106. Network Effect: How to Leverage the Power of a Group (A Behavioral Economics Foundations Episode)

<p><span style="font-weight: 400;">On today’s behavioral economics foundations episode we are going to be talking about the network effect (or perhaps it is more accurate to say “networking effects” because as you will learn throughout the episode, there are multiple kinds and situations for how they can be useful in a business). I am also going to talk about some pitfalls to look out for and how to incorporate behavioral economics into all of that.  </span></p> <p><span style="font-weight: 400;">This episode is related to the topic from last week about subscription models and even more directly to membership groups. I will explain that specifically throughout the episode, and if you haven’t listened to that one yet you will want to check it out. It’s episode 105 and there is a link for you in the show notes. Today, I’ll tell you what the network effect is and how it works, what it is not, some pitfalls to look out for, behavioral economics concepts to keep in mind, and so much more.</span></p> <p><span style="font-weight: 400;">And before we jump right into the network effect, a quick shout out to Clayton Key, whom you can all thank for today’s episode. Clayton and I connected on LinkedIn and in our messenger conversation he recommended the topic of this episode. Do you have a topic or question you’d like to suggest for an upcoming episode? Connect with me (Melina) on the socials using the links below.</span></p> <h3><span style="font-weight: 400;">Show Notes:</span></h3> <ul> <li style="font-weight: 400;"><span style= "font-weight: 400;">[01:01] This episode is related to the topic from last week about subscription models and even more directly to membership groups.</span></li> <li style="font-weight: 400;"><span style= "font-weight: 400;">[03:27] Thank you to Clayton Key for this great episode suggestion. </span></li> <li style="font-weight: 400;"><span style= "font-weight: 400;">[04:09] In its simplest form, the network effect is when the value of a business increases as the network grows.</span></li> <li sty