Category Archives: Rewards

Does The Entourage Effect Impact Loyalty Schemes?

Does Exclusivity Sometimes Backfire?

Many organisations offer their best customers exclusive rewards to acknowledge their value and to reduce churn amongst their most valuable customer segment. The entourage effect suggests this exclusivity can sometimes harm the effectiveness of a scheme where a VIP customer has a strong entourage.

For example, in online gaming  VIP players are usually managed by a dedicated team of customer services staff who monitor their behaviour and will speak to them on a regular basis. These  VIP schemes offer special promotions, free gifts (e.g. iPads), cash-back for large losses and they are  invited to exclusive VIP parties and events.

Image of Gala Bingo VIP scheme page
Image Source: Gala Bingo

The exclusivity of VIP events and promotions is supposed to enhance the customer’s personal feelings of status. This is based upon the principle of scarcity which suggests that by restricting the availability of a reward it increases its perceived value.

However, research published in the Journal of Consumer Research (2013) suggests the existence of an entourage effect which means VIPs may feel higher levels of status when they are able to share their experience with their followers.

What is the entourage effect?

The entourage effect results in a heightened sense of status when a VIP shares other-wise exclusive benefits with a wider group of connected individuals. The effect appears to be driven by an increase in feelings of connection with their guests.

What causes the entourage effect?

Humans are highly connected and “super social apes” (Herd, 2009). This means people are often heavily influenced by the behaviour and opinions of others. Further, possessing status is a strong human motivation (Fiske and Taylor 2008; Taylor and Brown 1988) and as a result people frequently undertake behaviours for the purpose of signalling information about their actual or desired status. This is partly why people buy premium brands, large houses and expensive cars.

Why do brands treat VIPs differently?

Studies have indicated that rewarding customers does increase their perceived status (Dre’ze and Nunes 2009) and results in stronger brand loyalty and customer satisfaction. As the majority of an organisation’s revenues are often generated by a small proportion of customers (see the Pareto principle), it is important to reward and retain VIP type customers.

However, many VIP schemes allow customers to share these exclusive benefits by inviting a guest along. But the danger here is that this could be perceived to reduce the exclusivity of the experience and thus the overall attractiveness of the benefits. This is based upon the scarcity principle which normally suggests that the more exclusive an experience is the greater its perceived value and the higher is its potential for signalling one’s status (Bourdieu 1986).

The entourage effect challenges this theory when it comes to VIP style reward schemes. The research suggests this is not because VIPs don’t want to feel lonely, that they desire public visibility of their status or want to make people feel indebted to them. No, the research suggests that the entourage effect is due to our desire for a heightened feeling of social connection.

Implications for reward schemes:

  1. Avoid making loyalty schemes too exclusive that it prevents VIPs from sharing experiences with their entourage.
  2. Allow VIP customers to add guests to events to elevate their perceived status. The research suggests this provides companies with an opportunity to increase loyalty and sales from their most valuable customers.
  3. The entourage effect does not apply to the notion of a “trophy wife” – a relatively scare person who increases the status of the other individual in the relationship. It’s the individual’s duty to support the trophy wife (Baumeister and Vohs, 2004) whilst it is the brand’s responsibility to develop and maintain the relationship with the entourage.
  4. See VIPs as groups rather than individuals. As people are social creatures it is important to treat VIPs as a group rather than a set of unconnected individuals. Taking this approach is more likely to generate long-term benefits in respect of improved retention and increased customer life-time value.


The entourage effect demonstrates the importance and power of our social connections in potentially elevating our status within our in-group. Even when this reduces the exclusivity of an experience our social nature offsets any loss in scarcity by increasing our feeling of social connection.

However, the research does indicate that the entourage effect is significantly reduced when there is a large physical distance between the VIP and their entourage, if the treatment is not preferential or if the guest also has a legitimate right to attend the VIP event themselves.

Overall though, the entourage effect indicates that it is beneficial for VIP loyalty schemes to allow members to invite guests to events. Loyalty schemes should make allowance for the entourage effect by encouraging VIP customers to pre-register close friends or relatives for events and promotions to enable them to fully benefit from the entourage effect.

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  • About the author:  Neal provides digital marketing optimisation consultancy services and has worked for  brands such as,, and He uses a variety of techniques, including web analytics, personas, customer journey analysis and customer feedback to improve a website’s conversion rate.


The Psychology of Pokemon Go

Learn the psychological secrets of Pokémon Go’s success!

In just two weeks Pokemon Go, the augmented reality smartphone game designed by Niantic, achieved over 21 million active users in the US, more than Candy Crush did at its peak. The game’s popularity has quickly spread in other countries  and it is now becoming a global phenomenon. So, why did Pokemon Go become a such an instant success and what are the psychological buttons that it pressed to create so many engaged users?

1. Nostalgia from a childhood brand:

Pokemon is a brand that has been established and has grown across multiple entertainment categories for over 20 years. This provided Pokemon with the opportunity to target an existing and passionate audience of players who grew up in the 1990’s and wanted to indulge in an old obsession. This instantly helped Pokemon Go establish itself on a new platform (smartphones and tablets) and created the conditions for the game to spread through social networks to a more diverse and younger audiences.

Image of implicit goals
Source: Decode Marketing

The desire for adventure and escapism is just one of a number of implicit psychological goals that motivate brand choice. Using the latest research from psychology and neuroscience marketing consultant Phil Barden has identified 6 key psychological goals that brands can be perceived to meet. The extent to which people perceive that a brand will fully meet certain psychological goals that they find compelling will help determine which one they choose.

Image of Pokemon Go in App store
Source: Pokemon Go, Niantic Inc, iOS App Store

Learning: Leverage brand equity by targeting existing engaged customers to give you a head start to building your app store presence.  Ensure brand communications target appropriate psychological goals that can help generate a strong emotional response to your game or product.

2. Herd mentality:

As social beings our decisions are heavily influenced by what we think other people around us are doing. When in a new or uncertain situation we naturally look to see what other people are doing as a guide to desired behaviour.  Pokemon Go benefited from copy-cat behaviour as our herd instincts assisted the spread of the awareness and adoption of the game through our social networks. Once the number of downloads gave Pokemon Go entry into the download charts this would have further boosted its desirability among trend seekers or gamers unsure about the nature of the game.


Top iOS apps in USA for 23rd July 2016
Source: App Annie top iOS apps in USA for 23rd July 2016


Learning: Using social proof and encouraging people to interact with your brand across offline and online social networks is a powerful influence on success or failure. How people interact with each other and what they do with your product or idea will determine the nature of your brand, not what you set out in your brand guidelines.

3. Novelty gets attention:

Our brains are hard-wired to be wary of change and so the blending of the real world with the digital world of augmented reality brings fantasy into the game experience in a seamless and engaging manner. This creates a novel user experience that attracts attention. Novelty is a powerful psychological trigger for stimulating our brain. Although augmented reality has been around for a number years, Pokémon Go cleverly integrates it with a real-world game that also activates user’s curiosity.

Image of Pokemon Go Drowzee

Learning: Use novelty to grab attention and create curiosity about your brand.

4. We desire control:

The design of Pokémon Go means that players have a good chance of intercepting a monster where ever they travel. There is no necessity to head for a Pokestop or Gym if it doesn’t fit in with the user’s plans. Monsters often pop-up randomly as players go on their daily business.

Pokémon Go allows players to remain in control and it is up to the user to decide how much effort they want to put into the game. This is important from a psychological perspective as autonomy is one of three basic drivers of human behaviour identified by psychologist Daniel Pink that make people happy and engaged in activities.

Image of Pokemon Go with Venonat showing


Learning: Autonomy and our desire to act with choice is something people naturally seek and psychologists believe that it improves our lives. Where possible always offer people choice as we dislike doors being closed or being forced down a particular path.

5. Mastery :

Pokemon Go uses achievements to reward players for progressing through the levels of the game. People love to obtain a high degree of competency in activities they undertake, but can easily get frustrated and abandon a game if a task is not realistically achievable. On the other hand if it is too easy to complete players can lose interest in the game. Pokemon Go achieves a balance by setting a low degree of initial difficulty for new players and using a distance/time barrier to ensure it takes some physical effort to discover more creatures.

Learning: Ensure challenges and tasks are realistically achievable, but not so easy that players lose interest. Mastery is one of our most powerful and intrinsic motivators which drives our passion for achievement.

Pokemon medal for 10 normal Pokemon
Source: Pokemon Go, Niantic Inc

6. Variable ratio schedule reward model:

In the 1950’s the American psychologist B.F. Skinner conducted experiments to understand how people respond to different reward schedules. He discovered that a variable ratio schedule, where the reward is based upon the number of times the task is undertaken, but the timing is randomised to make it unpredictable, is the best method for encouraging repetitive behaviour. This type of schedule encourages people to complete the behaviour over and over again as they are uncertain when the next reward will be received. It is also resistant to extinction by its very nature and can make some behaviour addictive.

Learning: Link rewards to the frequency of the behaviour, but use a variable ratio schedule to make the timing of the reward unpredictable.

Pokemon Go level up 4
Source: Pokemon Go, Niantic Inc

7. Use classical conditioning to obtain an automatic response:

When a user walks near a Pokemon, gym or Pokestop, their smartphone gives an audible buzz. As the players is then rewarded with a new Pokemon or other creature this sound becomes associated with the forthcoming reward in the same way that Pavlov’s dog would salivate at the sound of a bell. Classical conditioning creates automatic behaviours by paring a stimulus (a sound) with a response (search for monster nearby).

Learning: Use audible sounds, smells or movement to create automatic behaviours through classical conditioning by pairing a stimulus with a response. Once users have become conditioned to react in a certain way, you may pair another stimulus to the desired behaviour and create a new automatic response.

Image of Pokemon Zubat before capture
Source: Pokemon iOS app


8. We are all social beings at heart:

Unlike most apps, Pokemon Go provides the opportunity to meet new people because it requires you to visit local landmarks and walk to places nearby to find Pokémon’s. As human beings we are hard wired to connect and interact with other people. Indeed, social isolation and loneliness are harmful to our long term health and can trigger depression. Playing Pokemon Go therefore benefits are psychological health by creating opportunities for gamer’s to meet and interact with other people.


Image of Pokemon Go gym

Learning: Allow people to share or interact with other people as this is an important human characteristic with many benefits for the individuals concerned.


9. We benefit psychologically from walking:

There is increasing evidence to suggest a sedentary lifestyle is harmful to our health and that walking is beneficial from both a psychological and physical perspective. We have an innate desire to get outside and research suggests that walking can reduce depression and our risk of diseases such as diabetes.


Learning: Creating a game or product that requires or encourages physical exercise has health benefits for the customer and can create natural breaks in product usage which improves attention and engagement.

Image of Pokemon Go map
Source: Pokemon Go, Niantic Inc

10. Good timing:

Launching the game in the summer and just at the start of the holiday season meant that people are already primed and ready to go outside and explore. We are naturally drawn to sunlight because it increases the amount of vitamin D in our bodies which can help prevent cancer and improves our alertness and mental performance.

Learning: Always consider timing and how it may influence usage to give your product or campaign the best chance of success. Research your audience to identify key factors influencing adoption or likelihood to view your content.

Image of Pokemon Rattata outside Pets at Home store
Source: Pokemon Go, Niantic Inc


11. Easy equals true:

The app is so simple and intuitive to use that it does not require any detailed instructions or much practice to become competent. This means there is little friction associated with getting started and this minimises cognitive load which encourages continued engagement with the app.  Many apps are so poorly designed that they require extensive onboarding instructions and navigation aids. Such complexity can cause cognitive strain and frustration which often leads to apps being abandoned.

Learning: If your user interface requires detailed instructions or navigation aids to allow users to learn how to use it you have failed. Keep user interface designs simple and intuitive.


Image of Pokemon Gym description
Source: Pokemon Go, Niantic Inc

12. Piggy back on existing habits:

People are creatures of habit and so adoption is much easier if you can piggy back off an existing habit rather than having to create a new habit. Most smartphone users take their devices with them as they go for a walk or travel to the office or the shops. Pokemon Go was therefore able to benefit from habitual behaviour which assisted take-up of the game.


Learning: Where possible identify existing habits that your product or campaign can benefit from rather than trying to create a new behaviour.

Image of Pokemon Horsea creature
Source: Pokemon Go, Niantic Inc

13. The power of free:

We are attracted by free apps because people are inherently afraid of loss and free is a powerful motivator because we don’t like to miss out on a bargain. Further, allowing users to play for free minimises the perceived risk of signing up to Pokemon Go because there is no monetary cost to the player if they subsequently find they don’t enjoy the game.

In addition, even partial ownership (e.g. a free trial) tends to make people more attached to what they have and make them focus on what they could lose rather what they may gain. This is why free trials offered by the likes of Spotify and Netflix are so successful.

Pokemon Go generates revenues by players purchasing  virtual coins to exchange for items such as Pokeballs to capture monsters. Once players have moved up a number of levels they may also want to pay to store, hatch, train (in the gym) and battle opponents. Companies also have the ability to sponsor locations to attract players to a real location.


Learning: Ownership changes are our perception of things and our aversion to loss makes it more difficult to give up things that we have. For non-fremium apps, offer a free trial to give users ownership and allow them to check out the user experience. To monetise a free app allow players to buy in-app currency to spend on digital goods or enter competitions.

Image of loading screen for Pokemon Go
Source: Pokemon Go, Niantic Inc


What should we take out from Pokémon Go’s success?

Good marketing planning and having the right partners for a venture certainly help. Although we may not be lucky enough to have a global brand that has 20 years of heritage behind it, we can still be careful to create a compelling proposition and ensure that implementation is not rushed. What Pokémon Go does show is that if you can align your marketing with human psychology you will benefit from important drivers of consumer behaviour.

Thank you reading my post. If you found this useful please share with the social media icons on the page.

You can view my full Digital Marketing and Optimization Toolbox here.

To browse links to all my posts on one page please click here.

  • About the author:  Neal provides digital optimisation consultancy services and has worked for  brands such as, and  He identifies areas for improvement using a combination of approaches including web analytics, heuristic analysis, customer journey mapping, usability testing, and Voice of Customer feedback.
  • Neal has had articles published on website optimisation on  and as an ex-research and insight manager on the GreenBook Blog research website.  If you wish to contact Neal please send an email to You can follow Neal on Twitter @northresearch and view his LinkedIn profile.

The Psychology of Rewards & How To Motivate Your Customers

Understanding Automatic Behaviour:

To encourage visitors to undertake a new behaviour on your  website, such as making a first purchase or playing a game, you might want to offer something to reward that activity. But when should you provide a reward and how do you encourage repetitive behaviour?

These were the same kind of question that the American psychologist B. F. Skinner wanted to answer in the 1950s. He wanted to go beyond the work of Pavlov on ‘classical conditioning’ and investigate how rewards influence behaviour.


Reward psychology:

Pavlov discovered that animals (including humans) learn to respond automatically to certain stimuli (e.g. food) and that if you add further stimuli (e.g. a bell before the food arrives), you can also get them to automatically respond  to that (e.g. salivate) in the same way. If you then remove the original stimulus (e.g. food) animals will continue to respond to the new stimuli because the behaviour has become automatic.


Encouraging Automatic Behaviour:

Image of mri-head scan

Classical conditioning is important to conversion because we are more likely to be successful if we can make people do things automatically.  This is one reason to ensure your navigation and site layout conform to web conventions (e.g. navigation is either at the top or left hand-side of the page) as people will automatically know where to look for them.

Skinner developed powerful new theories of behavioural analysis (often referred to as operant conditioning), based upon continuously testing different scenarios to identify how the frequency and predictability of rewards influences behaviour.  He called these differences “schedules”. The five schedules he examined are:

  1. Continuous reinforcement – You reward the behaviour every
    time it is completed.
  2. Fixed interval – You reinforce the behaviour with a reward
    at fixed time intervals after the first time the behaviour is undertaken.
  3. Variable interval – You provide a reward after an interval
    of time, but you randomise the amount of time to make it unpredictable.
  4. Fixed ratio – Rather than basing the reward on time, it is
    determined by the number of times the behaviour is completed and this number remains constant.
  5. Variable ratio – Here the reward is again based upon the
    number of times the task is undertaken, but the number is randomised to make it unpredictable.

So, what did Skinner discover about these different
schedules and the psychology of reward? How can we apply what he learned to marketing and website optimisation?

Establishing a new behaviour:

Image of cash back promotions from

Continuous reinforcement is the most effective schedule when we are trying to establish a new behaviour. Providing a reward every time helps to reinforce the behaviour and there is no uncertainty about getting the reward. However, once the behaviour is established switch to a different schedule as otherwise the behaviour will become intermittent and stop if the reward ceases.

Many e-commerce websites use money off discounts or coupons
to reward people for making their first online order.  It is a clear and unambiguous way of incentivising people to add items to their basket and complete the order process.  However, many customers fail to return regularly and so what should companies do next?

Making Behaviour Stick:


Free slots games image


To encourage repeat behaviour a variable ratio schedules is most effective because it is linked to how often the behaviour is undertaken. As it is unpredictable people complete the behaviour over and over again as they are unsure when the next reward will be received.  Such schedules are resistant to extinction by their very nature and help to make some behaviour addictive.

Gaming websites understand this aspect of psychology very well. They ensure rewards are directly linked to how many times a game is played, but use the unpredictability of randomising the frequency of rewards to maintain a level of  suspense.  Loyalty schemes often fail because although they may be based upon the frequency of purchasing behaviour they are usually too predictable and lack that random reward.

Regular and Stable Behaviour:

Image of man on surf board

When you don’t want to encourage a lot of the behaviour at once, but would prefer it to be steady and regular, a variable interval
schedule is usually best. This is not very effective at establishing new behaviours as people are unsure if they will get rewarded when they complete the task.  However, once the behaviour is established
this type of schedule provides a clear incentive to continue with an activity provided the maximum time period between rewards is not too great.

E-commerce sites use this to their advantage by varying the  frequency of discount offers and sales to encourage visitors to keep returning to their website. If the timing of discounts is too predictable visitors soon learn only to return to the site when they know an offer is available. Making sure that the timing of discounts is unpredictable creates a reason to return on a regular basis.

For a Burst of Behaviour, But it Won’t Last:


To get a sudden increase in activity a fixed ratio schedule will result in such behaviour. But beware as once the goal is achieved you will see decline in the behaviour. The classic example is the buy 10 cups of coffee and get the next one free.

Show How Close Customers are to The Reward:

Research into fixed ratio schedules has shown that you should show how close people are to achieving the reward as people accelerate their behaviour as they progress towards the goal (see goal gradient effect). The insight here is that people are more motivated by how much is left to reach their target rather than how far they have come.

For a Sudden Spike in Behaviour:


The problem with fixed interval schedules is that people have a tendency not to take much notice of them until just before the time the reward is due.  They are too predictable and so continuous reinforcement would be more effective at encouraging a new
behaviour.  Seasonal sales suffer from this as visitors surge during the sale but fall off dramatically once it is over. Flash sales can help counter this predictability and give visitors more reason to return to your site on  a regular basis.

Image of Flash Sale

Encourage Baby Steps:


Image of toddler taking first steps

What if you want to encourage a new behaviour, but your visitors can’t or won’t adopt the behaviour until they have undertaken other tasks (e.g. registration or adding items to the basket). Shaping is psychological process that involves rewarding an earlier activity that will lead to the desired behaviour.

This works best with small behaviours and that you identify every
instance of the activity that you want to encourage. It is then important that you reward it every time with something the visitor sees as a positive reinforcement (e.g. praise or loyalty points etc.) and give it immediately after the behaviour. Shaping is a great way of nudging your visitors towards your ultimate goal by positively reinforcing those small baby steps that lead to the target behaviour.

Choice of Reward:


When selecting rewards it’s important to give something a person really wants as otherwise it won’t motivate them.  Try A/B testing different rewards to see what engages your visitors most.  Many organisations copy what their competitors are offering, but try testing something novel as people are instinctively drawn to new or different rewards.

Remove Something Your Customers Don’t Like:


Negative reinforcement, where you take something away that
people don’t like, can also work to encourage a desired behaviour.  Many e-commerce sites now offer to remove shipping costs completely if your order value is above a certain amount. People
dislike paying for shipping costs and so by removing them you reward customers whose basket value is over the specified amount.

Punishment is Less Effective:


Image of alcatraz prison cells

Punishing people is different from reinforcement as you are
applying a behaviour that the person doesn’t want to reduce an activity you want to stop. However, punishment is generally less effective than reinforcement because it is harder to get people to stop doing something than finding an alternative for them to do instead. Indeed, punishments can sometimes back-fire as people change their behaviour in unexpected ways to avoid the pain.

In one case a day care nursery applied a late pick-up fee for parents who collected their children after 6pm with the intention that it would reduce the behaviour. The opposite happened as the nature of the relationship changed.  Before the fee was applied parents might feel some guilt that they were preventing the day care staff from getting home. But once the fee was applied it became a pure monetary transaction that the parents felt they were compensating the nursery for and so did not feel so guilty about.



Using the appropriate schedule for rewarding visitors on your website can be a powerful means of engaging and encouraging desired behaviours. Ensure you take time to test different rewards though so that you find what motivates your customers. Try removing things that might cause your customers pain (e.g. fees or charges) especially if you can link it to targeted behaviours.

The psychology of reward tells us that it is better to motivate people with a positive reinforcement than trying to punish them for behaviour that you don’t want. Just like with Children it is better to reward positive behaviour than to focus on bad behaviour. Removing things customers don’t like though can be a powerful motivator.

Thank you for reading this post. If you found this post useful please share using the social media icons below.


You can view my full Digital Marketing and Optimization Toolbox here.

To browse links to all my posts on one page please click here.

Recommended reading: How to Get People to Do Stuff: Master the Art and Science of Persuasion and Motivation by Susan M. Weinschenk, Ph.D.

  • About the author:  Neal provides digital optimisation consultancy services and has worked for  brands such as, and  He identifies areas for improvement using a combination of approaches including web analytics, heuristic analysis, customer journey mapping, usability testing, and Voice of Customer feedback.  By  aligning each stage of the customer journey  with the organisation’s business goals this helps to improve conversion rates and revenues significantly as almost all websites benefit from a review of customer touch points and user journeys.
  • Neal has had articles published on website optimisation on  and as an ex-research and insight manager on the GreenBook Blog research website.  If you wish to contact Neal please send an email to You can follow Neal on Twitter @northresearch and view his LinkedIn profile.