[Kwerks - #15] $300 today or $30 every year for the next 20 years?
Wait till you pick the easiest option!
Impacted Metrics: Customer Satisfaction | Repeated visits | Purchase frequency
Previous Tip: Medium popcorn is always value for money! (All tips here)
Recommendation: Give out immediate rewards instead of a delayed one.
What is Hyperbolic Discounting
Hyperbolic discounting is our inclination to choose immediate rewards over rewards that come later in the future, even when these immediate rewards are smaller.
Why does it happen
There are several reasons why people might rationally choose a smaller reward now over a larger reward later. They may like the sure thing, their preferences could change, or they may have an urgent need such as hunger or paying the rent.
And it is no secret that waiting for something you want is difficult. It sometimes takes a measure of self-control that many of us don’t have.
“Buy now-pay later” works because of this effect.
How to implement it
If you have a points-based reward system, ensure that redeeming a reward doesn’t take a long time. For example, If the number of points required to redeem a reward takes a year to do so, the user will not value it as much.
“Buy now-Pay later” programs work! So have this option in case there are any limited-time offers going on. This allows you to make sales without losing customers.