The consumer research team of Nunez and Dreze wanted to test whether or not buyers would be more loyal and return for repeat sales if they were given a head start on an incentive program.
To test their hypothesis, they handed out "loyalty cards" to customers of a local car wash with the instructions that every additional wash that was purchased would earn a stamp on the card. When the loyalty card was filled, the card holder would get a deluxe wash free of charge.
What the cardholders weren't told was that there were two types of cards. Half the loyalty cards had places for eight (8) stamps. The other half had places for ten (10) stamps with the first two places already being stamped. In essence, the two cards were the same as they both required eight stamps for a free wash.
After a number of months the test was completed and the data was compiled. Twice as many of the ten stamp cards were turned in for the free wash as the eight stamp cards. Apparently, people that felt they had a head start (a "free" 20% of the goal was already reached before they returned for their first repeat purchase) on their goal tended to finish twice as often as the 8-stamp group.
Not only were the 10 stamp cards returned more often, they were turned in faster - 3 days faster between washes for the 10 stamp group. It was also documented that the closer people got to completing their loyalty goal, the more effort they exerted on finishing the program so they could claim their goal.
Granted, this was just one small test and your results may vary. But as an Internet marketer, I'm thinking to myself . . . how can I apply these findings to my own customer loyalty initiatives? Here are a couple of my own ideas:
- Am I using customer retention incentives? If not . . . why not?
- What can I offer in my own business as a loyalty reward that customers will want?
- Can I offer incentives that will speed up repeat purchases?
- When asking for customer input or feedback, are there incentives I could give to nudge my buyers for feedback?
- Are there ways I can make the loyalty process easy and partially done already?
- In my sales copy . . . how can I show prospects that they have already taken some of the important and necessary steps toward reaching their goal?
- How can I structure my sales process (or funnel) so the prospect feels like he/she is making progress toward an end?
- Can I help my customer "keep score" so he sees that he is making progress?