the Rewarding Strategy

Marketing folks must understand psychology well. When trying to encourage a new behavior, we are supposed to give a reward every time the person does the behavior (continuous reinforcement). We then switch to a different reward schedule to keep the behavior going once it has established.

This is exactly how Starbucks works: we collect stars for every purchase. And for every 125 stars collected, we redeem for a freebie. We call the rewarding strategy fixed ratio schedule, where “reinforcement” is based on the number of stars collected, and the number is always the same. However, under this strategy, customers will buy a lot of coffee over a short period of time to collect certain amount of stars and get the freebie, but behavior will drop after that.

To stimulate and speed up the behavior all over, the coffee magnate is constantly launching the star dash program — providing bonus stars based on consecutive behaviors. For example, a variable amount of bonus stars come after 3 consecutive purchases, sometimes 5, sometimes 6, and so on. They use variable ratio schedule as a business stimulus: the reinforcement is based on how many times customer does the behavior, but it changes all the time.

By the goal-gradient effect, customers will accelerate their behavior as they progress closer toward a goal. So by having bonus stars, they think they already had some progress, they work faster to fill up what’s left for 125.

The rewarding strategy breaks purchasing goals into small and manageable steps, making customers feel that they have a good chance of reaching the goal so they are easily addicted to purchase over and over, less likely to switch to other coffee brands, too.

the Rewarding Strategy