Executive Summary
The goal-gradient hypothesis, originally proposed by the behaviorist Clark Hull in 1932, states that the tendency to approach a goal increases with proximity to the goal. In his classic experiment to test this hypothesis, Hull (1934) found that rats in an alley ran progressively faster as they proceeded from the starting box to the food. In this article, the authors build on the behaviorist goal-gradient hypothesis and generate new propositions in the context of two real reward programs. They investigate these propositions using various methods, data, and modeling approaches (e.g., field and laboratory experiments, secondary data).
The authors propose a parsimonious goal-distance model in which effort investment is a function of (relative) psychological goal distance, defined as the proportion of the total (original) distance remaining to the goal. Algebraically, this psychological distance is denoted as dt = (r nt)/r, where r is the perceived total effort requirement of the reward (i.e., the starting distance to the goal) and nt is the amount of the requirements already fulfilled by the individual at time t. In a large-scale field study, the authors record interpurchase times for approximately 10,000 coffee purchases of members of a real café reward program (“buy ten coffees, get one free”). The authors find that as members approach the reward goal, the average length of time before their next coffee purchase decreases. On average, interpurchase times decrease by 20%, or .7 days, throughout the program. Using a discrete-time hazard rate model, the authors find a significant linear effect of perceived goal distance dt, demonstrating purchase acceleration as a function of goal proximity.
In a series of tests, the authors demonstrate that the observed purchase acceleration cannot be explained by habituation, expiration concerns, other time-trend effects, or heterogeneity bias. In particular, using a subsample of members who completed at least two cards, the authors find that interpurchase times reset (to a lower level) after the first reward is earned and then reaccelerate toward the second reward goal. In addition, they find deceleration among two groups of café customers who have low goal motivation: (1) “defectors,” who do not complete their card, and (2) those with “transparent” cards, who are paid a flat fee to record their purchases, regardless of their purchase frequency.
Next, the authors demonstrate that “illusionary progress” toward the goal can be induced by increasing the total original distance to the reward while increasing the perception of the requirements already completed (by giving bogus “head-start” credits). Such a manipulation reduces the psychological (proportional) distance to the reward, dt, while holding constant the real, absolute remaining distance. In a field experiment, the authors find that the mere illusion of progress toward the goal induces purchase acceleration. Specifically, customers who (through random assignment) received a 12-stamp coffee card with two preexisting “bonus” stamps completed the 10 required purchases significantly faster than customers who received a regular, 10-stamp card. Separate process experiments show that the illusionary goal progress effect cannot be explained by rival accounts, such as idiosyncratic fit and sunk cost.
The authors then analyze secondary data they obtained from another real incentive program in which participants earned a reward after rating 51 songs over the Internet. First, the authors replicate the finding of goal-motivated acceleration in intervisit times (in the context of the Web site rather than café visits). Second, they extend the goal-gradient effect to the domain of quantity decisions with a Tobit model, demonstrating that the quantity of ratings per visit increases as a function of goal proximity. Third, they generalize the goal-gradient effect to the domain of effort persistence, showing that the probability of effort termination and program defection decreases with lower goal distance. In this program, the phenomenon of postreward resetting is again observed.
Finally, consistent with the notion that a steeper goal gradient is generated by an increased drive to attain the reward, the authors find that café program members who accelerated more strongly toward their first reward exhibited greater retention and faster program reengagement. In the general discussion, the authors explore the theoretical and practical implications of their findings.
Biography
Ran Kivetz is the Sidney Taurel Associate Professor of Business in the Graduate School of Business at Columbia University. He received his doctoral degree in Business and his MA in Psychology from Stanford University; he earned his BA in Economics and Psychology from Tel Aviv University. His research examines consumer and managerial decision making, the psychology of effort and reward (and its application to incentive systems), the self-control of hedonic motivations, and marketing high technology. Ran has published articles in Journal of Marketing Research, Journal of Consumer Research, Marketing Science, and Marketing Letters. At Columbia, he has taught MBA courses on high-technology marketing and entrepreneurship and doctoral courses on bridging decision research with marketing science. Ran serves on the editorial boards of Journal of Marketing Research and Journal of Consumer Research and is a reviewer for leading decision-making and management science journals.
Yuhuang Zheng is a doctoral candidate in Marketing in the Graduate School of Business at Columbia University. He received his MA in Business from Columbia University and his MBA and BA in Engineering and Economics from Tsinghua University. His research interests include self-control, marketing luxury goods, consumer responses to marketing promotions, intertemporal choice, and cultural differences in consumer decision making. His dissertation proposal won the honorable mention in the Alden G. Clayton Doctoral Dissertation Proposal competition at Marketing Science Institute and the first prize in the Fordham University Pricing Center Doctoral Dissertation Proposal competition.
Oleg Urminsky is a doctoral candidate at Columbia University. He received his bachelor’s degree in Mathematical Philosophy from Princeton University and a master’s degree in Statistics from the Stern School of Business at New York University. Before entering academia, he worked as a marketing research statistician and as vice president at the advertising agency Young & Rubicam. Oleg’s research interests include intertemporal and probabilistic decision making, consumer self-control and guilt, reward programs, and bridging behavioral decision research with marketing science.
J Marketing Research, Volume 43, Number 1, February 2006
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