Study after study shows that our brains love small, predictable rewards more than occasional, large rewards. This principle is on prominent display in the gaming industry where slot machines far outnumber table games in any casino. Those same slot machines, with small stakes and small rewards, show up in gaming industry financial statements as significantly more successful than large-stakes tables. What makes that possible?
Small, Frequent, and Predictable Rewards
The significant skewing of real estate toward slot machines happens because gaming companies know that frequent, small, predictable rewards with unpredictable timing are precisely what our brains crave. Known as a variable ratio schedule of reinforcements, casinos know that customers respond better to a “…schedule of reinforcement where a response is reinforced after an unpredictable number of responses.” This pattern of expectation creates a high, and very steady, rate of responding and a very successful industry.
This principle is part of the allure of Facebook and other social media sites—once sites have a critical mass of active people providing frequent, yet unpredictable, small bits of content, users feel rewarded for continually checking the site and app. It’s enough to keep people coming back repeatedly, thereby increasing the content in a virtuous cycle. Just as with slot machines, these sites delight consumers when rewards average out every ntimes, but not always on the predictable nth response.
This “predictable unpredictability” is equally successful in marketing. By continually varying the level or frequency of a promotion or consumer benefit so that it still averages out over time, brands appeal to the consumer brain that loves the small, predictable, yet unpredictable, reward. In an increasingly noisy world, this practice very effectively draws attention and repeat visits to stores, kiosks, and Web and mobile sites. It shows up in the bottom line of companies that understand this just as it does for the gaming industry.
To know more about this and other success factors in customer loyalty marketing, check out Nudges, Influence and Rewards webinar series.