The Endowed Progress Effect: Give Your Customers a Head Start

head-startre:member group’s very own Mark Peterson shared an article on this subject and I found it quite interesting; so interesting in fact, that I decided to write my first blog post about it.

What exactly is the Endowed Progress Effect? It is a breakthrough piece of consumer research by professor Joseph Nunes and Xavier Dreze that analyzes how artificial advancement affects customer effort when it comes to loyalty programs.  Simply put, customers will spend more to reach a goal if they are given a head start towards meeting that goal.  Take for example a study on the behavior of customers who got a free carwash after purchasing 8 carwashes.  Researchers gave out 300 loyalty cards to random customers.  150 of the loyalty cards had 8 blank spaces and a free space.
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The other 150 loyalty cards had 10 spaces (2 of which came pre-stamped) and a free space. No matter what card you got, you still had to purchase 8 carwashes to get a free one.
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The Results
A total of 80 cards were redeemed with 720 visits.  The redemption rate of customers possessing a card requiring a total of 8 stamps was 19% – not too bad. The redemption rate of customers possessing a card requiring a total of 10 stamps (remember 2 stamps were provided from the start) was 34% – that’s nearly twice as many redemptions! This study would suggest that people are more likely to reach a goal if it has already been started for them. It can be daunting starting any new task, and a loyalty program is no exception.

What are you doing to get your customers engaged in your loyalty program (if you don’t have a loyalty program, you are far behind the curve)?  Nobody likes starting a new task from scratch – give your customers a head start.

Learn more about the endowed progress effect.

 

Travis Valerius

travis@remembergroup.com

Learning in the Big League

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As a somewhat recent graduate and new employee at re:member group I didn’t think much into loyalty programs before.  My thoughts before were that those businesses were trying to get a step ahead of the competition. Maybe offer their customers special coupons or birthday treats but nothing of major value. I used punch cards and I am very loyal to certain brands, but it wasn’t until my friend offered me a free plane ticket that I realized what these programs can do for me.

It may be a stretch to say I feel like lightning struck thoughts and ideas into my head, but it kind of did. Why am I not using rewards programs more? My friend earned two free plane tickets to a place of her choice in the United States and asked me to join her. Two FREE plane tickets. Now you may ask well how many times did she fly before she received these points. That I’m not sure of.  But what I do know is that more businesses need to be participating in rewards programs and so do I.

By giving your customers incentives to do businesses with them, it drives frequency and ultimately sales. While working at re:member group I have learned the many different ways and reasons behind loyalty programs. They aren’t just for the airlines and different businesses can do more than punch cards. It is more than just giving what the customer expects, it is about exceeding that expectation. Imagine going into a candy store and receiving benefits you never expected to be there. You will leave with a satisfied feeling and will go back. No matter what type of business you may have, it could benefit from a rewards program. It isn’t just for the birds.

Cady Henglefelt

cady@remembergroup.com

It’s Wedding Season! (aka It’s Loyalty Season)

wedding

I am in that time in my life where it seems like every summer I have at least 5 weddings to attend.  Don’t get me wrong, they are fun, but they pile up and get very expensive.  Being in the wedding is even worse, there are bachelor/ette parties, couple showers, wedding showers, rehearsal dinners, brunches, pictures, and the list goes on and on.

Now, while some wedding events are free, there is still a hefty price tag for the wedding gift and the wedding itself.  So why do we pay so much for such events?  Your answer: Loyalty. Can marketers take any hints from this?  Maybe not, but I’m sure gonna try.

1.    Weddings are the ultimate showing of loyalty: I’m not going to go into the roots and meanings of marriage, but it is the ultimate showing of loyalty between 2 people. Outsiders want to be a part of it, and have no problem supporting the cause emotionally and monetarily. Families choose to spend a year’s salary for a one night party signifying a lifetime of happiness. Make your product omit the sense of a lifetime of happiness, and your customers will spend money for that kind of party. Catch my drift?

2.    Get a cause people can believe in – weather it is points, discounts, rewards or anything alike, customers (and companies) must BELIEVE in what they are doing in order to be effective.  Customers don’t want to be a part of something that is seen as an afterthought or merely a background gimmick. It has to be real, and people have to feel the love coming from your company and employees.

3.    People by stuff for people they like – this is Business 101. If you are friendly, respectful, and passionate, about your company and/or product- people are more likely to buy from you. Same goes for customer service. It is a known fact that people will shell out extra cash if they like and trust the person they are buying from. Show the people some love!

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