The Goal-Gradient Hypothesis Resurrected: Purchase Acceleration, Illusionary Goal Progress, and Customer Retention

In the paper

“Members of a café RP (e.g., 'buy ten coffees, get one free') purchase coffee more frequently the closer they are to earning a free coffee (on average, interpurchase times decrease by 20% or .7 days throughout the program).”

• Also stated in: § Results · p. 5 · plain

  “Consistent with H 1 , as members accumulated more stamps on their cards, the average length of time before their next coffee purchase decreased.”

In the paper

“a stronger tendency to accelerate toward the goal predicts greater retention and faster reengagement in the program”

• Also stated in: § The Goal-Gradient Hypothesis Resurrected: Purchase Acceleration, Illusionary Goal Progress, and Customer Retention · p. 2 · plain

  “people's tendency to accelerate toward their first reward predicts a greater probability of retention and faster reengagement in the program.”

In the paper

“In contrast, customers in the experimental (illusionary goal progress) condition completed the ten required purchases (for the corresponding 12-stamp card) in only 12.7 days, nearly three days or 20% faster (t = 2.0, p < .05; medians = 15 versus 10 days; Z = 2.1, p < .05 [Mann-Whitney U test]).”

In the paper

“These members demonstrated strong goal gradients (i.e., faster interpurchase times as a function of lower d it ) on both of their cards ( b 1 = -.06 and -.09 for the first and second card, respectively; both p s < .05).”

In the paper

“The test was in the same direction and significant when we compared only the first interpurchase time on the second card with the last interpurchase time on the first card ( p < .05).”

In the paper

“In the GDM for incomplete buyback cards, we found no linear effect of goal distance ( b 1 = .02, p > .1), but there was a quadratic effect ( b 2 = -.1, p < .05).”

In the paper

“we examined higherorder parameters using orthogonal contrast codes (Fisher and Yates 1957), but we found that these were not significant.”

What the sources say

• ?Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  cites Fisher and Yates 1957

In the paper

“In the GDM for transparent cards, we found deceleration ( b 1 = .3, p < .01) and no curvature ( b 2 = .006, p > .1).”

In the paper

“The figure also shows that the first two interpurchase times on the second card (X ⎯ = 3.1 and 2.7 days, respectively) are substantially slower than the last two interpurchase times on the first card (X ⎯ = 2.2 and 2.1 days, respectively) and are similar to the first two interpurchase times on the first card (X ⎯ s = 3.2 and 2.8 days, respectively).”

In the paper

“As an estimate of the overall effect of acceleration on the average card, it is possible to compare the mean observed time to complete a card, which was 24.6 days, with the number of days it would have taken to complete a card at the rate of the first observed interpurchase time, which was 29.4 days. This yields a difference of nearly 5 days (16%) in card completion time.”

In the paper

“The size of the larger class was 97% ( b 1 = -12.4, p < .01; b 2 = -7.4, p < .01), and the size of the smaller class was 3% ( b 1 = -13.6, p < .01; b 2 = 1.5, p > .7).”

In the paper

“The data set includes the rating behavior of 148 members, who rated a total of 14,866 songs in 472 separate Web site visits.”

In the paper

“The first interpurchase time was 3.3 days, whereas the total card time yielded an average rate of 2.7 days per purchase.”

In the paper

“Consistent with this argument, we found that customers who accelerated more strongly toward their first reward subsequently exhibited greater retention and faster reengagement in the café RP.”

In the paper

“Respondents' ratings indicated that they felt worse about losing their card in the sunk-cost condition (X ⎯ = 2.1) than in either the experimental (illusionary goal progress) condition (X ⎯ = 1.7; t = 1.9, p < .05) or the control condition (X ⎯ = 1.7; t = 1.9, p < .05).”

In the paper

“Consistent with the goal-gradient hypothesis, the linear goal-distance parameter b 1 was positive ( p < .01), indicating that members were more likely to defect when they were farther away from the reward goal (or, equivalently, they were more likely to persist when they were closer to the goal).”

In the paper

“The findings were similar to those of the café RP.”

In the paper

“The linear goal-distance parameter was less than zero ( p < .01). This result supports H 1 and demonstrates that members visited the Jaboom Web site more frequently as they got closer to earning the reward (i.e., intervisit times decreased as a function of goal proximity).”

In the paper

“For example, among the 473 terminations we observed, 8.7% (41/473) occurred when only one song was accumulated toward the next reward (i.e., when d itq = .98), whereas only .2% of visit terminations (1/473) occurred when as many as 50 songs were accumulated (i.e., when d itq = .02).”

In the paper

“In the larger class (65%), we found linear acceleration ( b 1 = -.6, p < .1; b 2 = -.1, p > .1), and in the smaller class (35%), we found nonsignificant linear acceleration ( b 1 = -.1, p > .1; b 2 = -.3, p < .1).”

In the paper

“We found a weaker (though significant) effect of goal distance (d it ) in these data ( b 1 = -2.5, p < .01; b 1 = 2.9, p < .01).”

In the paper

“Consistent with the notion that a steeper goal gradient implies a greater drive to achieve the reward, we found that stronger accelerators reengaged in the program faster and were more likely to earn a second reward.”

In the paper

“In our data set, there were 371 attempted reward certificates (i.e., with at least 1 song rated toward the certificate) and 262 earned certificates (i.e., with 51 songs rated). Of the 262 earned certificates, 114 were completed in a single visit.”

In the paper

“Furthermore, as we predicted, b 3 was positive ( p < .05), indicating that the highest probability of terminating a visit occurred just after goal achievement, that is, when members were the farthest away from the (new) goal (at d itq = 1.0).”

In the paper

“Moreover, we observed the phenomenon of postreward resetting, whereby members accelerated toward each of two subsequent rewards but exhibited a drop in their rating quantities after earning the first reward and starting to work toward the second (i.e., when d t reverts to 1.0).”

In the paper

“The relationship between the goal gradient and retention was also evident in the finding that just after reward attainment (when goal distance regressed to 100%), customers exhibited a drop in activity (postreward resetting) and were also most likely to defect.”

In the paper

“The findings generalize beyond coffee purchases to effort involving repeatedly rating music over the Internet and goal gradients operationalized by acceleration in intervisit times, lift in rating quantities, and enhanced persistence closer to the reward threshold.”

In the paper

“Hull (1934) found that rats in a straight alley ran progressively faster as they proceeded from the starting box to the food.”

What the sources say

• ?Not checked — no full text of the sourcecites Hull (1934) source

In the paper

“The goal-gradient hypothesis denotes the classic finding from behaviorism that animals expend more effort as they approach a reward.”

• Also stated in: § The Goal-Gradient Hypothesis Resurrected: Purchase Acceleration, Illusionary Goal Progress, and Customer Retention · p. 1 · plain

  “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.”

What the sources say

• ?Not checked — no full text of the sourcecites Hull (1932) source
• ?Not checked — no full text of the sourcecites Hull (1934) source

In the paper

“Dynamic models of motivation (e.g., Atkinson 1957; Lewin 1951; Miller 1944) propose that people possess a strong achievement drive, which is heavily influenced by goals.”

What the sources say

• ?Not checked — no full text of the sourcecites Atkinson 1957 source
• ?Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  cites Lewin 1951
• ?Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  cites Miller 1944

In the paper

“We accounted for unobserved heterogeneity in the base hazard rate parameters (but not in the goal-distance or the covariate parameters) using the methodology we described previously.”

In the paper

“We also found that members exhibited a markedly similar acceleration pattern on two sequential cards; that is, we observed a slowdown in purchase rates after participants earned the first reward and began to work toward the second.”

In the paper

“We verified that control participants did not use the regular RP cards during the study.”

In the paper

“The goal-gradient hypothesis implies that the latent (unobserved) motivation at time t to achieve the goal (m t *) is a decreasing function of d t”

In the paper

“Perceived and real progress are distinct when the perception of the original goal distance can be systematically manipulated without affecting the real, absolute distance remaining to the goal.”

In the paper

“Nevertheless, it is noteworthy that the empirical impact of RPs on actual customer behavior is still largely undetermined (cf. Dowling and Uncles 1997; Lewis 2004; Sharp and Sharp 1997).”

What the sources say

• ?Not checked — no full text of the sourcecites Dowling and Uncles 1997
• ?Not checked — no full text of the sourcecites Lewis 2004 source
• ?Not checked — no full text of the sourcecites Sharp and Sharp 1997 source

In the paper

“When the program requirements involve discrete purchases or incidents (e.g., 'stay ten nights, and earn a reward'), the acceleration will manifest in more frequent activity (shorter interpurchase or intervisit times).”

In the paper

“This finding suggests that insufficient motivation to earn rewards underlies both defection (churn) and deceleration in purchase rates.”

In the paper

“Heath, Larrick, and Wu (1999) propose that as a result of the diminishing sensitivity of prospect theory's value function, people should exert more effort as they near their (self-imposed) goals.”

What the sources say

• ?Not checked — no full text of the sourcecites Heath, Larrick, and Wu 1999 source

In the paper

“These findings rule out the habituation account and other forms of time trend (e.g., graduation or expiration concerns).”

In the paper

“Overall, the segmentation analysis is inconsistent with the heterogeneity bias rival account; we found a majority of significant accelerators after accounting for unobserved heterogeneity in the tendency to accelerate.”

In the paper

“In summary, consistent with the goal-gradient hypothesis, purchase rates revealed a clear postreward resetting. Members accelerated their coffee purchases toward their first reward (a free coffee) and then slowed down when they began working toward a second similar reward; the same members subsequently reaccelerated their purchases as they approached the second reward.”

In the paper

“This modeling approach incorporates time-varying covariates and controls (e.g., weekly number of issued stamps) intended to rule out alternative explanations, such as time-trend effects.”

In the paper

“Among the time-varying covariates, we included both the weekly number of issued stamps and a code for whether a given day was after the end of the spring classes to control for alternative explanations based on time trend.”

In the paper

“Researchers have also highlighted the impact of people's psychological distance from their outcomes and goals on decision making and behavior (Lewin 1951; Trope and Liberman 2003).”

What the sources say

• ?Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  cites Lewin 1951
• ?Not checked — no full text of the sourcecites Trope and Liberman 2003 source

In the paper

“We used latent classes to account for unobserved heterogeneity in the hazard rate parameters (Kamakura and Russell 1989), which is important to rule out heterogeneity bias.”

What the sources say

• ?Not checked — no full text of the sourcecites Kamakura and Russell 1989 source

In the paper

“Although the analysis of raw data provides preliminary support for purchase acceleration (H 1 ), it does not account for various important factors.”

In the paper

“The sensitivity to relative and reference values suggests that consumers spontaneously consider their distance to a goal, incorporating the total distance as a reference point, which leads to an evaluation of relative goal distance.”

In the paper

“We randomly assigned 65 travelers to either a control or an experimental condition of a hypothetical frequent-diner program offered by their favorite pizza chain.”

In the paper

“They were randomly assigned to either a control condition or an experimental (illusionary goal progress) condition.”

In the paper

“When the RP is structured so that more intense activity (e.g., a larger purchase or more units of effort) in any single visit earns more credits toward the reward (e.g., 'earn one point for each dollar spent'), acceleration may be detected through both shorter interpurchase times and increased purchase (or effort) quantities.”

In the paper

“As Kivetz (2000) originally proposed, the notion that achievement motivation increases with smaller goal distance suggests that customers accelerate and persist in their efforts as they near the program's incentive threshold (i.e., the reward requirement or goal).”

What the sources say

• ?Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  cites Kivetz 2000

In the paper

“Hazard rate models (Cox 1972) are an important method to model interpurchase times.”

What the sources say

• ?Not checked — no full text of the sourcecites Cox 1972 source

In the paper

“Carver and Scheier's (1990) cybernetic control model suggests that comparisons of the rate of progress toward the goal with a relevant criterion generate affect; when progress exceeds (falls short of) the criterion, positive (negative) affect arises”

What the sources say

• ?Not checked — no full text of the sourcecites Carver and Scheier 1990 source

In the paper

“Such postreward resetting is inconsistent with the rival accounts based on time trend or habituation, whereas it is consistent with the notion that the motivation to expend effort depends on goal distance.”

In the paper

“Overall, customers from whom we bought back incomplete cards (defectors) differed from redeemers (loyals) in that the former did not accelerate and even decelerated their purchases as a function of accumulated stamps.”

In the paper

“We posited that people are influenced by the proportional (or psychological) distance to the goal (i.e., d t = [r - n t ]/r).”

In the paper

“Accordingly, we proposed that the illusion of progress toward the goal would enhance achievement motivation by reducing the perceived proportion of distance remaining to the goal.”

In the paper

“Prior research with animals has shown that a steeper goal gradient was generated by an increased drive (e.g., hunger) to attain the reward (Hull 1934).”

What the sources say

• ?Not checked — no full text of the sourcecites Hull 1934 source

In the paper

“Importantly, the tests we report subsequently included covariates that statistically controlled for the length of time it took participants to complete the first card (i.e., the participant's overall program effort and product liking) and the date of completion of the card.”

In the paper

“That is, whereas acceleration is related to retention and goal attainment, deceleration is associated with program defection and goal abandonment.”

In the paper

“We obtained similar results when we forced the constant and error variance to vary across latent classes.”

In the paper

“the sunk-cost condition was identical in all aspects to the experimental condition (including the picture of a tenstamp card with two stamps already on it), except that the two stamps were due to the respondent's own purchase effort.”

In the paper

“We also included the covariates we used previously in the hazard rate model of interpurchase times and controlled for the duration and completion date of the first card.”

In the paper

“Thus, inconsistent with heterogeneity bias, both segments demonstrate acceleration in rating quantities as a function of goal proximity.”

In the paper

“illusionary goal progress does not reduce the absolute distance to or the delay of the reward”

In the paper

“Moreover, consistent with postreward resetting and inconsistent with the learning explanation, these members rated an average of 24 songs on the last visit of their first certificate compared with 16 songs on the first visit of their second certificate (pairwise t = 2.3, p < .05).”

In the paper

“That is, we investigated the effect of individual differences in the slope of the goal gradient (the linear goaldistance parameter), holding constant the base hazard rate (i.e., the average interpurchase time) and possible seasonality (or right-censoring) effects.”

In the paper

“Note that all three conditions entailed the same absolute remaining distance to the reward goal (eight additional pizza purchases).”

In the paper

“We estimated the effect of d itq = 1.0 separately to guarantee that the hypothesized goal-gradient effect (captured by β 1 ) could not be explained solely on the basis of an increased likelihood of defection at d itq = 1.0, that is, just after reward attainment.”

In the paper

“This is equivalent to 9 purchases per month based on the first interpurchase time, compared with 11 purchases per month based on the observed rate that includes purchase acceleration.”

In the paper

“Consistent with H 2 and the results of the field experiment, respondents in the experimental versus control condition estimated completing the eight required purchases in fewer weeks”

In the paper

“The RP, which was presented to participants as an ongoing program, continued for a period of 24 months after our observation period. Thus, expiration concerns should not have affected the behavior of program members.”

In the paper

“All other aspects of the program were held constant across the two conditions and were identical to those we described previously for the café RP.”

In the paper

“Note that an increase in promotion sensitivity due to goal proximity could be attenuated when (1) the promotional effort is identical to the main program effort (e.g., 'fly next week and earn triple miles') and (2) effort acceleration is subject to behavioral ceiling”

In the paper

“This last problem can be solved with the Tobit version of the GDM.”

In the paper

“The GDM unifies these results and predicts the effect of illusionary goal progress.”

In the paper

“These three goal gradients predict increases in the recency of the last transaction, the average frequency of all transactions, and the average monetary value of these transactions; thus, the goal-gradient and its modeling have important implications for the widely used RFM approach.”

In the paper

“Given the robustness and generality of the GDM, we believe that it can be applied to a broad range of goal-based motivational systems, including more complex incentive systems.”

In the paper

“In addition, the increased motivation to achieve RP goals may reduce competition and price wars by escalating customer lock-in and switching costs and enhancing consumption rates (i.e., expanding the category).”