Real vs. Virtual Rewards: The Battle Over Consumer Motivation

Real vs. Virtual Rewards: The Battle Over Consumer Motivation

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Moderator Christine Lagorio of Inc. Magazine is guiding panelists, Samantha Skey of Recyclebank, Irving Fain of CrowdTwist, Kris Duggan of Badgeville and Brian Wong of Kiip, in a discussion about loyalty programs and the ways in which they have evolved.

Principally they are exploring why physical-world rewards (prizes, money, free-products) and other tangible benefits aren’t necessarily the drive behind membership in loyalty programs – or how they are.

Lagorio introduces everyone on the panel, the youngest of whom Brian Wong, is 20 years old. (Happily, the oldest panelist is not named!)

What are the different types of rewards your companies offer? she asks.

Skey begins by explaining all the different types of rewards available at Recyclebank for green behaviors. They began with recycling and then moved on to energy reduction, carpooling, and pledges to reduce the carbon footprint. They are always trying to better mix the right tools together to keep the experience sustainable and fun.

Fain talks about tangible rewards and early access to something that others don’t have as being a primary driver. He suggests that monetary items seem to have more luck in sustaining long term loyalty.

Badgeville, says Duggan, looks at rewards as different levers and they try to use them to drive behavior. Lables and reputation-based motivators generate content: financial incentives like coupons and discounts. They construct rewards by looking at the depth of social commitment. In highly social communities they are more important.

Wong energetically greets the crowd and then explains that content, product and experience are the three most important things. When you’re playing the games you love on your phone and you can win free stuff—a Starbucks drink or something just walking down the street, it’s a great driver.

Lagorio admits she doesn’t want to be the mayor of anything but she likes status or when someone follows her on Twitter.

Wong calls it an “E” moment. The validation is important for everyone. Getting retweeted. It’s a great reward.

Skey says that the onus is on the companies to know what their goals are. Do you want to reduce the amount of garbage in a landfill? How do you motivate that? What’s most efficient? What’s cost effective?

Duggan wants to figure out who is using the site, how can you connect with them? It’s about tracking identiy and behavior, who is on their social graph and then tracking the data. Most importantly discover how to do that without making a lot of noise for the consumer.

How do you keep consumers from feeling like their privacy is being invaded? Logoria asks.

Skey says, “We are going through people’s trash which can be creepy.” But Recyclebank is open about it with their users. If people see how the info is being used, not for a Botox ad but to actually learn things about communities and recycling habits, and also to applaud the individual and make them feel good, they are less likely to feel violated.

When you are rewarding consumers are they targeted? asks Logorio.

They should be more targeted, admits Skey, but they like to let consumers select how they’d like to be rewarded. Recyclebank uses a point system.

Fain points out that everyone agrees that the notion of privacy is changing- the amount of digital content, what people are willing to share. You have to be a good data citizen. It puts a moral onus on you as a company to use the information responsibly. And you have to be transparent.

Duggan agrees and adds that you have to find out how much your consumer wants exposed. Connectedness and the opportunity for discovery are key.

Wong points out that the teen generation will give up a lot of info even if they aren’t sure who or what they are giving it up to.

On regulation, Fain says, when people cross the line regulations come up.

Skey argues that the divide between parents and kids is changing. Gen X parents aren’t as nice as Baby Boomer parents. They are early children of Divorce, she says to a loud laugh. They want to make sure there are controls in place. They won’t let their six-year-olds do a financial transaction before breakfast. Companies trying to get information irresponsibly will be held accountable, she suggests.

Moving on to rewards Duggan brings up The Black Card – having it is the primary motivator, he says. It is it’s own motivator. Owners of it probably don’t know what the privileges are, the financial value or anything. They just want it. Now social networking allows it to live outside the wallet. Status and reputation are a 10 to one leveraged reward. If you paid me for it, it’s worth less. The more social, the more status rewards have value.

Skey agrees that if your using real vs. monetary, monetary is not sustainable. Driving long term loyalty to a cause is not totally effective. If it’s all about jumping through the hoop to get the dollar, that’s easier to turn off than the drive for approval and status.

Fain suggests that monetary rewards can be layered overtop.

Wong warns that a lot of people are suffering from badge fatigue. It cannot be a part of a fixed ratio rewards schedule. Kiip rewards on variable schedule. Serendipitous rewards– like an airline upgrade model is random and ultimately very effective. Just knowing that the status creates probability is enough.

Fain points out that an upgrade is real. You actually get a seat in first class. It isn’t a virtual reward.

Logorio opens it up to questions:

An audience member wants to know, Do genders respond differently to different rewards?

Skey says women seem to want to exhibit their good works for the environment more than men (laughter). “Shocker!”

Duggan says, Male/female, 18-24? Midwest? It doesn’t matter. If you have an affinity for that brand you are responsive to these techniques.

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