Many incentive program designers rationally believe that most people know the prices of just about everything, even when the price is not explicit. Because of that, what’s the point of trying to mask the explicit dollar value of an award?
The point is that we are not as good with prices as we think we are.
The longest-running daytime television game show is The Price is Right. Success in the game is predicated on contestants guessing the prices of everyday household items.
What has kept it on the air for so many years is a brilliant and straightforward joke: viewers at home believe it should be easy to guess prices correctly, while contestants regularly fumble onstage.
The problem that contestants face isn’t stage fright; it’s present-day life: we don’t know the prices of things all that well, even when we think we do. Every day, we see a variety of prices for everything we buy. Making a purchase online today involves reviewing many prices before we buy, and frankly, our brains are overwhelmed with all the prices.
Fortunately, we don’t need to remember prices for everything. We can Google it. According to Joel Schooler from the University of Santa Clara, the idea of forgetting things, like prices of household items, has a name that’s easy to remember: it’s called the Google Effect.
All this is to say that the incentive program designers can have renewed enthusiasm for non-monetary point systems. Motivational has long been connected to the hedonic and luxurious components of rewards, a stark contrast to the explicit monetary value. The Google Effect makes it even easier to keep the dollar sign out of the equation.
Removing an explicit value from a reward allows the recipient to give the award an emotional value of their own. The question in the mind of the participant becomes, “Do I want it?” rather than “Is that a good deal?”
So, if you’re designing sales incentives and believe that it’s essential to let the sales reps know the price of the grill or big-screen television, think again. Be as explicit as you wish with the specifications, but keep the dollar sign out of the communication. Your reps’ motivation and results will demonstrate that it was the right call.
References
Hartley, J., Inattention and Prices Over Time: Experimental Evidence from 'The Price Is Right' (1972-2019),” October 11, 2019. Available at SSRN: https://ssrn.com/abstract=3469008
Haskoor, M., “New Study Shows Contestants are Getting Worse at ‘The Price is Right.’” Decider, November 2, 2019. https://decider.com/2019/11/02/new-study-shows-contestants-are-getting-worse-at-the-price-is-right/
Schooler, J., “Did I Save That? How Metamemory Informs Search Patterns,” April 2017. Available at SSRN: 10.13140/RG.2.2.27686.32327
About the Author
Tim Houlihan is the founder and chief behavioral strategist of BehaviorAlchemy, LLC, a consultancy using a behavioral lens for improving the actions of workers, customers and policymakers. He co-founded Behavioral Grooves, a meetup and podcast with listeners in more than 80 countries. Previously, Tim was Vice President of Reward Systems at BI WORLDWIDE where he was responsible for a $300 million global portfolio of reward systems, acted as the firm's thought leader in behavioral sciences and was the chief liaison to research partners around the world. Tim believes people underestimate the role of the unconscious in our behaviors. The application of good behavioral science can remedy that.
@thoulihan