How to Use Uncertainty and Rewards to Your Advantage

May 17, 2018
Uncertainty-Feature

Uncertainty is becoming increasingly popular in ecommerce.  From the rise of subscription boxes to the continued success of eBay auctions, customers are still drawn to shopping experiences that hold a bit of mystery.  

This fascination isn’t that different from the excitement of getting a new pack of baseball cards as a kid.  Not knowing which ones you were going to get was half (if not most) of the fun, and this type of thrill is what prompted you to buy pack after pack even if you didn’t get the ones you wanted.  

Clearly, the phrase “a bird in hand is worth two in the bush” doesn’t always ring true, and you can take advantage of that with your own customer experience -- in particular, with your rewards program.

 

Why Uncertainty is More Powerful Than Certainty

There are two types of rewards you can offer your customers: certain rewards and uncertain rewards.

Certain rewards have a fixed outcome that your customers know about.  Fixed discounts are a great example: customers understand that if they spend X dollars at your store, they’ll receive a $5 discount.

"Certain rewards have a specific fixed outcome, while uncertain rewards have at least two potential outcomes."

Uncertain rewards, on the other hand, have at least two potential outcomes.  In the fixed discount example, customers would know that they could earn a reward for spending X dollars, but they wouldn’t know if they were going to receive a $2 discount or a $10 discount.

Based on these definitions, the idea that uncertainty is more motivating than certainty sounds very counterintuitive.  Why would anyone consciously take a risk that might not pay off as well? However, while this might sound a bit backwards there are three great reasons that prove otherwise.

Uncertainty is More Exciting

Not knowing what’s coming next can be a very exciting.  Think about the last time you watched a movie or read a new book -- it’s no fun to read or see one that you already know the ending to, and the same goes for your rewards.  Actions that might not have been super thrilling to complete before are suddenly more enticing and valuable because your customers can’t be sure what they’re going to get out of it.

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Uncertain rewards make your customer experience feel more exciting by adding an element of mystery.

This transition from ordinary to extraordinary makes seemingly “mandatory” actions feel more enjoyable, rejuvenating your customer experience.  Just a small shot of the unexpected can keep your customers on their toes and excited to see what’s coming next.

Uncertainty Increases Customer Investment

When your customers don’t know what your program’s positive outcome is going to be, they get intrigued.  Uncertainty shifts the emphasis away from the reward itself to the process of earning it. When that process is more exciting, customers are more willing to invest in more uncertain rewards along the way.

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Customers invest more into your customer experience when the process for earning a reward is more enjoyable.

By drawing attention to the process, customers are forced to evaluate their experience with you more closely.  Since they care more about it, they subsequently become more willing to invest time, money, and effort into every interaction with your brand long term.

Uncertainty is Less Expensive

As customers focus more on the earning process and their personal investment with your brand, the value of the reward itself becomes a secondary factor.  This makes it possible for you to offer uncertain rewards with a high perceived value and low actual cost.

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Uncertainty is more valuable than the actual cost of a reward.

With uncertain rewards, the excitement of earning each reward supplements the lower value of the reward itself, keeping the emphasis on the process.  As a result, customers will be satisfied with simply discovering what it is, not how much it’s worth.

 

How to Incorporate Uncertainty Into Your Rewards Program

Even though uncertainty can be extremely powerful on its own, it’s even more effective when combined with a rewards program.  Reward programs are already designed to motivate customers to engage with your store on a regular basis, and uncertain rewards up the ante with something your best customers don’t expect.

Sports memorabilia brand Topps does this incredibly well.  Let’s use them as a model to explore three ways to incorporate uncertainty into your rewards program.

Offer Mystery Free Product Rewards

Free is always better.  Regardless of how much a free product reward is worth, it always feels like a more significant reward than a coupon.  Whether it’s branded swag, house brand products, or something similar, free products encourage engagement, increase your program’s sense of fun, and guarantee satisfaction.  That’s because the perceived value is high regardless of how much it actually costs you to produce.

Topps Now tier list

You can crank this perceived value even higher by making the products customers can earn a secret.  Topps offers mystery baseball cards as a monthly reward for their best customers. While customers don’t know which card they’re receiving ahead of time, they do appreciate the value of the card for how it relates to their interests, and look forward to it month after month as a result.

By directly tying this VIP reward to their target audience’s interests, Topps is able to inject uncertainty into their customer experience in a way that seamlessly relates to the rest of their brand -- all while adding a fun sense of nostalgia that deepens the experience!

Use Uncertain Rewards as VIP Perks

Uncertain rewards are very effective at emphasizing the process of earning rewards.  VIP tiers are used similarly, encouraging customers to enjoy the process of engaging with your brand over a longer period of time by offering increased incentives at every point in their journey.

By incorporating uncertainty into a VIP program, mystery rewards become the pinnacle of your rewards experience.  They’re intriguing, motivating, and enticing for customers at any level and become the ultimate gift that keeps on giving because the reward a customer earns once won’t necessarily be the same the second time.  This uncertainty pushes customers to earn enough points to redeem the mystery gift a second time, keeping their repeat engagement rate high.

Topps Now collectable baseball card

Topps’ three-tiered VIP program puts this principle into practice beautifully.  As a member of the second tier (All-Stars), customers are rewarded with a one-time Topps Now MLB Card of the Month for earning that status.  Hall of Famers, though, get an exclusive card once a month for however long they remain in that tier, making the cards the ultimate symbol of status and exclusivity in the program.  

These considerations make it more likely that customers will complete actions in order to earn the program’s top status, boosting program engagement rates.

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Introduce Uncertain Rewards Over Time

While most customers get excited about uncertain rewards, there are others who prefer to earn a sure thing.  If you only offer one type of reward, you run the risk of alienating some potential customers who are motivated by clear-cut discounts and other certain rewards.  

Introducing uncertain rewards over time, however, gives you the opportunity to warm more traditional customers up to the idea gradually.  The more familiar the idea is to them, the more willing they’ll be to try it once your other rewards have proven to be valuable up front.

The key is establishing value clearly and quickly upfront before expanding your program.  While you can do this in a number of ways, Topps chose to do it with welcome points, birthday rewards, and an integrated referral program.  Just for joining their program, having a birthday, and making one successful referral I can earn my first $5 off reward, establishing a clear connection between engagement and rewards.

Topps Now customer panel with rewards

By allowing customers to redeem points for dollars off coupons at any level of their program, Topps makes their VIP program’s value easy to understand.  This motivates customers to stay engaged, and gives customers time to see and experience value before “taking a chance” on the mystery card rewards offered at the highest level of the program.

This type of gradual integration makes uncertainty less of a risk or concern for new and returning customers alike, keeping the program’s excitement and allure intact.

 

Uncertainty is a Sure Thing for a Successful Rewards Program

If you want to find the ultimate motivational tool for your rewards program, uncertain rewards and a VIP program are a match made in heaven.  Not only can they help you save costs on rewards, but they also work together to improve your overall customer experience, giving one small (and mysterious) change huge dividends for both you and your customers.

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