Boost Retention With Endowed Progress – Video

December 1, 2019

When someone gives you a head start toward a goal, you experience something called the Endowed Progress EffectThis effect causes a person to feel a strong sense of progress in place of overwhelm. In our Loyalty Kickstart strategy, it provides us with ways to boost customer retention and client referrals.

Boost retention by using the Endowed Progress Effect in your loyalty program, similar to how this study on car washes brought people back for repeat visits.

The Research

A group of 300 study participants were each given a loyalty punch card at a local car wash. 150 people received cards with 8 spots to punch, and the other 150 had 10 spots to punch, but they were given two “free” punches. Despite everyone requiring 8 paid washes to redeem the free wash, the group with the 2 free punches redeemed 34% of their punch cards, whereas the other group only redeemed 19%.

The Vivid Labs Loyalty Kickstart Strategy based on the Endowed Progress Effect


Using Endowed Progress Neuromarketing To Boost Retention

Product Businesses

As a product business, you’ll benefit immensely from giving your customers a head start on any points-based rewards system you offer for repeat sales.

In the same way Zappos runs its rewards program for its customers, you can set up a points-based rewards program that uses the endowed progress effect by welcoming new customers with a big windfall of points upon their first purchase.

This immediate boost in points is similar to how credit card companies offer points upon joining. You can use it as a way to boost retention by pushing customers toward the next sale, or even boosting sales conversions by use this points “windfall” as an incentive to make their first purchase.

Service Businesses

Derek Coburn’s book Networking Is Not Working outlines a strategy for boosting client referrals through experiences such as wine tastings and sporting events.

Your endowed progress strategy, based on Derek’s “Networking 2.0” approach, is to jump your new clients forward in the typical client-appreciation journey they would typically embark on after signing with you. Skipping them forward about 20% in your normal client appreciation process will show them that they are authentically valued. For example, instead of sending a gift card, invite them to a local event with you.

The Endowed Progress Effect will do the rest. After you provide them with an authentic and meaningful experience – one they would normally expect to be reserved for long-time clients – you’ll boost retention of new clients right our of the gates.

Using Endowed Progress Neuromarketing To Boost Referrals

Product Businesses

The Endowed Progress Effect makes it easy for customers to generate strong referrals.

As part of your customer journey’s referral path (see the exercise worksheet), you can add a double-gift reward as part of your new customer welcome process. After they receive their initial product, send them two of another product: one for them to keep and another for them to give away (you can also do this through a voucher, though the effect is lessened due to digital skepticism).

Service Businesses

The next time a client signs on for your service, add a new step to your typical welcome process. Instead of just sharing your affiliate commission structure (if you do in the first place), give them a 20% boost to a higher commission tier.

This gives them the sense that they’ve already made progress toward receiving high commissions, even if they’re brand new to your company and culture.

Question #1: Boost Retention In A Service Business

What if the product being sold is yourself? Let’s say I am a new dentist trying to build a practice. Giving away a loyalty card that gets punched each time you visit seems un-professional and goofy. How does the thought pattern of a customer reward card apply to a business that sells a persons talent as the product?

Boost Retention In A Service Business

Question #2: Boost Retention With Other Businesses

How can I boost retention in a B2B context with this strategy?

Boost Retention With Other Businesses

Question 3: Boost Referrals For Small Businesses

I am an advertising Photographer for magazine advertisements and a Director of TV commercials for advertising. I can’t give money back or it is considered an illegal kickback. Points don’t work. I try to politely ask people out to a baseball game, or a show, or dinner, but it can get expensive. I work almost 100% on referrals, so today’s topic is on the money for me. Any other thoughts about securing new customers and retention?

Boost Referrals For Small Businesses

If you liked this post, check out our post on using The Endowment Effect To Boost Sales Conversions. Be sure to check back regularly for information, insights, and updates on marketing strategies rooted in sound research and experimentation. And book a call with the Vivid Labs team for support of your new marketing ventures with fact-based, rational decision-making.

About Vivid Labs

Vivid Labs is a science-based marketing agency. We focus on conversion optimization, which is the science of improving the performance of a sales or marketing system. We publish our findings and strategies for you to explore and try in your own organization.

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