You are given a frequent buyer card for your local coffeeshop. Each time you buy a cup of coffee you get a stamp on your card. When the card is filled you get a free cup of coffee. Here are two different scenarios:
Card A: The card has 10 boxes for the stamps, and when you get the card all the boxes are blank.
Card B: The card has 12 boxes for the stamps, and when you get the card the first two boxes are already stamped.
Question: How long will it take you to get the card filled up? Will it take longer or shorter for scenario A vs. scenario B? After all, you have to buy 10 cups of coffee in both scenarios in order to get the free coffee. So does it make a difference which card you use?
The answer apparently is yes. You will fill up the card faster with Card B than with Card A. And the reason is called the “goal-gradient” effect.
The goal-gradient effect was first studied in 1934 by Hull with rats. He found that rats that were running a maze to get food at the end would run faster as they got to the end of the maze.
The goal-gradient effect says that you will accelerate your behavior as you progress closer to your goal. The scenarios I describe above were part of a research study by Ran Kivetz, Oleg Urminsky, and Yuhuang Zheng (full reference is below). They decided to see if humans would behave like the rats. And the answer is, yes they do.
Here are some important things to keep in mind about the goal-gradient effect:
- The shorter the distance to the goal the more motivated people will be to reach it.
- You can get this extra motivation even with the illusion of progress, as in Scenario B above. There really isn’t any progress (you still have to buy 10 coffees), but it seems like there is some progress so it has the same effect
- People enjoy being part of the reward program. When compared to customers who were not part of the program, the customers with the reward cards smiled more, chatted longer with café employees, said “thank you” more often and left a tip more often (all statistically significant for you research buffs out there).
- In a related experiment the same researchers showed that people would visit a web site more frequently and rate more songs during each visit as they got closer to a reward goal at the site. So this goal-gradient effect appears to be generalizable across many situations.
- Motivation and purchases plummet right after the goal is reached. This is called a “post-reward resetting phenomenon”. If you have a 2nd reward level people will initially not be very motivated to reach that 2nd reward. Right after a reward is reached is when you are most at risk of losing your customer.
And for those of you who want to read the original research:
Ran Kivetz, Oleg Urminsky, and Yuhuang Zheng, The Goal-Gradient Hypothesis Resurrected:Purchase Acceleration, Illusionary Goal Progress, and Customer Retention, Journal of Marketing Research, 39 Vol. XLIII (February 2006), 39–58.
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