Instant Rewards vs. Delayed Rewards

Duke University behavioral economist Dan Ariely conducted an experiment. In his 2008 book *Predictably Irrational*, he described the background of this experiment: two groups of workers, one receiving cash rewards daily, the other receiving them at the end of the week. The amounts were identical. Result: the daily-reward group had 23% higher productivity and 40% higher satisfaction.

Same money, just a different timing — from weekly to daily — completely different effect. The reason is that instant rewards have a clear causal line between behavior and reward. The causal line between delayed rewards and behavior is blurred by time.

The mechanism of instant rewards is directly tied to the brain's reward system. Neuroscientist Wolfram Schultz, in his classic 1997 study, found that the shorter the interval between behavior and reward in the brain's reward center (the dopamine system), the greater the dopamine release and the stronger the learning and motivation reinforcement. When you perform well today and get rewarded today, the brain tightly links "effort" and "reward." But if the reward comes five years later, the brain can't establish this connection at all. The neural circuit between behavior and reward doesn't get reinforced.

What your membership program needs to do isn't to increase the face value of points, but to shorten the time to reward.

This is also why Starbucks Rewards became hugely successful after its 2009 redesign. The old version was "collect a certain number of points for a free coffee." The new version added "earn Stars instantly with every purchase, and Stars can be immediately redeemed for customization options (free syrup, free size upgrade)." The "objective value" of these small rewards is very low — the cost of an extra espresso shot is less than NT$20. But their immediacy activates the brain's reward system, and customers' purchase frequency increases significantly.