Friday, May 23, 2014

animals expend more effort as they approach a reward

RAN KIVETZ, OLEG URMINSKY, and YUHUANG ZHENG*
 
The goal-gradient hypothesis denotes the classic finding from behav-
iorism that animals expend more effort as they approach a reward. Build-
ing on this hypothesis, the authors generate new propositions for the
human psychology of rewards. They test these propositions using field
experiments, secondary customer data, paper-and-pencil problems, and
to bit and logit models. 
 
The key findings indicate that 
(1) participants in a real café reward program purchase coffee more frequently the closer
they are to earning a free coffee; 
(2) Internet users who rate songs in
return for reward certificates visit the rating Web site more often, rate more songs per visit, and persist longer in the rating effort as they approach the reward goal; 
(3) the illusion of progress toward the goal induces purchase acceleration (e.g., customers who receive a 12-stamp coffee card with 2 preexisting “bonus” stamps complete the 10 required purchases faster than customers who receive a “regular” 10-stamp card); and 
(4) a stronger tendency to accelerate toward the goal predicts
greater retention and faster reengagement in the program. The concep-
tualization and empirical findings are captured by a parsimonious goal-
distance model, in which effort investment is a function of the proportion
of original distance remaining to the goal. In addition, using statistical and
experimental controls, the authors rule out alternative explanations for
the observed goal gradients. They discuss the theoretical significance of
their findings and the managerial implications for incentive systems, pro-
motions, and customer retention.
 
The Goal-Gradient Hypothesis Resurrected:
Purchase Acceleration, Illusionary Goal
Progress, and Customer Retention

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