Happy Sunday, Everyone!

I hope you’re all recovering from the post-BFCM hangover and enjoying the annual slew of Holiday parties, end-of-year meetings and frantic dashes to complete your 2025 to-do lists.

One thing I’ve noticed - especially in the wake of BFCM - is that, regardless of your industry, December is the month where "Expert Takes" fly in faster than Santa on his sleigh. If you haven’t logged into business tinder recently (lucky you), the drill goes something like this: “Email is dead,” “Paid is back,” “TikTok is the new Google,” “All marketers are being replaced with AI,” “You don’t need a creative team anymore because [insert thing].”

It’s all noise.

In situations such as these - where everyone else is obsessing over the changing tactics behind what’s happened (bids, budgets, platforms, creative formats) - I’ve found it most helpful to run in the polar opposite direction. To focus my attention on “unchanging man” - David Ogilvy’s “timeless human truths.”

One of my favorite books on that subject is Dan Ariely’s, Payoff: The Hidden Logic That Shapes Our Motivations. I actually had the pleasure of speaking alongside Dan at GPeC in Romania just over three years ago. It was a surreal experience to share a meal (and more than a few laughs) with someone who has had such a profound impact on how I think about marketing.

If you haven’t read Payoff, you should. It’s short, punchy and dismantles the outdated idea that humans are simply "coin-operated" machines, driven only by money and transactional rewards – something that’s particularly relevant after the spectacle of discount-driven consumption + capitalism that is BFCM.

Marketers too often fall into the trap of thinking our target audience(s) are purely rational economic actors: If I give them a 20% discount, they will buy. If I offer a free trial and tell them how great my features are, they’d be crazy not to sign up. If we just tell them how much better our [widget] is than our competitor’s doohickey, they’ll make the sensible choice.

But - as Ariely’s research proves - people aren’t purely rational economic actors. People are emotional. Social. Unpredictable. Driven by meaning, ownership and connection far more than we are by raw economic reality.

The amusing thing is that most people reading the above paragraph are nodding and (probably) thinking to themselves, “No duh, Sam! We know that.” But, to quote the famous behavioral economist Amos Tversky, “To understand what people think, look to their actions not to their words.” And, in the case of most brands + marketers, the actions - the offers, the ads, the incentives - tell a different story.

And, I’d argue, one of the primary reasons many marketers are pouring over forecasts and P&Ls, wondering why their marketing initiatives - Google, Meta, Email, TikTok, YouTube, whatever - aren’t producing the results they’d hoped is largely a failure of human understanding, not discounting.

So, for today, I wanted to share three of my favorite behavior economics experiments from Payoff – along with how you can apply the learning to your marketing efforts going forward.

1. The "Bionicles" Experiment: Meaning Matters More Than Money

Ariely conducted a study where he paid participants to build Lego "Bionicles." He assigned each participant into one of two groups: meaningful or Sisyphic.

• Group A (Meaningful): After they built a Bionicle, it was set aside on a table for display. They were asked if they wanted to build another for slightly less money.
• Group B (Sisyphic): After they built a Bionicle, the researcher immediately disassembled it in front of them while asking if they wanted to build another.

The Result: Group A built significantly more Legos than Group B, even though the pay structure was identical. Seeing their work destroyed (the "Sisyphic" condition) destroyed study participant’s motivation almost immediately.

The Marketing Application: The "Void" of the Thank You Page

I see this constantly in eComm, lead-gen and non-profit audits. You spend thousands of dollars getting a user to the site, you convince them to fill out a complex form or donate money, and then… you dump them into a void.

They get a generic "Submission Received" message. Or worse, the page just reloads.

To the user, this is the Sisyphic condition. They expended effort, and the digital feedback loop just disassembled their work. They don't know if it went anywhere. They don't feel the impact.

Fix it: Don't just confirm the transaction; communicate the meaning behind the transaction. Validate your new customer’s emotions and start to forge social connections.

• Visualize the Impact: On your "Thank You" pages, show the immediate result. "Your application is now on the desk of [Specific Person]." or "Your $50 donation just funded [Specific Outcome]."
  ​
• Gamify Progress: If you need users to fill out long profiles, visualize their progress. A saved progress bar prevents the feeling of futility.
  ​
• Give Quick Next Steps: this is particularly helpful for lead generation - when someone completes an inquiry, that represents (to the person) a significant milestone. They broke the inertia of inaction and took concrete action towards resolving a problem or addressing a challenge. Instead of treating the thank you page as a dead end, use it as a springboard – give them quick next steps, like a downloadable guide, a quiz, informational/educational content and/or a tool or calculator. Not only does this serve as a “reward” for taking the action (creating meaning), it also deepens commitment AND provides your team with valuable data that can be used to close the prospect later in the sales cycle. It’s a win-win-win.

The brands that do marketing remarkably well refuse to treat conversion events as the end of a transaction; rather, they treat them as the beginning of a relationship. I wrote a newsletter about nudging consumers in this exact way a while back, which you can check out here: Nudge Your Consumers in the Right Direction.

2. The "Origami" Experiment: The IKEA Effect

Another of my favorite lessons from Ariely’s research is the "Origami" experiment. In it, he recruited participants who had never folded origami before and handed them instructions to build paper cranes and frogs. As you might expect, the results looked less like elegant Japanese art and more like crushed homework pulled from the bottom of a backpack.

But here’s where it gets interesting: Ariely then asked two groups - the creators (the people who made the origami) and the observers (neutral people who did not make any origami) - how much they’d be willing to pay to buy each piece of origami. The results were miles apart:

• The Creators: they valued it as highly as expert-level origami
• The Observers: they offered almost nothing

The Insight: The gap between these two groups reveals a powerful, consistent truth about human behavior: we fall in love with what we help create. The moment we invest effort - real cognitive or physical labor - we begin to attach meaning and value. In behavioral economics, this is known as the IKEA Effect: the bias that causes us to overvalue things we assemble ourselves, even when the end product is objectively worse than if it had been made by a trained, capable professional.

It’s why a wobbly coffee table you built from scratch can feel more special than a higher-quality one that arrived fully assembled. It’s why gardeners defend their tomatoes as if they were heirloom treasures. It’s why junior designers fall in love with their unpolished, definitely-in-need-of-improvement first concepts.

Ariely proved (once again) that effort creates attachment. Attachment creates value. Value drives willingness to pay.

The Marketing Application: Strategic Friction

At almost every conference I attended this year, “reducing friction" was a central theme of at least one talk – whether it was on a website (“make it so easy that the user doesn’t have to even think”) or in a form (“only ask for their name and email - nothing else!”), checkout (“one-click checkout is best!”), even in a product experience (“done-for-you is best, always!”). Marketing (and sales) are obsessed with "frictionless" experiences.

And sure, removing some annoying barriers is - objectively - a good thing. You should have a website that loads quickly, that works as intended, that eliminates duplicative or unnecessary work on the part of the user. Those are all good things.

But not all friction is created equal. The counter-intuitive reality is that high-friction can be high-value. If you make a sign-up process too easy, the user has no skin in the game. They haven't folded the origami. If the checkout is so simple a toddler can do it, the customer isn’t emotionally invested in the purchase, and return rates (and chargebacks) skyrocket.

Our focus should not be on eliminating all friction, but rather on eliminating bad (unnecessary) friction.

Fix it: The solution isn’t to make everything harder. It’s to make key interactions more participatory.

• Static product images? Replace them with interactive configurators.
• Generic onboarding? Swap it for diagnostic journeys that shape the experience.
• Overly simple forms? Try ones that ask for some engagement/effort from your target audience, but feel overwhelming for window-shoppers (e.g., goals, revenue, budget).
• One-size-fits-all messaging? Break it by asking users to self-identify needs, goals, or obstacles.

This is exactly what Nike did with Nike ID. They created an interactive, friction-filled experience where users must actively engage before they can buy. Why? Because the moment a user spends five minutes selecting colors, stitching and materials, that shoe creation stops being a commodity and starts becoming an extension of the customer’s identity. From there, the prospect’s willingness to pay grows, because now they’re not buying a thing, they’re acquiring a part of their own identity. They’re no longer choosing a product available to the masses; they’re crafting one specifically tailored to them.

Skincare brands have mastered this, too. Go to (almost) any DTC beauty brand, and you’ll find some kind of quiz/interactive element that asks a series of questions about the user’s routines, concerns and habits before recommending products. Why? Because by the time the recommendations load, the user already feels a sense of ownership: this routine is mine because I helped build it.

This isn’t just a DTC/eCommerce thing, either – B2B is (finally, slowly) catching on with custom bundle builders, quiz-based personalization and/or “design your plan” pricing tools. These are tools engineered to create a sense of ownership before the transaction or sales call ever happens.

Effort → identity → value.

Ariely’s experiment - and the IKEA Effect it illustrates - is a wonderful reminder that simplification + friction reduction are not the goal; meaning is. Everything you do - from an advertising, landing page, UI/UX, product, whatever perspective - should be focused on creating meaningful engagement + value in the minds of your target customers….especially if doing so causes non-core customers (or window shoppers, or pretenders, or time-wasters) to opt out.

Three question forms and one-click experiences will boost conversion rates, but at the expense of post-conversion behavior. Meanwhile, well-designed, purposeful friction deepens attachment, increases willingness to pay and strengthens long-term retention.

The tl;dr: spend more time thinking about how to engineer the right friction, not on eliminating all of it. If you’re curious how to leverage this, I wrote a detailed piece on 9 ways to engineer better behavior using principles like this, check it out here: 9 Ways to Engineer Better Behavior​

3. The Intel Chip Factory Study: Pizza vs. Cash

Since everyone seems to be talking about AI chips, it’s only fitting to end with an experiment that unfolded inside one of the original chipmakers: Intel. But, unlike most of the AI headlines (where everyone seems to focus on the latest chips), this one took place on the factory floor, where people are essential to the output.

Our dear Prof. Ariely had a question that anyone who has led a team is familiar with: how do you motivate people to perform better?

To answer it, he designed a field experiment inside an Intel semiconductor facility. Employees were divided into four groups:

• Group #1: was promised a $30 cash bonus for hitting production targets
• Group #2: was promised a voucher for a free pizza (value ~$15, or 50% of the cash)
• Group #3: was promised nothing of material value; rather would receive a simple text message from their manager that said, “Well done.”
• Group #4 (the control): gets nothing at all

He ran this experiment every day for a week straight, with all employees remaining in the same group for the duration (e.g., if employee A was assigned to Group #1, s/he would remain in that group for the full week).

Corporate intuition suggests the cash should provide the greatest motivation - after all, it’s the highest value incentive offered AND it comes with the bonus of being flexible (if you don’t like pizza, you can buy cake, or a video game or a bottle of wine or just save it). The rational behavior is for the largest, most flexible incentive to produce the largest increase in performance.

But humans aren’t logical, and the results of Ariely’s experiment revealed something counterintuitive.

On day one, both the pizza and the compliment resulted in larger productivity boosts than the cash incentive. The cash group improved, but only modestly. That, in and of itself, was interesting – but then came Day 2.

The day after receiving their $30, their productivity didn’t just dip; it cratered, falling 13.2% below the control group. Once the initial transaction was complete, Group #1’s motivation evaporated. The incremental work (performing above the baseline) was reframed as something you do for a payout. And once that payout was collected, the psychological contract was over.

Meanwhile, the pizza and the compliment tapped into something deeper. A pizza at the end of a long day is not about cheap, grease-filled calories (as delicious as pizza is/was); it’s a token of appreciation and a symbol of team spirit and recognition. A text message saying “well done” has precisely zero tangible value, but conveys real, genuine acknowledgment. These incentives continued to produce gains because they made the work feel social, valued and meaningful, not transactional.

The Insight: Financial incentives are easy and efficient from the business’ perspective, but they’re also corrosive when misapplied. Any time you provide a cash reward, it signals that the relationship is transactional. When a brand rewards a customer with money, we quietly redefine the terms: I’m doing this for the payout. And once the payout is delivered, the incentive collapses.

Meanwhile, recognition, belonging and social value hold motivational power disproportionate to their cost - they elevate effort instead of commoditizing it, creating a sustained behavioral lift long after the initial gesture.

The Application: Rethinking Loyalty

I’m on record saying most loyalty programs are absolutely terrible. I hate giving loyal customers $10 coupons – first, because a loyal customer is (by definition) already in the habit of buying from you (so you’re just giving away margin for a purchase that would have happened anyway) and second, because they make the same mistake as Intel’s management did with the cash incentive.

When you give a loyal customer a 15% off code, a $10 gift card or a bunch of “loyalty” points redeemable for trivial savings, what you’re really doing is re-framing the entire relationship from emotional/social/belonging terms into purely economic terms. The person no longer feels like they are buying to signal their belonging, but rather that their loyalty must be financially rewarded. It’s no wonder why the retention programs for those brands are like glass cannons – they generate initial action, but not deep, long-lasting loyalty that can overcome adversity (higher prices, an imperfect experience, competitor presence). In some perverse way, most loyalty programs undermine genuine loyalty by teaching repeat customers that their relationship with the brand is purely transactional.

Put another way: a $5 coupon tells your customers: your loyalty is worth precisely this amount of cash.

That framing is dangerous, because transactional loyalty is fragile loyalty. It disappears the moment someone else offers marginally better terms.

The Intel experiment shows us a stronger path: loyalty built on a foundation of respect, connection and shared purpose/identity.

When brands recognize customers, elevate them, tell their story back to them and/or give them insider access, the relationship transforms. The customer shifts from pure economic animal to social and brand participant.

This is why VIP tiers that feel earned (not automated), early access drops that feel exclusive, or “founder circle” communities for power users routinely outperform larger discounts. These gestures tap into status and belonging - the equivalent of the pizza or the compliment - not the $30 bill. And this is also why the marketing equivalent of that Intel manager’s text message—a personalized “Year in Review” -- consistently outperforms coupons in both sentiment and social sharing. Customers share what makes them feel seen, not what saves them $8.43.

Fix It - Offer Pizza or Compliments, not just Cash: Rather than defaulting to monetary rewards, shift your loyalty architecture toward meaning.

• Status > Cash: leverage VIP tiers, exclusive access and/or insider programs that make customers feel recognized
• Social Recognition > Discounts: send personalized summaries, milestones or “Your Impact This Year” reports that reinforce identity
• Narratives > Coupons: create experiences that tell customers their story back to them. People join for the community, not the promo code.

The best part? Almost all of these options are economically more attractive to the business/brand than the cash incentive! What does it cost your brand to offer early access to a product drop to your loyal customers? Something on the order of the marginal cost of email segmentation and a few bits of creative – maybe $1,000 total? What does it cost to send a personal, hand-written note and a thoughtful gift (instead of the standard corporate gift) to your 10 largest customers this time of year? Maybe $2,500 (including time + materials)? How much effort does it take to create a dynamic “impact” email to your donors or subscribers?

I guarantee the cost of all of these programs is less than the cost of giving every customer a $10 discount – both in raw financial terms, and (most especially) in emotional terms.

A simple hierarchy captures the underlying mechanics that Ariely found:

• Cash motivates transactions
• Recognition motivates people
• Status motivates identity

The first fades almost immediately; the latter two are persistent, growing over time.

What This Means For Marketers: Let’s start with a simple, obvious conclusion: you cannot buy loyalty with discounts. You cannot bribe your way into emotional connection. Competing exclusively on price is like fighting in the Colosseum: you may win a few rounds, but no one makes it out alive over the long-term.

What you can do is build deeper, more defensible loyalty by recognizing your customers, elevating them and making them feel like part of something larger than themselves (a community, a movement, an identity).

The Intel experiment proves that the most powerful incentives aren’t monetary - they’re emotional and social. It’s incredibly tempting (and often, effective in the short-term) to throw progressively larger financial incentives at your retention challenges – but all that does is make your customer relationships more brittle. The way to win long-term is to think more holistically and more emotionally – what do your customers want (and if you don’t know, do some audience research // customer insights work to find out!), and how can you design a program that meets those emotional/social needs for them?

Answer that question, and you’ll find that not only are your customers more loyal to your brand, but they’re also more profitable. Sometimes, human irrationality has its perks.

The Bottom Line

We spend an inordinate amount of time trying to reverse-engineer the "black box" of platform algorithms, whether it’s obsessing over Meta’s latest update, Google’s new ad product (or AI overviews) or how to boost visibility in TikTok shops. Most of marketing is focused on optimizing for the machine – often at the expense of the person behind the screen.

Here is the reality: Platforms change. Algorithms evolve. Tactics come and go. But the hardware inside your customer’s head - the need for meaning, the desire for ownership, the drive for social connection - hasn't changed in 50,000 years. It will not change tomorrow, no matter what drivel the marketing guru on LinkedIn says.

Solve for the unchanging (wo)man and you’ll find yourself in a much better place. The real winners are the ones who understand the hidden logic of why people click, buy and stay.

They will be the brands that stop trying to "hack" attention and start engineering more emotional, more meaningful experiences.

That’s all for this week!

Cheers,

Sam

​

Loving The Digital Download?
Share this Newsletter with a friend by visiting my public feed.

​

​

Follow Me on my Socials

​​​

​

1700 South Road, Baltimore, MD 21209 | 410-367-2700
​Unsubscribe | Manage Preferences​