The base idea here is really interesting. How will the numbers work out? Some Indian apps like Cred do this with randomized rewards on credit cards payments, but the payments are so few and far in-between that customers stop expecting anything meaningful after a while (I get a nickel's worth on a 100 dollar spend if I'm lucky, zero usually).
Also, people get used to rewards really fast (https://youtu.be/FdkQwQQWX9Q) and they get upset when something they've taken for granted is taken away. There could also be an optimal mix between novelty and stability for happiness (Derek Thompson discusses this in his book "Hit Makers". A customer who is charged for dinner but gets dessert free is likely to be happier than randomly getting a few items comped. This could be worth exploring.
The idea that people start sensing pattens between their actions and outcomes is really powerful! If people feel a sense of control, it gamifies them even more and turns on the gambling instinct. Lots of interesting ideas here, but I'm curious which one would give the most bang for buck to start with.
If you think of it as marketing spend, I think you could actually go pretty high in comps! It looks like resorts tend to spend ~5-10% of their revenue on marketing. I think a couple of percent of revenue dedicated to comps would feel pretty generous, especially if you're doing lots of individual purchases (e.g. every food, drink, activity).
You also have more margin to play with - I'm not directly familiar with Cred (it looks interesting, the club marketing is pretty clever!), but credit card fees are 1.5%-3.5% generally. It looks similar for India; that doesn't give a ton of margin to work with for rewards. Compare that to food - generally a restaurant has food costs + labor targeted at 60% of price. That means that the $10 appetizer really costs $6 when comped (ignoring fixed costs), so each reward goes a little further.
It's a really good question how quickly people will just get used to getting comps. I think the mechanisms are interesting here - does giving MORE comps actually make them less valuable because people come to expect them? Maybe the optimal amount is actually a lot less than the maximum amount you can do financially - after the 17th one, it stops being as special? Although on the flipside, a vacation at a resort is almost always less than a week, maybe that's not enough time for hedonic adaptation to occur.
I think the callout around dessert is great too. I haven't read Hit Makers, but maybe maintaining randomness means better odds for the things with the most emotional impact. I'd be worried about it ever feeling manipulated, but if dessert brings an especially high amount of joy then maybe we want to do it more often!
I like this one. I bet you could fix the “only got a free soda” issue with an algorithm that makes sure everyone eventually gets something of value. I could also see an audience of superfans developing around this if you let people think there are ways to game the system - people love that kind of sleuthing just as much as they love free stuff!
100%! As much as I love the ethos of true randomness, algorithmic balancing gives a lot more control for downside risk. But I wonder if that control has downsides - if people feel like we’re algorithmically manipulating probabilities, does it start to make bad luck feel unfair?
Maybe there’s a way to fix it without manipulating probability. What if there’s a "true-up" at the end of the vacation - like a safety net for guests who got nothing? Or maybe flip it with a dummy prize - “you didn’t get anything free this trip? Congrats, you get the mega prize - an entire tuna, fresh cut for a sashimi party for you and your friends.” Although maybe that encourages guests to minimize purchases to AVOID getting a comp?
The sleuthing aspect makes me think of how we can learn from video game rewards. You win as volleyball game on court 3 and you have a 80% chance of a free drink, a 19% chance of free dinner, and a 1% chance at a free round trip ticket to come back. Something that encourages guests to try their luck more than once and swap tips on the places where they got lucky.
I kind of think about a casino where the expected value is the casino is going to win, but people still go and spend a bunch. Why is that? And in fact casinos do this exact thing, they randomly comp stuff, those smart billionaires (and you) are on to something…
I can see that people might enjoy(ish) this, but I think I would immediately run screaming.
The base idea here is really interesting. How will the numbers work out? Some Indian apps like Cred do this with randomized rewards on credit cards payments, but the payments are so few and far in-between that customers stop expecting anything meaningful after a while (I get a nickel's worth on a 100 dollar spend if I'm lucky, zero usually).
Also, people get used to rewards really fast (https://youtu.be/FdkQwQQWX9Q) and they get upset when something they've taken for granted is taken away. There could also be an optimal mix between novelty and stability for happiness (Derek Thompson discusses this in his book "Hit Makers". A customer who is charged for dinner but gets dessert free is likely to be happier than randomly getting a few items comped. This could be worth exploring.
The idea that people start sensing pattens between their actions and outcomes is really powerful! If people feel a sense of control, it gamifies them even more and turns on the gambling instinct. Lots of interesting ideas here, but I'm curious which one would give the most bang for buck to start with.
If you think of it as marketing spend, I think you could actually go pretty high in comps! It looks like resorts tend to spend ~5-10% of their revenue on marketing. I think a couple of percent of revenue dedicated to comps would feel pretty generous, especially if you're doing lots of individual purchases (e.g. every food, drink, activity).
You also have more margin to play with - I'm not directly familiar with Cred (it looks interesting, the club marketing is pretty clever!), but credit card fees are 1.5%-3.5% generally. It looks similar for India; that doesn't give a ton of margin to work with for rewards. Compare that to food - generally a restaurant has food costs + labor targeted at 60% of price. That means that the $10 appetizer really costs $6 when comped (ignoring fixed costs), so each reward goes a little further.
It's a really good question how quickly people will just get used to getting comps. I think the mechanisms are interesting here - does giving MORE comps actually make them less valuable because people come to expect them? Maybe the optimal amount is actually a lot less than the maximum amount you can do financially - after the 17th one, it stops being as special? Although on the flipside, a vacation at a resort is almost always less than a week, maybe that's not enough time for hedonic adaptation to occur.
I think the callout around dessert is great too. I haven't read Hit Makers, but maybe maintaining randomness means better odds for the things with the most emotional impact. I'd be worried about it ever feeling manipulated, but if dessert brings an especially high amount of joy then maybe we want to do it more often!
I like this one. I bet you could fix the “only got a free soda” issue with an algorithm that makes sure everyone eventually gets something of value. I could also see an audience of superfans developing around this if you let people think there are ways to game the system - people love that kind of sleuthing just as much as they love free stuff!
100%! As much as I love the ethos of true randomness, algorithmic balancing gives a lot more control for downside risk. But I wonder if that control has downsides - if people feel like we’re algorithmically manipulating probabilities, does it start to make bad luck feel unfair?
Maybe there’s a way to fix it without manipulating probability. What if there’s a "true-up" at the end of the vacation - like a safety net for guests who got nothing? Or maybe flip it with a dummy prize - “you didn’t get anything free this trip? Congrats, you get the mega prize - an entire tuna, fresh cut for a sashimi party for you and your friends.” Although maybe that encourages guests to minimize purchases to AVOID getting a comp?
The sleuthing aspect makes me think of how we can learn from video game rewards. You win as volleyball game on court 3 and you have a 80% chance of a free drink, a 19% chance of free dinner, and a 1% chance at a free round trip ticket to come back. Something that encourages guests to try their luck more than once and swap tips on the places where they got lucky.
I kind of think about a casino where the expected value is the casino is going to win, but people still go and spend a bunch. Why is that? And in fact casinos do this exact thing, they randomly comp stuff, those smart billionaires (and you) are on to something…