What connects loyalty cards, G, vanity, and the psychology of bias?

I realised yesterday that I now have seven different loyalty cards for seven different coffee shops. Of course, this is hardly a sign of my superlative loyalty! Quite the reverse. The very reason I have so many is precisely because I'm not consistent in where I buy coffee, but don't want to lose out on the advantages of repeat custom. The loyalty cards work on a system identical to B.F. Skinner's fixed interval schedule of reinforcement, which I talked about many moons hence in a piece entitled Designing Rewards in Games. Although now rather tatty, this piece still pulls in traffic to my blogs from Google quite regularly. For the coffee shop loyalty schemes, the schedules pay out roughly 1 in 6, with the best offering a free coffee every 5 and the worst (Costa) effectively offering just a 1 in 20 (5%) return. But all these loyalty schemes are superior in dividends to Microsoft's Gamerscore scheme (or G), which until last year offered no tangible rewards at all.

And yet, G is far more effective than the coffee shop loyalty cards at promoting loyalty, and it is interesting to see why that might be. It is worth recognising as an initial point why loyalty cards work when they do work. Most people have fairly steady and regular routines. They may have a choice of coffee shops on their way to and from work, but it's a static choice and once people settle on their preference they will tend to stick to it. Loyalty cards exploit this in two ways: discouraging infidelity, and encouraging marginal purchases. In the case of infidelity, the cards discourage customers from going elsewhere if, say, the queue is too long, or they've come on a slightly different route. “If I go elsewhere, I won't get my free coffee”, the putative punter thinks, and sticks with the regular shop. In the case of marginality, the cards give an extra reason to buy even if coffee isn't what's on their mind. “Well, it's a step towards my free coffee”, is the thought process.

Gamerscore leverages the same kind of thoughts, even though there is no explicit reward. In this respect, the new Xbox Live Rewards scheme with its paltry 2% maximum rebate on online purchases is farcically negligible in its effects. What makes G work more than anything else is vanity, the same motive your parents had for buying that new car, TV or VCR in the classic game of “Keeping up with the Joneses”. Players on Xbox’s subscription service literally compare themselves to other players via their Gamerscores, trying to remain one step ahead of their friends. The psychology of this is in itself intriguing. If someone you know has slightly more G, that motivates you to get more G to get ahead. If someone you know has slightly less G, that motivates you to get more G to stay ahead. If someone has considerably less G, you feel satisfaction at your superior sense of ‘achievement’. And the icing on the cake: if someone has radically more G, well, they have no life and are obviously a freak. Cognitive bias, the bedrock of so much human behaviour (not all of it negative), ensures that we recognise how sad it would be to be obsessed with accumulating the meaningless reward currency G, even while we steadfastly resist applying that judgement to ourselves, because clearly we do it “just for fun.”

The striking thing about this comparison between the two kinds of loyalty scheme (both of which are mildly addictive Skinner reward schedules) is what a difference publicity makes. The coffee shop cards are private to individuals and only work if the individual’s lifestyle happens to run regularly enough for it to be a factor. But G is necessarily public – it is mandatory, inescapable, and shown publically to everyone who cares to look at your profile for any reason. Indeed, it was precisely these reasons – that I couldn't opt out, and that it was necessarily public – that inclined me to avoid collecting G, and ultimately led me to mothball my 360 after just one boxed game. G was not the only factor, of course – the Xbox controller gives me terrible hand cramps, and of course, see last week’s remarks on my disinterest in contemporary boxed videogames. But unlike the vast majority of Xbox players, the G was always a reason for me not to play and never a reason to play. I could make a very similar case about Facebook, in fact.

The rewards of G, and the commoditisation of friendship in social media, work the same basic way as the loyalty cards, but instead of tangible rewards (free coffee) they are predicated on socially constituted vanity and insecurity. The thought processes run similarly, though. In the case of discouraging infidelity, G ask players to think: “If I play elsewhere, I won't get my G”. In the case of encouraging marginal purchases, G asks players to think of certain so-so games: “Well, at least it’s easy G”. The most effective part of the new Xbox Live Rewards scheme isn’t going to be the birthday gift or the miniscule rebate, but rather the vanity associated with the titles ‘Contender’, ‘Champion’ and ‘Legend’, because players will put in extra hours on otherwise humdrum games in the pursuit of these rather meaningless title. They’ll want to say “I’m a Legend”, even though before they get there they might say “How sad do you have to be to have earned enough G to be a Legend?”. To be fair, many of us (myself included) did exactly the same just to earn the title ‘Elite’ in the game of the same name. This isn’t exactly a new phenomena, it’s just taken upon new stakes by the increased publicity of these new social media dimensions.

We like to think that we desire money because of its value, but actually many people desire money because they associate it with status. Which is ironic, because we mostly tend to despise the rich, even while longing to be like them. In many ways, G taps into the same powerful combination of vanity and cognitive bias that makes all materialistic acquisition so pointlessly circular. In this respect, the simple Skinner schedules of the coffee shop chains seem positively innocent by comparison.