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The Role of Gamification in Enhancing Intrinsic Motivation to Use a Loyalty Program

Kyongseok Kim & Sun Joo (Grace) Ahn

in press, Journal of Interactive Marketing

Abstract

Based on Self-Determination Theory (SDT), this study examined how rewards could

weaken intrinsic motivation to use a retail loyalty program. Two experiments were conducted.

Study 1 revealed that individuals who received a salient reward (an explicit requirement and

deadline for reward achievement and no reward options) presented lower intrinsic motivation to

engage in the loyalty program than those who received its non-salient counterpart (a less explicit

requirement, no deadline, and reward options). Study 2 found that the salient reward presented in

the gamified form using graphical feedback enhanced the lowered intrinsic motivation.

Implications for designing effective loyalty programs are discussed.

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Since 1981, when American Airlines first introduced AAdvantage (Petersen and Winship

2005), loyalty programs have become a popular marketing tactic to build and maintain customer

loyalty through a planned reward scheme based on purchase history (Sharp and Sharp 1997; Yi

and Jeon 2003). In recent years, loyalty programs have been adopted by a wide array of industry

sectors, including retail, travel/hospitality, and finance, and have become increasingly popular

among consumers worldwide (Berry 2015a; Kivetz and Simonson 2002). The total number of

U.S. loyalty memberships, for example, exceeded 3.3 billion in 2014, a 26% increase from 2.6

billion in 2012, and each U.S. household belonged to an average of 29 loyalty programs (Berry

2015a).

An integral element of loyalty programs is the achievement of pre-determined rewards by

meeting purchase quotas; for this reason, loyalty programs are often called “reward” programs

(e.g., Southwest Rapid Rewards, Marriott Rewards, and My Starbucks Rewards) (Kim, Shi, and

Srinivasan 2001). The majority (83%) of rewards offered are financial, such as points that can be

redeemed later for goods and services, such as free coffee and complimentary hotel stays (Berry

2015a).

Many behavior-change strategies using rewards are predicated on the principle of operant

conditioning (Skinner 1953). This behaviorist principle holds that external rewards (i.e., rewards

granted from external sources) can control behavior such that when administered subsequent to

the desired behavior (e.g., points given after purchase), rewards can increase the likelihood that

the behavior will take place again, a mechanism called positive reinforcement. Indeed, rewards

for reinforcing desired behaviors exist in a wide range of contexts—notably, in education (e.g.,

scholarships) and workforce management (e.g., overtime pay) (Ryan and Deci 2000a).

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However, operant conditioning also holds that when rewards cease, the behavior is likely

to cease as well, returning to its pre-reward condition (Skinner 1953). In line with this

observation, marketing scholars have expressed concern that loyalty programs using the reward-

response association might not always lead to true brand loyalty but lead to increased sensitivity

to the rewards themselves (e.g., Noordhoff, Pauwels, and Odekerken-Schröder 2004; Yi and

Jeon 2003). This concern might also pertain to a recent criticism that loyalty programs appear to

be unrelated to the cultivation of customer brand loyalty or customer assets (Shugan 2005).

Indeed, many loyalty programs seem frantic, acquiring new customers by over-issuing sign-up

bonuses, discounts, and points, while failing to engage and retain existing customers (Berry

2015b).

Earlier work on motivation has demonstrated that external rewards are likely to weaken

individuals’ intrinsic motivation (i.e., a person’s innate tendency to pursue novelty, challenge,

and/or enjoyment from an activity per se rather than from the instrumental value of the activity

[e.g., rewards]) (Deci 1971; Deci 1999). For example, Deci (1971) found that monetary rewards

lowered college students’ motivation to engage in a learning activity. Interestingly, this stream of

research provides evidence counterintuitive to the common understanding about the use of

rewards as an effective motivational strategy.

Whereas this undermining impact of rewards on intrinsic motivation (Deci, Koestner, and

Ryan 1999) has been investigated primarily in the context of education (e.g., Deci 1971; Kim et

al. 2014; Ross 1975) and pro-social behavior (e.g., Osbaldiston and Sheldon 2003; Weinstein

and Ryan 2010), the present article examined the phenomenon in the consumer domain through

two experiments. Based on the framework of Self-Determination Theory (SDT; Deci and Ryan

1985), a theory of extrinsic and intrinsic behavioral regulation, Study 1 first established the basis

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of whether reward contingencies would lower intrinsic motivation to engage in a retail loyalty

program and whether that lowered intrinsic motivation would be associated with a decrease in

brand loyalty. Study 2 examined gamification (i.e., the use of game-design elements in non-game

contexts to motivate desired behaviors; Deterding et al. 2011) as a means of enhancing intrinsic

motivation to engage in a retail loyalty program. The growing popularity of loyalty programs is,

at least in part, attributed to advancements in mobile technology. The fun, interactive features of

smartphone applications for loyalty programs might not only bring meaningful enjoyment but

also motivate users to achieve more rewards, allowing them to monitor their progress instantly

and, in turn, to feel competent in obtaining the rewards (Hector 2015). In fact, almost half of

consumers using loyalty programs reported that they would continue using the programs if those

programs had a smartphone application (Berry 2015b). In the long run, understanding the nature

of rewards can help companies better employ loyalty programs.

STUDY 1

Self-Determination Theory (SDT)

SDT is a theory of motivation that delineates the intricacies of human cognitive and

behavioral regulation (Baumeister and Vohs 2007). In traditional social psychological theories,

human behavior is considered to be subordinate to social contexts, whereas SDT further assumes

that human behavior might not always be dictated by contexts, stressing that humans have innate

propensities to behave autonomously (Deci and Ryan 1991). Accordingly, SDT postulates two

types of motivation that drive human behavior: intrinsic and extrinsic (Ryan and Deci 2000b).

Intrinsic vs. Extrinsic Motivation. SDT offers a framework for explicating the degree to

which an action is self-determined (i.e., intrinsically motivated), and postulates two broad types

of motivation: intrinsic and extrinsic motivation (Deci and Ryan 1985). The term intrinsic

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motivation is defined as “the doing of an activity for its inherent satisfactions rather than for

some separable consequences” (Ryan and Deci 2000c, p 56). Humans have a natural tendency to

engage in interesting and playful activities, regardless of reward contingencies. A case in point is

a student working hard on homework because (s)he derives pleasure from the learning

experience per se or a customer participating in a loyalty program because he thinks the program

itself is enjoyable.

However, people are not always intrinsically motivated to engage in an activity. To this

end, the term extrinsic motivation refers to activities executed with the goal of obtaining tangible

rewards or some separable outcomes (Ryan and Deci 2000c). Extrinsically motivated individuals

tend to perform an activity for its instrumental value rather than for enjoyment from the activity

per se—for instance, a student working hard on homework only to receive a good grade in the

class or a customer using a loyalty program purely to obtain rewards.

Need for Autonomy. SDT postulates that intrinsically motivated behaviors are driven by

individuals’ psychological needs that are universal and cross-developmental (Deci and Ryan

1991). One such psychological need is the need for autonomy (Deci and Ryan 1987). The term

need for autonomy refers to one’s “desire to experience an internal [italic added] perceived locus

of causality with regard to action” (Deci and Ryan 1991, p 243); that is, the construct represents

an individual’s perception of how much he has control over the action.

SDT-grounded studies have identified several important social psychological (or

contextual) factors that could affect one’s need for autonomy: choices, requirements, deadlines,

and rewards (e.g., Deci 1971; Deci, Koestner, and Ryan 1999; Ross 1975; Ryan and Deci 2000a).

An environment that supports the need for autonomy is likely to allow an actor to have choices

as a means of expressing the self (Deci and Ryan 1987). Providing choices implies that the

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situation is flexible and free from pressures to behave in a certain way (Ryan and Deci 2000b). In

contrast, an environment that imposes an explicit requirement and deadline for a behavior is

likely to inhibit satisfaction of the need for autonomy, thus undermining intrinsic motivation

(Deci and Ryan 1987; Ross 1975). For instance, previous studies have found that completion-

contingent rewards that present salient conditions for obtaining extrinsic rewards, similar in

nature to the design and structure of rewards from most loyalty programs (e.g., “earn 10 more

points by the end of the month and get a reward”), weakened intrinsic motivation (Deci 1971;

Deci, Koestner, and Ryan 1999). In response to these rewards, the actor might shift the locus of

causality from internal sources (e.g., enjoyment) to external sources (i.e., rewards), consciously

or unconsciously becoming “a pawn to the source of external rewards” (Deci 1971, p 105).

Hypotheses

Based on the premises of SDT, Study 1 examined the undermining effects of extrinsic

rewards on intrinsic motivation in the context of loyalty programs. Most consumers are likely to

consider loyalty programs to be more or less controlling (as opposed to supporting their needs

for autonomy) because they can achieve rewards only after completing a required number of

purchases (Kim, Shi, and Srinivasan 2001). However, reward programs may vary in the ways of

imposing requirements and deadlines for reward achievement and the range of reward options

available. Kim and Ahn (in-press) demonstrated in their earlier study investigating the effect of

reward options on user motivation that when comparing the effects of a salient reward (i.e., a

promise of reward with an explicit requirement and deadline and no options of choice) and a

non-salient reward (i.e., a promise of reward with a less explicit requirement and deadline and

some options of choice) on intrinsic motivation to use a loyalty program, customers receiving the

salient reward presented lower intrinsic motivation than those receiving the non-salient reward.

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Because their work was one of the first studies to test the effect of different reward types on user

motivation, Study 1 aimed to replicate these earlier findings with a different group of participants

to establish inter-study reliability as well as lay the foundation for Study 2. Thus, the following

hypothesis was posited:

H1: Individuals who receive a salient reward will report significantly lower intrinsic

motivation to engage in the loyalty program than individuals who receive a non-

salient reward.

SDT-grounded studies have stressed the importance of intrinsic motivation because

individuals higher in intrinsic motivation had greater interest in and excitement about the action

under consideration, leading to greater performance and longer-term behavioral change (Deci

and Ryan 1991; Sheldon et al. 1997). That is, high levels of intrinsic motivation often result in

positive cognitive, affective, and behavioral outcomes. In the context of learning, for instance,

Ryan and Connell (1989) showed that intrinsically motivated students had better long-term

memory of learned material, presented more enjoyment of school, and made greater effort to

learn than their extrinsically motivated counterparts. Applied to the context of consumer

behavior, these findings suggest that customers lower in intrinsic motivation are likely present

less interest in and make less effort toward achieving rewards, behaviors that are precisely the

opposite of what loyalty programs seek.

Deci et al. (1994) operationalized this internal coherence between one’s motivation and

behavior as a positive correlation between the self-reported measure of intrinsic motivation and

relevant attitudinal and/or behavioral outcomes. Given that brand loyalty is the relevant outcome

in the current study, the following hypothesis was posited:

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H2: Intrinsic motivation to engage in the loyalty program will positively correlate with

brand loyalty.

Method

Sample and Design. A sample (N = 104) was obtained via Amazon Mechanical Turk

(MTurk), a crowdsourcing Internet marketplace that enables social scientific researchers to

collect data from human subjects (Amazon Mechanical Turk 2016). Research has suggested that

MTurk can offer more diverse and reliable samples than traditional sources of participants, such

as convenience samples of undergraduate students (e.g., Buhrmester et al. 2011; Mason and Suri

2012). MTurk can provide academic researchers with access to a more stable pool of participants

than undergraduate student pools that significantly fluctuate depending on the time of year and a

more diverse pool in terms of age, ethnicity, and socio-economic status. Moreover, MTurk can

make it cheaper and faster to conduct experiments, compared to using laboratory settings or

online survey panels (e.g., SurveyMonkey and Qualtrics), allowing researchers to integrate

experiments on MTurk easily and rapidly. It has also been confirmed that participants from

MTurk yield significantly lower response errors, compared to recruitment from other online

sources, such as Internet discussion boards (Paolacci, Chandler, and Ipeirotis 2010). Only U.S.

residents were selected to participate in the experiment using MTurk’s qualification requirement.

A non-subjective, non-experimental screening procedure asked participants to describe a random

image to verify their English proficiency (i.e., the image annotation test; Rashtchian et al. 2010).

The average age of the participants was 33.67 years (Min = 20; Max = 57; SD = 8.82), and 48.1%

(n = 50) were female whereas 51.9% (n = 54) were male. All participants were users of the

loyalty program under investigation at the time of data collection.

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A two-group, post-test-only design was used to test the hypothesized effects of reward

type (i.e., salient vs. non-salient) on intrinsic motivation to use the loyalty program. After the

participants were randomly assigned to the two groups, they were asked to look at a screenshot

of the smartphone application for the loyalty program (see Appendix) and to respond to the items

measuring the dependent variables (i.e., intrinsic motivation and brand loyalty). Additional items

measuring individual differences (i.e., attitude toward the brand and product involvement) and

demographic background followed. The participants received a monetary reward for completing

the online experiment.

Experimental Stimuli. Two versions of a loyalty program message, one containing a

salient reward (SR) and one containing a non-salient reward (NSR), were created for

experimental purposes. Both versions took the form of Starbucks’ loyalty program, My Starbucks

Rewards, which enables customers to earn reward points after they make a certain number of

purchases. The number of members in the program is an estimated 17 million (Perez 2016).

The salient reward was manipulated by presenting an explicit requirement (e.g., “Earn 66

more stars”), a due date for reward achievement (“Offer valid until March 26, 2017”), and no

options for the resulting reward (“Get our Iced Mocha Macchiato”). The non-salient reward was

manipulated by presenting a less explicit requirement (“Earn more stars”), no due date for

reward achievement, and options for the resulting reward (“Get a free drink [whatever you

want]”). In every other aspect, the two versions were identical in form and content (see

Appendix).

Manipulation Check. A pretest was conducted as a manipulation check of reward

salience with individuals (N = 46) who were using My Starbucks Rewards at the time of data

collection; none of them participated in the main study. The salient reward was expected to be

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perceived as more controlling (or less supportive of autonomy) than the non-salient reward.

Perceived autonomy support was measured using a 3-item, 7-point scale (1 = strongly disagree

vs. 7 = strongly agree) in line with the above discussion on the need for autonomy (e.g., Deci,

Connell, and Ryan 1989): “The program seems to emphasize that rewards are contingent upon

completion of the required number of purchases” (i.e., requirement), “The program seems to

require customers to achieve rewards by a certain due date” (i.e., deadline), and “The program

seems to provide customers with choices and options in choosing rewards” (i.e., choice). With

responses to the last item reverse-coded, the higher the score, the more controlling (or less

supportive of autonomy) the reward was perceived to be. The results showed that the participants

who received the salient reward perceived the reward as significantly more controlling (or less

supportive of autonomy) than those who received the non-salient reward (MSR = 4.97, SDSR = .75

vs. MNSR = 4.47, SDNSR = .66, t (44) = 3.55, p < .05 [.001]). Therefore, the manipulation was

expected to be successful.

Confound Check. The participants were also asked to evaluate the formal features (e.g.,

visual quality, layout, ease of use, etc.) of the loyalty program’s mobile application used to

present the two reward types. A 3-item, 7-point scale was used to assess attitude toward the

program (Mackenzie and Lutz 1989) (e.g., “I consider the My Starbucks Rewards mobile app to

be…,” 1 = bad vs. 7 = good). No significant differences were found between the two stimuli

(MSR = 5.82, SDSR = .93 vs. MNSR = 5.76, SDNSR = .91, t (44) = .34, p = .74).

Dependent Variable Measures. Intrinsic motivation and brand loyalty were the two

primary dependent variables used to assess the effects of the salient and non-salient rewards. The

3-item, 7-point scale measuring intrinsic motivation, emphasizing interest in and enjoyment of a

behavior, was adapted from Ryan (1982) (e.g., “It would be enjoyable to engage in the loyalty

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program”). Brand loyalty was measured using Kim, Morris, and Swait’s (2008) 5-item, 7-point

scale, which assesses both affective (e.g., “Overall, I am loyal to Starbucks”) and behavioral (e.g.,

“I always go to Starbucks if I want to have coffee”) loyalty. Table 1 specifies the measurement

items used in this study, previous studies that adopted the same measures, and their reliability

scores as measured by Cronbach’s alpha.

Place Table 1 about Here

Results and Discussion

Prior to testing H1, the manipulation of reward salience was double-checked using the

main-study sample (N = 104). Consistent with the pretest results, the salient reward was

perceived as significantly more controlling (or less supportive of autonomy) than the non-salient

reward (MSR = 5.16, SDSR = .91 vs. MNSR = 4.67, SDNSR = .86, F [1, 102] = 3.55, p < .01 [.001]).

An analysis of covariance (ANCOVA) was performed to test H1, with intrinsic

motivation as the dependent variable. Participants’ (N = 104) attitudes toward the brand and

involvement with the product were controlled as covariates because the variables could

potentially have influenced intrinsic motivation (e.g., interest and enjoyment) to use the loyalty

program (MacKenzie and Lutz 1989; Zaichkowsky 1994). The power analysis conducted using

G*Power 3.1 with two experimental groups, an alpha of .05, a power of .80, and a medium effect

size of .25 showed the desired sample size of 88 (Cohen 1988; Faul et al. 2007). The ANCOVA

results showed a significant difference between those who received the salient reward and those

who received the non-salient reward in their intrinsic motivation to engage in the loyalty

program (H1). Those in the salient-reward condition reported significantly lower intrinsic

motivation than those in the non-salient reward condition (MSR = 4.78, SDSR = 1.51 vs. MNSR =

5.11, SDNSR = 1.31, F [1, 100] = 14.35, p < .01 [.002], η2 = .10), thereby supporting H1.

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A partial correlation analysis was run to test the relationship between intrinsic motivation

and brand loyalty (H2), controlling for attitude toward the brand and product involvement (see

Table 2 for the zero-order correlations among the four variables). A significant positive

correlation between intrinsic motivation and brand loyalty emerged (r = .26, p < .01 [.009]),

suggesting that customers lower in intrinsic motivation to engage in the loyalty program might

have weaker brand loyalty (or vice versa). Therefore, H2 was supported.

Place Table 2 about Here Study 1 provided empirical evidence for the undermining effects of a salient, completion-

contingent reward on intrinsic motivation to use the loyalty program, a finding consistent with

the premise of SDT. Additionally, reduced intrinsic motivation was associated with lower brand

loyalty, suggesting the unintended, negative consequences of loyalty programs using rewards.

Scholars have expressed concern that many loyalty programs increase revenue only in the

short term, failing to maintain and engage customers (e.g., Shugan 2005; Palmieri 2015). This

concern corresponds with the fact that on average, only 9.5 loyalty programs were actively used

by U.S. households among 29 programs to which they belonged as of 2014 (Berry 2015a). In

light of the findings of Study 1, this trend implies that many loyalty programs need elements that

spark intrinsic motivation to encourage ongoing participation among customers and

counterbalance the potential reduction in brand loyalty.

STUDY 2

Despite the undermining impact of a salient, controlling reward on intrinsic motivation,

as evidenced in Study 1, most loyalty programs might have little choice but to continue imposing

requirements and deadlines for reward achievement and limiting reward options due to a number

of reasons (e.g., costs and promotional needs) (Kim, Shi, and Srinivasan 2001). Using the

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extended framework of SDT, internalization (Deci et al. 1994), Study 2 examined gamification

as an opportunity for loyalty programs to raise both perceived competence in reward

achievement and intrinsic motivation, while still offering salient, completion-contingent rewards.

Gamification

Gamification is an umbrella term referring to “the use of video game elements in non-

gaming systems to improve user experience and user engagement” (Deterding et al. 2011, p 1).

For loyalty programs, the game elements most commonly adopted include badges, points, levels,

and scoreboards (Hamari 2013; Mekler et al. 2013). No matter the element, the overall aim is to

affect user motivation and behavior positively. The growing popularity of gamification—as

many traditional loyalty programs have failed to engage their customers—has largely been based

on the belief that games are fun and that services using game elements will be more engaging

(Berry 2015b; Hamari 2013). In this regard, gamification is often viewed as an attempt to

transform the utilitarian values of a loyalty program (e.g., extrinsic, financial rewards) into

hedonic values (e.g., enjoyment) (e.g., Hamari 2013; van der Heijden 2004). However, little

empirical research has been done to test the effects of gamification on consumer motivation to

engage in a loyalty program (Seaborn and Fels 2015).

Research has suggested that effective gamified loyalty programs tap into the motivational

power of goals on the user end (e.g., Blohm and Leimeister, 2013; Hamari 2013). An essential

element for successful loyalty programs is feedback—a system indicating a user’s progress

toward reward achievement over time (Zichermann 2014). For example, Starbucks’ mobile

application, My Starbucks Rewards, features an interactive “stars” display to enable users to

monitor reward levels constantly; this graphical, gamified feedback system is designed to help

users motivate themselves to experience feelings of competence in achieving rewards (Deci and

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Ryan 1991; Rampton 2015; Ryan and Deci 2000b). Such positive feelings can lead to changes in

existing behavioral patterns, such as higher engagement in the loyalty program to experience

success (Blohm and Leimeister, 2013).

Internalization

In addition to the undermining effects of external rewards on intrinsic motivation, SDT

also proposes a psychological mechanism by which intrinsic motivation can be enhanced, even

in the presence of external rewards. This mechanism, called internalization, is “the process of

transforming external regulations into internal regulations” (Deci et al. 1994, p 120). While SDT

categorizes human motivation into two broad types, extrinsic and intrinsic (Deci and Ryan 1985),

the theory does not conceptualize motivation as a dichotomy but as a continuum bounded at one

end by extrinsic motivation and at the other end by intrinsic motivation (Ryan and Deci 2000b;

2000c).

An individual at times will regulate his behavior, striving to internalize the value of an

activity that is extrinsically driven (i.e., not necessarily interesting or enjoyable) but important

(e.g., taking a test) (Deci et al. 1994). An internalized behavior, therefore, lies somewhere

between being extrinsic and intrinsic on the motivation continuum. SDT postulates two

mechanisms that lead to different degrees of internalization: introjection and integration (Deci

and Ryan 1991). Introjection is a process through which an individual recognizes and takes in

the value of an extrinsically driven activity but does not fully assimilate the activity to the self

(Deci et al. 1994) (e.g., taking a test in an effort to become a responsible student or participating

in a loyalty program to become an economical consumer). On the other hand, integration is a

process through which the value of an extrinsically driven activity is both recognized and

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assimilated to the self (e.g., taking a test to feel a sense of accomplishment or participating in a

loyalty program to feel competent in earning rewards).

SDT-grounded studies have consistently found that providing positive, informative

feedback on one’s performance in an extrinsically driven activity facilitated internalization of the

activity (e.g., Deci and Ryan 1991; Deci et al. 1994; Ryan and Deci 2000b). For instance, Hagger,

Koch, and Chatzisarantis (2015) found that students who received a grade with comments from

their teacher explaining what they did correctly showed higher intrinsic motivation to learn more

material than those who received a grade without comments. Unlike an intrinsically motivated

activity, an extrinsically motivated activity is likely to involve inner tension (e.g., reluctance)

because it might not be inherently interesting or enjoyable. To this end, interactive feedback of

the consumers’ performance in the loyalty program through gamification can help users monitor

their progress more easily and experience competence in reward achievement, thereby

motivating them to shift the locus of causality from external sources (e.g., rewards) to internal

sources (e.g., perceived competence) (Deci and Ryan 1987). According to Deci and Ryan (1991),

perceived competence, along with perceived autonomy, is a psychological need that drives

intrinsic motivation.

Hypotheses

The purpose of Study 2 was to assess the effects of a salient reward presented in the form

of graphical feedback (as a gamification element) on raising intrinsic motivation to engage in the

loyalty program. The discussion above implies that the interactive feedback provided by loyalty

mobile applications could serve as an intrinsic motivator enhancing feelings of mastery and goal

achievement as intangible, internal rewards (Blohm and Leimeister 2013; Hofacker et al. 2016).

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Therefore, this study posited that the gamified presentation of the salient reward would help raise

intrinsic motivation:

H3: Individuals who receive the salient reward with gamified feedback will report

significantly higher intrinsic motivation to engage in the loyalty program than

individuals who receive the salient reward only.

However, the effects of adding a gamification element to the non-salient reward on

intrinsic motivation would be minimal, if any, because of the expected high levels of intrinsic

motivation resulting from the non-salient reward (see Austin and Brunner 2003 for the ceiling

effect of measurement).

Method

Sample and Design. A sample (N = 200), consisting only of U.S. residents, was obtained

via MTurk. Before the participants received the experimental materials, they were asked to

describe a random image to verify their English proficiency using an image annotation test

(Rashtchian et al. 2010). The average age of the participants was 34.1 years (Min = 20.0, Max =

56.0, SD = 9.6), and 52.0% (n = 104) of them were female whereas 48.0% (n = 96) were male.

All of the participants were users of the loyalty program under investigation at the time of data

collection.

A 2 (reward type: salient vs. non-salient) × 2 (gamified feedback: present vs. absent)

between-subjects design was created, resulting in four different conditions. Participants were

randomly assigned to one of the four groups. The instructional procedures used in Study 1 were

implemented.

Experimental Stimuli. Two additional conditions (gamified feedback: present vs. absent)

were combined with the salient- and non-salient-reward conditions used in Study 1, resulting in

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four different experimental stimuli: the salient reward with gamified feedback (SR+GF), salient

reward only (SR), non-salient reward with gamified feedback (NSR+GF), and non-salient reward

only (NSR). The gamified feedback featured the “stars” display used in My Starbucks Rewards

(see Appendix).

Manipulation Check. The manipulations of reward salience and gamified feedback were

checked using 69 individuals who were using My Starbucks Rewards at the time of data

collection; none of them participated in the main experiment. The scale of perceived autonomy

support from Study 1 was adopted to assess the salience of each reward type. The results showed

that the non-salient reward was perceived as significantly less controlling (or more supportive of

autonomy) than the salient reward, regardless of feedback condition (MNSR = 4.67, SDNSR = .99

vs. MSR = 5.36, SDSR = .74, t [67] = 2.49, p < .05 [.035]).

A 3-item, 7-point scale of perceived competence (1 = strongly disagree vs. 7 = strongly

agree) was used to measure how well the gamified feedback encouraged users to track their

progress and achieve rewards (e.g., “The design of My Starbucks Rewards motivates users to put

more effort into reward achievement”) (Ryan and Deci 2016) (see Table 1). Individuals who

received the gamified feedback reported higher perceived competence than those who did not

receive the feedback, regardless of reward type (M+GF = 5.91, SD+GF = 1.04 vs. M-GF = 5.28, SD-

GF = 1.42, t [67] = 2.48, p < .05 [.017]).

Confound Check. The individuals across the four conditions were asked to evaluate the

formal features of the loyalty program. No significant differences in attitudes toward the program

emerged (MSR+GF = 6.18, SDSR+GF = .89 vs. MSR = 6.04, SDSR = .91 vs. MNSR+GF = 5.92, SDNSR+GF

= .84 vs. MNSR = 5.78, SDNSR = 1.00, F [1, 65] = 1.12, p = .29). Overall, the results of the pretest

suggested that the manipulations would be successful.

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Dependent Variable Measure. Similar to Study 1, intrinsic motivation was assessed as

the dependent variable to gauge the effects of the manipulations.

Results and Discussion

Before testing H3, the manipulations of reward type and gamified feedback were double-

checked using the main-study sample (N = 200). Consistent with the pretest results, the non-

salient reward was perceived as significantly less controlling (or more supportive of autonomy)

than the salient rewards (MNSR = 4.92, SDNSR = 1.02 vs. MSR = 5.20, SDSR = .90, t [198] = 2.05, p

< .05 [.042]). Furthermore, individuals who received the gamified feedback were more likely to

agree that the loyalty program was designed to stimulate users to pursue rewards than those who

did not (M+GF = 6.10, SD+GF = .75 vs. M-GF = 5.79, SD-GF = 1.01, t [198] = 2.48, p < .05 [.016]).

An ANCOVA was performed, with the manipulation of gamified feedback as the

independent variable, intrinsic motivation as the dependent variable, and attitude toward the

brand and product involvement as covariates, in the salient- and non-salient-reward conditions,

respectively. For each condition in which gamified feedback was manipulated (present vs.

absent), the desired sample size for running ANCOVA was 88 with an alpha of .05, a power

of .80, and a medium effect size of .25 (Cohen 1988; Faul et al. 2007). Among the participants

who received the salient reward (n = 112), those who were given the gamified feedback

presented significantly higher intrinsic motivation to use the loyalty program than those who

were not (MSR+GF = 4.61, SDSR+GF = .43 vs. MSR = 4.41, SDSR = .47, F [1, 108] = 4.92, p < .05

[.029], η2 = .05). For the participants who received the non-salient reward (n = 88), however, no

significant difference was found in their intrinsic motivation between those who were given the

gamified feedback and those who were not (MNSR+GF = 4.69, SDNSR+GF = .36 vs. MNSR = 4.67,

SDNSR = .28, F [1, 84] = .09, p = 765, η2 = .00). In line with these results, a significant interaction

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effect of reward type and gamified feedback on intrinsic motivation was also found (F [1, 194] =

4.39, p < .05 [.037], η2 = .02) (see Figure 1). Overall, the results supported H3.

Place Figure 1 about Here An additional analysis was conducted using the PROCESS procedure (Hayes and

Preacher 2014) to examine the mediating role of perceived competence in the effects of gamified

feedback (dummy coded: 1 = present vs. 0 = absent) on intrinsic motivation. The analysis

showed no direct effect of gamified feedback on intrinsic motivation (b = .07, SE = .05, p = .14)

but showed an indirect effect via perceived competence (b = .08, bootstrap SE = .04, bootstrap

confidence interval = .01 to .16), suggesting that the effects of gamified feedback on intrinsic

motivation might have been fully mediated by perceived competence. However, the results

should be interpreted with caution because the current factorial design might not be sufficient to

test causal relationships between the variables.

Study 2 revealed that the addition of a gamification element (i.e., graphical feedback) to a

loyalty program could be an effective means of enhancing intrinsic motivation to engage in that

program, even in the presence of a salient, external reward. The results showed that individuals

who received the salient reward with gamified feedback as high in intrinsic motivation as those

who received the non-salient reward.

GENERAL DISCUSSION

The current study assessed the applicability of the two major theoretical propositions of

SDT—the undermining impact of external rewards on intrinsic motivation and internalization—

to the context of retail loyalty programs using two experiments. Overall, the findings indicate

that the use of a salient, completion-contingent reward weakened intrinsic motivation to engage

21

in the loyalty program. At the same time, intrinsic motivation, though undermined by the salient

reward, was enhanced by the use of a gamification element (i.e., graphical feedback of points).

Rewards are pervasively used to motivate human behavior at various levels of society

(Ryan and Deci 2000a). At the micro level, for example, rewards are used to reinforce desirable

behaviors at home and at school. At the macro level, rewards play a pivotal role in capitalistic

societies, where firms compete for limited resources and consumers. Rewards are also the

primary mechanism of advertising that attempts to manipulate consumer behavior by promising

desired outcomes for those who consume the right products.

Despite the persuasive power of rewards, some scholars have expressed concern that

rewards might cause a serious and enduring problem (e.g., Deci 1971; Deci, Koestner, and Ryan

1999; Ryan and Deci 2000a). Reward contingencies are likely to undermine intrinsic motivation,

overriding their inherent tendencies to pursue challenge and enjoyment from activities and,

ultimately, replacing their internalized value (e.g., brand loyalty). In line with this concern, the

present study demonstrated that the salient reward lowered intrinsic motivation to use the loyalty

program and that diminished intrinsic motivation was associated with a decrease in brand loyalty.

While previous studies on loyalty programs have examined the effects of various

characteristics of loyalty programs (e.g., required effort to achieve rewards and reward types) on

consumer decisions to participate in loyalty programs and company profitability (e.g., Kivetz and

Simonson 2002; Luxton 1998; Sharp and Sharp 1997), few studies have investigated customer

motivation to engage in loyalty programs. Although SDT has rarely been examined in the

context of advertising and marketing, the current study demonstrated that the theory can shed

light on consumer motivation.

22

Findings from Study 1 suggest that companies should reevaluate the costs and benefits of

their current loyalty programs. A loyalty program, which could significantly reduce brand loyalty

in the long run, might not be worth its peripheral benefits. Although the results from Study 1

point to a program that uses a non-salient reward as having a less negative impact on intrinsic

motivation than a program that uses a salient reward, firms typically use loyalty programs that

impose achievement requirements and deadlines and limit reward choices (i.e., salient,

completion-contingent rewards). The findings of Study 2 suggest a potential solution to this

dilemma: program managers could enhance intrinsic motivation by implementing game elements.

Feedback is a primary element of successful loyalty programs and is typically used as an

indication of customer progress over time toward a goal (e.g., “You’ve earned 56 stars”)

(Armbruster 2014). In order to design a more effective loyalty program, however, program

managers should preemptively address customers’ feelings and acknowledge the challenges that

customers face in participating in their loyalty program, instead of merely providing mechanical

feedback on customer progress. To this end, the findings of Study 2 suggest that when

consumers confront such a motivational barrier (e.g., when their intrinsic motivation is

undermined by a completion-contingent reward), gamification may have the potential to help

them regain momentum toward reward achievement by keeping them informed of their progress

and making them feel competent in earning rewards.

The current study focused primarily on the unintended, negative consequences of using

salient, external rewards on intrinsic motivation to engage in a retail loyalty program, yet the

results should not be interpreted as a denial of the positive effects of those rewards. For instance,

monetary rewards can attract new and less-spending customers to loyalty programs and increase

behavioral loyalty (Sharp and Sharp 1997; Verhoef 2003). The problem is that many loyalty

23

programs use rewards as short-term promotional incentives to boost the conditional probability

of repeat-purchase behavior, thereby producing only transient loyalty (e.g., Shugan 2005; Yi and

Jeon 2003). Industry practitioners also suggest that loyalty programs should reduce their reliance

on monetary rewards and focus more on non-monetary rewards (e.g., feelings of mastery and

accomplishment) to make user experiences with loyalty programs more enjoyable.

Limitations and Future Research

Despite its theoretical and practical implications, the current study has a few limitations.

First, this study used only one product category, one brand, and one loyalty program. Although

the participants of this study were all users of the loyalty program under investigation, and their

levels of product involvement and attitude toward the brand were measured and statistically

controlled, future studies should use multiple product categories with various levels of

involvement, brands, and loyalty programs.

This study focused on one game element: the graphical feedback of an extrinsic reward in

the form of star points. However, many loyalty programs are now developing other non-

monetary ways to reward their customers (e.g., badges and trophies). Future research should

assess the effects of various game elements on intrinsic motivation. Perhaps more importantly,

earlier studies on gamification point out that despite initial success in increasing intrinsic

motivation through enjoyment of the game elements, over time, participants in a gamified

program may eventually focus on obtaining external rewards (e.g., points) rather than fulfilling

the intended goal of the program (e.g., brand loyalty) (Hanus and Fox 2015; Tang and Hall 1995).

It is thus possible that gamified brand loyalty programs may initially be effective in nudging

participants toward intrinsic motivation for enjoying their interactions with the brand, but these

24

effects may be short-lived. Future studies should investigate the long-term outcomes of gamified

brand loyalty programs.

Despite these potential limitations, this study is one of the earliest experimental inquiries

into the undermining impact of rewards on customer use of loyalty programs, demonstrates the

usefulness of a novel theoretical approach, and provides insight that scholars and practitioners

can apply in the fields of advertising and marketing.

25

Table 1

Measurement Items

Variables/Items 1 Cronbach’s alpha

Source Study 1 Study 2

Perceived Autonomy Support (Reward Salience) 1. The loyalty program seems to emphasize a specific goal in the

number of purchases for a reward (requirement) 2. The loyalty program seems to require customers to achieve

rewards by a certain due date (deadline) 3. The loyalty program seems to provide customers with choices and

options in choosing rewards (choice) (R) 2 Attitude toward the Program Please evaluate the My Starbucks Rewards mobile app with emphasis on its formal features (e.g., layout, visual quality, ease of use, etc.): 1. Bad-Good 2. Unfavorable-Favorable 3. Unpleasant-Pleasant Intrinsic Motivation 1. It is interesting to engage in the loyalty program 2. It is enjoyable to engage in the loyalty program 3. It is fun to engage in the loyalty program Brand Loyalty 1. Starbucks is the first brand I look for, if I want to have coffee 2. I always go to Starbucks, if I want to have coffee 3. I usually go to Starbucks, if I want to have coffee 4. Overall, I am loyal to Starbucks 5. To me, various brand names of coffee house chains available in

the market are similar Attitude toward the Brand To me, Starbucks is… 1. Bad-Good 2. Unfavorable-Favorable 3. Unpleasant-Pleasant Involvement with the Product Category To me, coffee is… 1. Unimportant-Important 2. Boring-Interesting 3. Irrelevant-Relevant 4. Unexciting-Exciting

.82

.99

.92

.98

.96

.91

.79

.95

.90

.91

.97

.89

Deci, Connel, and

Ryan (1989)

MacKenzie and Lutz (1989)

Ryan (1982)

Kim, Morris, and Swait (2008)

MacKenzie and Lutz (1989)

Zaichkowsky (1994)

26

Table 1 (Cont’d)

Variables/Items 1 Cronbach’s alpha

Source Study 1 Study 2

5. Means nothing-Means a lot 6. Unappealing-Appealing 7. Mundane-Fascinating 8. Worthless-Valuable 9. Uninvolving-Involving 10. Needed-Not needed (R) Perceived Competence 1. The design of My Starbucks Rewards would allow users to easily

monitor their progress toward reward achievement 2. The design of My Starbucks Rewards would encourage users to

achieve rewards 3. The design of My Starbucks Rewards would motivate users to put

more effort into reward achievement

.80

.79

Ryan and Deci (2016)

1 Variables presented in order of appearance; all variables measured by a 7-point scale 2 Reverse-coded

27

Table 2

Zero-Order Correlations among Intrinsic Motivation, Brand Loyalty, Attitude toward the

Brand and Product Involvement

Variables 1 2 3 4

1. Intrinsic Motivation ⎯

2. Brand Loyalty .48*** 1 ⎯

3. Attitude toward the Brand .46*** .69*** ⎯

4. Product Involvement .14** .13** .17** ⎯

1 Statistically significant at ** p < .01 or *** p < .001

28

Figure 1

Interaction Effects of Reward Type and Gamified Feedback on Intrinsic Motivation

1 Intrinsic motivation (measured by a 7-point scale) 2 Straight line indicating a significant difference and broken line indicating an insignificant difference

4.61

4.41

4.694.67

4.3

4.4

4.5

4.6

4.7

4.8

Present Absent

Salient Reward

Non-Salient Reward

1

2

Gamified Feedback

29

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APPENDIX

Experimental Stimuli

Salient Reward (SC) Non-Salient Reward (NSR)

Salient Reward with Gamified Feedback (SR+GF)

Non-Salient Reward with Gamified Feedback (NSR+GF)