Researchers at University of Southern California and University of Pennsylvania set up an experimental loyalty card program at a car wash: Each customer could receive a free car wash after paying for eight.
However, this offer was structured in two different ways: One group of customers were told they’d receive a reward after purchasing ten car washes, but they’d start off the program with a free credit for the first two washes. They had to get eight more. The other group were required to get eight washes before receiving the reward, and they didn’t start off with any free washes.
Of customers in the “get eight, no head start” group, about 20% ended up participating in the program to the point where they received a free wash. But of customers given the head start, almost 35% purchased the eight additional washes to get their free one. In addition, the head start group completed their quota more quickly and kept coming to the car wash more often than did the group who didn’t get the head start.
Help customers focus on how far they’ve come and less on how far they have to go. This applies not just to loyalty programs, but also to layaway plans, for example. Design the payment record card to resemble a pyramid so that early payments show up as a large base and later payments as topping it off.
The general point here is to maintain motivation by maintaining momentum. Retailers also find success in giving frequent shopper program credits for coming into their store periodically, even if the person doesn’t make a purchase on the visit to the store that day.
For your profitability: Sell Well: What Really Moves Your Shoppers
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