What is Variable Rewards?

Variable rewards is a tactic marketers often use because it makes a product more enticing to customers.

The element of surprise creates heightened engagement and improves customer retention. It's like treasure hunting – you might find gold, or maybe nothing at all. This sense of adventure is intriguing and leads to repeated interaction with a game, website, or product.

This strategy roots back to the early days of behavioral psychology. Based on the Pavlovian and Skinnerian principles of reinforcement schedules, variable rewards have been found to create stronger and more persistent responses in subjects. Its advent into marketing is closely tied with the rise of online platforms where user interaction and patterns can be analyzed and rewards can be finely tuned and distributed.

When it comes to retaining customers or users, variable rewards work wonders. This is because users are conditioned to expect something unique or different every time they interact with the platform, which encourages them to come back again and again. This helps improve customer retention rate, creating a loyal customer base which is more profitable in the long run.

Examples of Variable Rewards

1. A social media company may display varying content each time the user visits, maintaining their curiosity and motivating them to come back often.
2. An e-commerce platform might offer different daily deals, keeping customers returning to the site in anticipation of a new bargain.
3. An email marketing campaign could send out emails with varying incentives or surprises, such as a percentage discount, free shipping or a special gift.
4. A mobile gaming app might have random reward schemes, such as loot boxes, leading to players logging in frequently in hopes of achieving a rare item.
5. Loyalty programs in retail stores, where customers earn rewards points which may lead to varying redemption rewards.

Marketing Tactics Similar to Variable Rewards

• Gamification: This involves applying game design elements in non-game contexts, making products or marketing initiatives more interactive and engaging.
• Pavlovian Conditioning: Involved in marketing as branding efforts, where a specific stimulus (like a brand logo) is associated with a positive response.
• Skinner's Reinforcement: The principle behind variable rewards, where the behavior is reinforced by providing a reward.
• Behavioral Marketing: It segments users based on their demonstrated behaviors, allowing for better personalization of rewards.
• Customer Loyalty Programs: Schemes designed to incentivize and reward customers for repeat business.

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