The psychology of rewards – Five reasons why reward programmes really work

• Operant conditioning – reinforcing behaviour through reward

The basic principle behind many reward programmes comes from behavioural theory: people tend to repeat a behaviour when it is rewarded. This is called ‘positive reinforcement’. For example, if every purchase is rewarded with points, there is a high probability that the customer will buy from the same provider again next time. Immediate rewards are particularly effective – they anchor the desired behaviour more firmly in the memory.

• The principle of scarcity – exclusivity creates desire

Limited rewards or time-limited promotions create the impression of scarcity. In psychology, this is known as the ‘scarcity effect’: what is rare is perceived as particularly valuable. Companies make targeted use of this effect to encourage customers to act quickly – for example by offering exclusive deals for loyalty members or early booking discounts.

• Commitment & consistency – once you start, you stick with it

The so-called ‘foot-in-the-door’ effect describes a psychological phenomenon: those who take a small action (e.g. signing up for a bonus programme) are more willing to make a long-term commitment. Customers generally remain loyal to their chosen path – especially if they have already collected points or utilised benefits.

• The brain’s reward system – dopamine and motivation

Every form of reward activates the so-called reward system in the brain – dopamine is released. This neurotransmitter is responsible for feelings of happiness, motivation and learning. Reward programmes that contain an element of surprise or offer variable rewards can make particularly good use of this effect. The allure of the unknown increases excitement and therefore customer loyalty.

• Loss aversion – losing hurts more than winning pleases

According to behavioural economics, the pain of a loss weighs more heavily than the joy of an equally large gain. This mechanism can also be seen in loyalty programmes: For example, points expire if a customer is inactive for an extended period of time. The threat of loss motivates a reaction – and therefore a new purchase.

Conclusion:

Reward programmes work because they are deeply rooted in our basic psychological behaviour. Companies that base their loyalty strategies on these insights not only generate more sales, but also emotional loyalty and lasting customer relationships.

Do you have any questions on this topic or would you like personal advice on your loyalty programme? We look forward to hearing from you!