The illusion of the "Headstart"

I was recently forwarded a report on consumer behaviour and loyalty schemes that I thought was quite interesting. The report was entitled “The endowment progress effect: how artificial advancement increases effort” and was conducted by two consumer researchers named Joseph Nunes and Xavier Dreze. Their research focused in on a carwash outlet in America and a loyalty scheme they were trying to implement in order to increase the volume and frequency of repeat custom.

The outlet in question offered a loyalty card that had 8 spots that was stamped after each purchase of a car wash, once all eight spots were stamped the company gave you a free car wash. As part of the research they also introduced a card which had 10 spots on it, the first two of which were pre-stamped so as to give customers the illusion of a “head start”.
The two schemes were essentially identical and offered customers exactly the same reward for the same amount of repeat custom; once you bought 8 car washes you would receive one for free.

Upon analysing the results Nunes and Dreze found that the card with 8 spots resulted in a 19% completion rate, whereas the card that had 10 spots boasted a superior completion rate of 34%, on top of that those using the 10 spot loyalty card had a shorter length of time between visits, returning with on average 2.9 fewer days between washes than their 8 spot equivalents.

The two researchers concluded that by reframing the offer as being “already started but not yet completed”, in this case 20% completed as opposed to the 0% completed offered by the 8 spot card, this increased motivation for the customer to return.
I think it is interesting to see how few retailers do this especially with products that are easily substituted.