Loyalty, loyalty, loyalty

You may have seen loyalty reward schemes around campus, whether it’s the Grumpy Mules free cup of coffee after 8 drinks or the Bread Oven’s free sandwich after an unnecessary number of BLTs. But maybe its not your caffeine addiction that lures you back, maybe its that sense of loyalty you have to the coffee place you now swear by.

Reinforcement

Loyalty programmes rely heavily on the principles of positive reinforcement. Skinner developed the idea of operant conditioning, explaining that behaviours followed by a reward are more likely to be performed again. In the context of the reward scheme, every time you visit your favourite sandwich place and receive a little meaningless stamp, you feel as though you are being rewarded for buying, and more specifically buying from only this place. The reward scheme is a prime example of a fixed ratio schedule (Pryor, 1985). Consumers are advertised a set of rewards for carrying out specific behaviours, and we know that we will receive a reward every single time we perform the behaviour ie. buying a sandwich.

Goal Gradient Effect

In combination with positive reinforcement, a phenomenon known as the goal gradient effect (Hull, 1932) pushes consumers to buy more and more. The idea is that, the closer the proximity to a final reward, the more one approaches it. In this context, the nearer you get to the free sandwich, the more you will buy to collect those meaningless stamps. This means the shop receives more and more money from you by simply dangling a reward in front of you.

Overall, the price of giving away a free sandwich completely outweighs the revenue they’ve received from your manifested sense of loyalty. 

References

Hull, C. L. (1932). The goal-gradient hypothesis and maze learning. Psychological Review, 39(1), 25.Pryor, K. (1985). Don't shoot the dog! Toronto: Bantam Books.

Skinner, B. F. (1938). The behavior of organisms: an experimental analysis. Appleton-Century. New York.