Multiple Medium-Sized Rewards Outperform One Large Reward in Draws

Abstract

Uncertain rewards can incentivize consumers to publish product reviews on social media or make referrals to friends. When the incentives take the form of multiple draws, consumers have the chance to win different reward combinations, such that they might feature multiple medium-sized rewards (e.g., $10, $12, $13, $15, $20) or several small and one large reward (e.g., $1, $2, $3, $4, $60). As the current research establishes, the former version induces greater motivation, even if it promises the chance of a smaller sum of total winnings, because consumers perceive a greater likelihood of winning a desirable reward, compared with the odds of winning the one large reward. This superior motivating effect is contingent on similar probabilities of winning each reward in the next draw. In addition to clarifying how consumers respond to uncertain rewards and their structures, this study advances understanding of the motivational uncertainty effect and also identifies the perceived likelihood of winning another desirable reward as a key underlying mechanism. The practical insights that result from these findings indicate that marketers can use multiple medium rewards effectively to incentivize consumers.