Customer Retention Issues? Endowed Progress Can Help (Video)

January 6, 2020
Published by Dan Russell

Customer retention is a constant focus for management teams and marketing executives. What makes us want to stick with a brand? What motivates us to stay engaged?

One answer that research on decision science has given us is the Endowed Progress Effect.

When you give your prospect a head start toward a reward, such as getting a free item or reaching a certain rewards tier, they have a higher likelihood of achieving the goal you’ve set out for them (even if it means buying more from you). This Endowed Progress Effect causes us to feel more motivation toward a goal when we get a head start (typically between 20-30%).

This effect causes your prospect to feel a strong sense of progress in place of a feeling of overwhelm. Our Loyalty Kickstart strategy is based on this effect, and it can play a large part in your efforts to increase customer retention, boost sales conversions, and raise customer lifetime value. Watch our Hustlers Lab episode explaining how to do it:

Customer Retention Proven Through Research

300 study participants were each given a loyalty punch card at a car wash. Half of the group received cards with 8 spots to punch, and the other half of the group had 10 spots to punch, but they were given two “free” punches, resulting in only 8 more spots go.

Despite the same level of work required to redeem the free car wash, the group with the 2 free punches redeemed 34% of their punch cards, whereas the other group only redeemed 19% of their cards. Customer retention almost doubled just by adding the head start.

Have Us Do It For You

Team Vivid uses the Endowed Progress Effect in our Testing Rounds. Think your business could raise its customer retention from trying this strategy out? Download our Testing Round Prospectus to explore more.

Primary Source

Nunes, J.C. & Dreze, X. (2006). The endowed progress effect: How artificial advancement increases effort. Journal of Consumer Research, 32(4), 504-512

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Published by Dan Russell

Dan is the founder and CEO of Vivid Labs.