Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Why offer promotional bonuses? New study shows how (fake) progress can motivate customers

31.01.2006


An important new study explores the impact of artificial bonuses on customer loyalty. For example, putting a few extra "bonus" stamps on a frequent-buyer card – instead of just requiring more purchases in the first place – leads to an artificial feeling of advancement towards a goal…and repeat business. In a forthcoming paper in the Journal of Consumer Research, this phenomenon is termed the "endowed progress effect."



"The endowed progress effect we document is shown to affect the attractiveness of a program to consumers, their perceived likelihood of joining a program, and their expectations of purchasing enough to earn the reward," explain Joseph C. Nunes (University of Southern California) and Xavier Drèze (University of Pennsylvania).

In other words, people are more likely to join and stay loyal to a program if they feel like they are consistently making progress. Nunes and Drèze show this in several scenarios, and also examine the motivational source of these reactions, finding that the dollar value of the bonus is not nearly as important as what fraction of the promotion is completed by the bonus. The critical distinction between whether a program works or not has more to do with consumers perceiving that they are moving along closer toward the goal rather than estimating their losses if they discontinue.


The researchers also point out that the effect is dependent on critical factors such as the reason for the endowment, or bonus. "When there is no reason offered," they explain, "the effect only occurs if the endowment is issued in an alternative currency such as points. However, when progress is recorded in the number of purchases made, the firm must offer a reason for the endowment, even a specious one."

Suzanne Wu | EurekAlert!
Further information:
http://www.uchicago.edu

More articles from Studies and Analyses:

nachricht New study: How does Europe become a leading player for software and IT services?
03.04.2017 | Fraunhofer-Institut für System- und Innovationsforschung (ISI)

nachricht Reusable carbon nanotubes could be the water filter of the future, says RIT study
30.03.2017 | Rochester Institute of Technology

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: A quantum walk of photons

Physicists from the University of Würzburg are capable of generating identical looking single light particles at the push of a button. Two new studies now demonstrate the potential this method holds.

The quantum computer has fuelled the imagination of scientists for decades: It is based on fundamentally different phenomena than a conventional computer....

Im Focus: Turmoil in sluggish electrons’ existence

An international team of physicists has monitored the scattering behaviour of electrons in a non-conducting material in real-time. Their insights could be beneficial for radiotherapy.

We can refer to electrons in non-conducting materials as ‘sluggish’. Typically, they remain fixed in a location, deep inside an atomic composite. It is hence...

Im Focus: Wafer-thin Magnetic Materials Developed for Future Quantum Technologies

Two-dimensional magnetic structures are regarded as a promising material for new types of data storage, since the magnetic properties of individual molecular building blocks can be investigated and modified. For the first time, researchers have now produced a wafer-thin ferrimagnet, in which molecules with different magnetic centers arrange themselves on a gold surface to form a checkerboard pattern. Scientists at the Swiss Nanoscience Institute at the University of Basel and the Paul Scherrer Institute published their findings in the journal Nature Communications.

Ferrimagnets are composed of two centers which are magnetized at different strengths and point in opposing directions. Two-dimensional, quasi-flat ferrimagnets...

Im Focus: World's thinnest hologram paves path to new 3-D world

Nano-hologram paves way for integration of 3-D holography into everyday electronics

An Australian-Chinese research team has created the world's thinnest hologram, paving the way towards the integration of 3D holography into everyday...

Im Focus: Using graphene to create quantum bits

In the race to produce a quantum computer, a number of projects are seeking a way to create quantum bits -- or qubits -- that are stable, meaning they are not much affected by changes in their environment. This normally needs highly nonlinear non-dissipative elements capable of functioning at very low temperatures.

In pursuit of this goal, researchers at EPFL's Laboratory of Photonics and Quantum Measurements LPQM (STI/SB), have investigated a nonlinear graphene-based...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Marine Conservation: IASS Contributes to UN Ocean Conference in New York on 5-9 June

24.05.2017 | Event News

AWK Aachen Machine Tool Colloquium 2017: Internet of Production for Agile Enterprises

23.05.2017 | Event News

Dortmund MST Conference presents Individualized Healthcare Solutions with micro and nanotechnology

22.05.2017 | Event News

 
Latest News

Physicists discover mechanism behind granular capillary effect

24.05.2017 | Physics and Astronomy

Measured for the first time: Direction of light waves changed by quantum effect

24.05.2017 | Physics and Astronomy

Marine Conservation: IASS Contributes to UN Ocean Conference in New York on 5-9 June

24.05.2017 | Event News

VideoLinks
B2B-VideoLinks
More VideoLinks >>>