become emotionally attached to it, it will become more difficult for them to leave.  That’s the theory anyway.

And actually it’s not a bad theory, the problem is that it’s easier to build a complex profile for your users than it is to get them to buy into it.  To build an emotional connection to that identity within your thing, the identity needs to be of value to the user, and largely that means social status.  People are loathe to leave something in which they’ve built cred, and if you look at every single example of a system where any kind of rich identity is keeping the users there, it’s because they’ve sunk time into increasing their status in that thing.

A simple example is the Motley Fool’s CAPS program.  CAPS is a system in which users declare whether a stock is going to move up or down, and are then given points based on how well their picks do relative to the market and the rest of the community.  High CAPS scores are highly coveted.  Users with high CAPS scores often have their opinions quoted by the Motley Fool staff, are given special invitations to exclusive newsletter programs, and have their picks bubbled to the top of any stock you look at in the system.  Notice that all of these things require a community of individuals to exist, to be able to interact with each other, and for there to be opportunities to elevate ones self above their peers and rewards for doing so.

World of Warcraft is an entire world of status.  Each new expansion creates new opportunities for showing off in a new way: Achievements, levels, PvP rankings, and so on.  Most of these channels collapse into a unified reward mechanism: equipment.  All the best looking, most exclusive equipment requires spending hundreds of hours in game, but once you have such a piece, you’re a walking advertisement for how badass you are.

The game is built in such a way that there’s no way around sinking the time to get this stuff, and every single random individual in the community who sees you is going to know it.

Even something like achievements on Xbox Live are a huge sink for some people.  This is the SIMPLEST form of status: simply a number.  The higher your number, the better you are.  This is much less relevant, however, if you’re not connected to Xbox Live and your friends can’t compare numbers with you.

Giving your users rich identity features is great – but inefficient.  If you’re going to spend years and dollars trying to improve retention from that angle, it’s infinitely better to spend them increasing the fidelity of the community as a whole.  People can build their own status systems given the ability and reason to interact with each other – its what we do all the time.  Rich identity should be a solution to the problem of having built a community so complex that it borders on a society or culture, but there’s insufficient ability to distinguish users apart.  Rich identity can pay dividends then, but if you’re a single man on a desert island, nobody cares how expensive your fine Italian suit is.