Today’s customers prefer small, instant rewards over the larger yet delayed ones. Check out this slidedoc for Regan Yan’s explanation why customers choose ‘now’ over ‘tomorrow’! Visit our website for more details and to subscribe to our eNewsletter http://www.digitalalchemy.asia Let’s connect… http://www.facebook.com/DigitalAlchemyLimited http://twitter.com/Digitl_Alchemy http://www.youtube.com/user/DigitalAlchemyPtyLtd http://www.linkedin.com/company/digital-alchemy http://plus.google.com/109695231036450612270/posts http://instagram.com/Digitl_Alchemy Don’t forget to follow our SlideShare channel for more content in the world of database marketing!

1. INSTANT
A SCIENTIFIC
BASIS FOR
GRATIFICATION
BY REGAN YAN

2. INSTANT GRATIFICATION
Copyright © Digital Alchemy 2
A SCIENTIFIC BASIS FOR
In essence, this is the problem with what I call
“legacy loyalty”; spending a lot for a long time
and I will give you a reward in the future. How
many conversations have you had at dinner
parties where people complain that they can
never redeem their frequent flyer points and
question why they even bother?
Ironically, true frequent flyers care more about
their tier status than they do about point
accumulation. It makes you wonder what these
legacy programs really drive for the “accumulation
partners”. Do you really stay with your telco
because you get 40 frequent flyer points per
month? Have you ever thought about how much
480 frequent flyer points are worth? Well, at
Qantas, it’s worth $3. So based on the future
discounting theory, it’s worth about 20₵ to me
right now.No wonder I have so many packets of
unwanted lollies in my car.
As it turns out, our value for a reward declines
exponentially over time. This explains why we will
do irrationally significant things for a relatively
small reward but won’t do the same thing for a
larger reward that is held out for a future date.
ow many of us have gone into a petrol
station and found themselves buying $5 worth of
lollies to get 4₵ per litre off 40 litres of petrol. We
are, in effect, spending $5 to get a $1.60 discount
on a product that is twice the price it should be...
and we didn’t really want it anyway because it will
cost you $200 to have the cavity in your teeth
filled. So why do we do it? It’s simple, we are
exhibiting a phenomenon called “present bias”
or “future value discounting”.
H
TIME
VALUEOFREWARD
Reward value declines according to the future value discounting theory
Now
Same reward given in the future
OUR VALUE FOR
A REWARD DECLINES
EXPONENTIALLY
OVER TIME.

3. www.digitalalchemy.asia | info@digitalalchemy.asia
Regan founded Digital Alchemy in 2003. Under his leadership, together with over
20 years of experience in strategic and data-driven marketing, Digital Alchemy has
grown to become Asia Pacific’s leading Database Marketing Services Provider.
Today, Regan is a recognised subject matter expert of Analytical Database
Marketing and Customer Relationship Marketing, speaking regularly at Australian
and international events.
Managing Director, Digital Alchemy
Regan Yan
ABOUT THE AUTHOR
au.linkedin.com/in/reganyan
Visit our blog
www.digitalalchemy.asia/blog
Copyright © Digital Alchemy | May 2015