DEC 20

The secrets of The Casino Effect

The secrets of The Casino Effect

I might make you shake your head in disappointment, but I'm a fan of casinos. Once I'm sat at that roulette table, I'm glued to the seat, watching the ball spin around the wheel time after time until a) I win big - and force myself to walk away with a fat wallet, or b) I have no money left.

Psychologists call people like me addictive personalities, which sounds wonderful, but it's not as good as it sounds, trust me. We can get hooked on pretty much anything that boosts our dopamine levels, making this trait pretty dangerous at times.

It's never been a huge problem, but it does mean that when I do spend an hour or two playing roulette, it's all - or nothing.

Casino bosses know this, of course.

But there's something else that they know which almost doubles what we're willing to spend - and the time doing it.

They know about variable ratio rewards.

And it turns out that as marketers, we can use the same psychological techniques as the casinos to boost sales.

Best part of all? It's ethical. We can reward our customers in a way that gets them to WANT to spend more.

Let's rewind to the 1960s for a moment, and look at the work of American psychologist BF Skinner in the field of operant conditioning.

Skinner performed experiments with lab rats and discovered that giving rewards at random intervals was more successful in changing the rat's behaviour than offering rewards at fixed intervals.

In other words, when you don't know when you're going to be rewarded, it's more of a pleasant surprise when it happens than if you knew it was coming.

That's why when your number comes up on the roulette wheel, your dopamine kicks in. You weren't expecting it.

Feels fantastic, doesn't it?

There's one important factor at play. It's all very good rewarding at random intervals, but there must be a continuation of the original action, which is why Skinner called it variable 'ratio'. A reward is given based on the number of times someone performs the same action, rather than being based on time.

So what's this got to do with marketing?

Well, think about how you reward your customers for taking a particular action.

Sure, you can give them a loyalty card and give a freebie away for even 10 widgets they buy, but what about chucking in a few random rewards too - when they're not expecting it?

Let's say on the 3rd and 7th purchase you throw in something for free. Or phone them up out of the blue to thank them personally. Or give them a surprise discount. Or ANYTHING that your customer actually wants (this is important).

When you do this, two things will happen:

1. The chances of that customer coming back time and time again increases quite dramatically. This is one of the fundamentals of operant conditioning.

2. The lasting emotion that accompanies the variable ratio rewards lasts a long time. As Skinner said himself, this technique is hard to extinguish even when rewards are no longer given.

If you're giving out rewards, consider ways to make them variable ratio rewards.

And if you're not giving out any rewards? Well perhaps it's time to start doing just that!

Chris Haycock



Chris has more than 20 years experience in marketing, working at both blue-chip companies and start-ups across the UK. His particular expertise is digital marketing, and has run a successful digital media company since 2011, with a portfolio of businesses that reach 1 in 7 of the UK population.

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