Friday, August 07, 2009

How do you motivate people?

Dan Ariely, of Predictably Irrational, reveals in The Trouble with Cold Hard Cash that motivating people with money doesn't seem as effective as a specific prize:

Thankfully, there is some data on this debate. A few years ago Goodyear Tire & Rubber Company decided to test which method was more successful in an effort to improve sales of a new line of Aquatred tires. Their plan was simple and elegant: first they ranked their 60 retail districts according to previous sales, then divided them into two groups of equal performance and assigned one group to receive monetary incentives and the other to receive tangible incentives of equal value to the first group.
The results were very interesting; it turned out that the tangible-reward group increased sales by 46% more than the monetary-reward group. They also improved in terms of the mix of products sold by 37%. One explanation, and it seems to me a fairly good one, is that we can visualize tangible rewards (imagine yourself on a Hawaiian beach), which creates an emotional response. Money, on the other hand, is not accompanied by images as often (aside from maybe Scrooge McDuck swimming in piles of it), and lacks the emotional pull that tangible rewards have, so they’re less effective in motivating employees. I guess it’s called “cold, hard cash” rather than “future beach vacation cash” for a reason.


It may be that when trying to get our children to do something, we'll have better results with something specific like a half hour of TV or a piece of cake, than a couple dollars.

Technorati tags: motivation, money, parenting, children


Luke said...

That makes a lot of sense. And that is also why marketers often focus on an "experience" rather than function of what they are selling. You're not just getting a burger, you're getting back to the college party experience!


Henry Cate said...

I wonder how the experiment would have run if they had described in detail what people could buy with their reward?