—TechRound does not recommend or endorse any financial, investment, gambling, trading or other advice, practices, companies or operators. All articles are purely informational—
One of the harsh realities for any startup in the booming internet age is that customers don’t have to stay loyal to a certain brand. There are countless options to choose from in every industry, meaning that people can easily switch between services whenever they want.
That’s why your customer loyalty scheme needs to be perfectly designed to get people to keep coming back. One proven way to do this is through the use of random and uncertain rewards.
Taking Lessons from the Entertainment Industry
If you need proof that random rewards work on a vast number of people, all you have to do is look towards the entertainment industry. Almost all entertainment plays into the idea of uncertainty, and the fact that people enjoy not knowing what’s going to happen.
That could be why the European roulette wheel has become one of the most enduring games of all time. The classic red and black wheel has been around for hundreds of years, and there are now live versions of the game online. Part of the enjoyment is that the ball could end up anywhere, and players are rewarded if they managed to guess the outcome.
Films and television series do this as well, but in a different way. Clever stories keep some information concealed from the viewer, only to reveal them later on. Plot twists are a common theme of this form of entertainment as well, designed to shock people with an unexpected outcome.
Why Uncertainty Works in Loyalty
There’s been a lot of research into different loyalty schemes and their effectiveness, and it has been found that variable reward scheduling can have a powerful impact. The idea is that people are conditioned to expect rewards, but they never know when it is coming. This then makes them more motivated to keep engaging.
The concept is easier to implement than ever thanks to the rise of mobile apps and the ability to send notifications to customers. Instead of telling customers when and what the offers will be, you can inform them to watch out for alerts and to keep checking back. Then, by providing uncertain rewards from time to time, they’ll get into the habit of coming back to look for them.
What Are Some of the Best Examples of This in Action?
There are plenty of great examples of businesses that this type of uncertain reward system to ensure that their customers keep returning. Duolingo, for instance, has chests that contain random gems or boosts. This encourages people to log in daily to see what’s in their chest.
Starbucks has also mastered the idea of random rewards. It often has bonus star challenges where it will notify members about how they can earn extra loyalty points for fulfilling certain tasks. This has worked well for the company, which is renowned for its loyalty program around the world.
If you’re wondering why your current loyalty scheme isn’t working, it may be that it’s too predictable and therefore not exciting enough. It may be a good idea to switch to random rewards to see whether this boosts your customer retention rates.
—TechRound does not recommend or endorse any financial, investment, gambling, trading or other advice, practices, companies or operators. All articles are purely informational—
