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Framing Reward is as Important as Reward Itself

Loyalty and Reward Programs

Millions of Americans are enrolled in loyalty or reward programs in hotels, supermarkets, drugstores and restaurants, and there are two major challenges:

  • As the outlets with loyalty programs tend to reward only the customers who are already loyal, the participation percentage is on the lower side.
  • Customers find it difficult to be loyal, due to other chains and outlets offering great discounts as well.

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Framing Reward is as Important as Reward Itself

Framing Reward is as Important as Reward Itself

https://www.nirandfar.com/framing/

nirandfar.com

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Key Ideas

Loyalty and Reward Programs

Millions of Americans are enrolled in loyalty or reward programs in hotels, supermarkets, drugstores and restaurants, and there are two major challenges:

  • As the outlets with loyalty programs tend to reward only the customers who are already loyal, the participation percentage is on the lower side.
  • Customers find it difficult to be loyal, due to other chains and outlets offering great discounts as well.

The Endowed Progress Effect

How a reward is framed, and the steps the customers must take to 'earn' the reward, is the key to a successful loyalty plan.

If customers are shown their efforts and the progress they have made, in absolute terms, with a clear path on what to do next, it is more likely they will push themselves to complete the program.

This Endowed Progress Effect Applied

This Endowed Progress Effect is successfully deployed in games like Candy Crush Saga, and websites like Paypal and LinkedIn, which show a prominent progress indicator, with easy to find ways for completing the next milestone. These apps and games use social pressure tactics and freebies to lure the customers into providing more information or buying a premium service.

Once the customer sees that time and energy has been spent, and progress made, they are less likely to drop out.

Variable Rewards Trick

Customers come back due to some variable rewards. These can be: a new tweet, a special offer at a restaurant, or a fresh new deal at a shop.

Variable rewards, which have an element of uncertainty and unpredictability, work like a slot machine for our brains. Smart framing focuses on the time and money the customer has already spent, instead of what they can get.

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  • Ongoing feedback from both customers and employees can help provide an indication of how well these programs are working.
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The Cons Of Incentive Programs
  • May Encourage Deception: Employees may look for ways to make their performance appear to be good when it isn’t.
  • Misaligned Incentives: poorly conceived ones may incentivize risky and irresponsible behavior that undermines the mission of the company. 
  • Can Lead to Conflict: iI competitive workplaces with limited rewards, employees may engage in bad behavior to get ahead or become convinced that pursuing incentives is a zero-sum proposition and become resentful. 
The Pros Of Incentive Programs
  • Increased Productivity: Rewarding the delivery of tangible results reinforces that good work will be rewarded. 
  • Strengthens Succession Pipeline: Employees often try to improve their skills in the pursuit of incentives, ultimately increasing their own efficiency. 
  • Encourages Retention: A good incentive program increases employee job satisfaction and overall loyalty to the organization. 
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The Goal Gradient Hypothesis

The Goal Gradient hypothesis states that we push harder or are motivated to exert more by the fact that the goal is almost within reach.

The knowledge that the desired outc...

The "Buy Ten Get One Free" Line

Marketers use this to nudge us towards buying a certain product or service, providing us with a goal that is almost within our grasp.

Example: When enrolled in a buy ten get one free coffee program, the person who has just one coffee to complete ten, is motivated to buy it as the free coffee is now imminent.

Offering Free Bonus Points

Studies show that if a person is offered a bonus reward or push, he or she is more likely to complete the goal as he has been provided with a further incentive and help to reach a stage where his reward is within his sights.

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