UX & Incentivizing the Wrong Actions: Why Your Rewards Program Isn’t Working

Building a Rewards Program

While Julie O’Brien was a team member at OPower, a company that partners with utility providers to provide energy reports for their customers, she noted there was a trend in the market at the time for every service provider to have some type of loyalty program.

Her job was to figure out how to create a rewards program that not only looked great, but also proved to be effective in a very unique market. She knew right off the bat that it wasn’t as simple as just rewarding customers for the actions she wanted them to take. Therefore, prior to building the program, Julie and her team dug into the academic literature and conducted extensive research and testing to set OPower up for success.

They were now challenged to determine not only which actions to incentivize, but how to incentivize those actions. Their theory was not all actions should be incentivized because not all actions can be incentivized. Julie and her team ran an online experiment to determine which of the twenty-five potential actions are even worth incentivizing.

Opower asked participants to evaluate each of the actions in terms of how easy they were to perform. For example, they asked how easy it is for them to buy a new refrigerator, change their light bulbs, do an energy audit, etc. They also evaluated how intrinsically motivated participants were to take each action.

Julie added, “Ultimately, we wanted to know what predicts when incentives work and when they backfire.”

Julie notes that their data told a story that was beautiful, clean, and replicated all the academic literature. There was this nice interaction effect where the more intrinsically motivating a behavior was, the less effective the incentives were but if there was an action that was relatively easy, and not intrinsically motivating, then external incentives performed really well.”

It was clear based on Julie’s research that in this specific use case, it is difficult to trigger intrinsic motivation with an external reward. If the action was difficult or arduous, external rewards wouldn’t work. They were only effective if the individual was not intrinsically motivated to do it and considered the action to be easy, such as changing a lightbulb.

Decoding the Why — How Behavioral Science is Driving the Next Generation of Product Design.

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Entrepreneur blending behavioral economics, data and technology to help changemakers inspire and move people to action. Co-founder @creativesci & member @yec.