by Yu-kai Chou
Since it benefits no one if the user actually suffers heavy losses, it’s best to utilize the “ultimate loss” as a form of expectation management, with the system creating “grace systems” that the users appreciate but do not abuse.
For instance, in the workplace the manager may make it clear that performances below a certain level will result in being let go. So everyone becomes motivated, in a sure but limited sense, to avoid the dreadful loss. This Core Drive 8 manager may even exercise small loss-events ranging from pep talks, moving people off important assignments, to publicly scolding them (hint: generally a terrible idea). All to make sure the employees emotionally acknowledge this sense of loss, and are motivated to work harder.
However, when an employee has failed the performance goal and fully expects to be let go, the manager may execute another option. Knowing full well that turnover and retraining new talent is the least preferable outcome, the manager can tell the employee that the organization appreciates his effort and hard work, and that they will give him another chance to hit the target.
As you can see, the Ultimate Loss here is not actually implemented, but instead wielded as a black hat motivational tool. After this, the employee may appreciate the second chance and become more motivated to do the work. This then becomes an example of Core Drive 8: Loss & Avoidance setting up for Core Drive 5: Social Influence & Relatedness, where the employee potentially starts to work harder because of a new sense of gratefulness towards the manager.
Expectations have everything to do with happiness and motivation. A hungry teenager in a poor country will have an extremely difficult time understanding why a perfectionist student in a developed country would be depressed for three weeks simply because she received a “B” in school. On the other hand, a student who expects to fail the class celebrates for a week when they obtain a B.
Similarly, a billionaire who lost a lot of money and became a millionaire might end up committing suicide210, while the average person who end up with a million dollars would become ecstatic. From my own observations, our happiness is almost exclusively determined by our expectations matched against our circumstances. Based on that, the easiest way to become happy may be to adjust our expectations and appreciate what we do have, instead of becoming upset because of the things we don’t. Even many marriages fail because of unrealistic expectations for each other, leading to built up bitterness over the years that plagues the soul.
When it comes to interactions with people, it’s always easier to start off stern and then become lenient, rather than being nice and then executing harsh punishment later. The dynamic between Core Drive 8 and Core Drive 5 often determines the relationship between landlord/tenants, teacher/students, employer/employees, and government/citizens.
Of course, if the employee starts to take the second (or third, fourth etc.) chance for granted, then it is crucial to maintain the credibility of the Loss & Avoidance system and let the employee go. If the ones breaking the rules aren’t facing any real consequences, it demoralizes the experiences of those that are performing their parts, and overall motivation plummets.
With that said, one thing to always remember is that this same slacking employee may shine like a star if the manager actually implemented more White Hat motivation. Motivational designs such as providing more autonomy, feedback, and meaning, as opposed to pure punishment systems. However, since the scope of this chapter is to explore the nature and effects of utilizing Core Drive 8: Loss & Avoidance, we focus mainly on the uses and effects of that Core Drive.
A Caveat: Avoiding the Avoidance
One caveat in using Core Drive 8: Loss & Avoidance is that the user must know exactly what they should do to prevent the undesirable event from happening. As mentioned in Chapter 10 on Scarcity & Impatience, if a loss-focused message is simply there by itself, but it is not intuitively obvious what the user needs to do, it often backfires - the Core Drive 8 becomes an Anti Core Drive and the user goes into denial mode. The brain irrationally concludes, “Since I don’t know how to deal with it, it’s probably not that big of a problem anyway.” Status Quo Sloth, which we will learn about later in this chapter, then dominates over the motivation towards loss-prevention.
A study done by health researchers Howard Leventhal, Robert Singer, and Susan Jones asked students to read pamphlets that describe the dangers of tetanus infection211. There were three groups of students in the experiment: the first group received the warning pamphlet, but without clear steps to prevent tetanus infections. The second group received the warning pamphlet along with a specific plan towards arranging a tetanus injection (a trigger towards the Desired Actions). The last group received the specific plan towards arranging a tetanus injection, but did not receive the high-fear warning pamphlet.
As you might expect, only the group that received both the high-fear warning pamphlet and the plan towards the remedy became highly motivated to take on the Desired Action. As mentioned in Core Drive 2: Development & Accomplishment, we only want to act if it makes us feel smart. If the user feels confused (hence stupid) when thinking about what to do regarding this potential threat, they would rather just dismiss it altogether instead of feeling incompetent over it.
As cleverly put by Noah Goldstein, Steve Martin, and Robert Cialdini, perhaps President Franklin Roosevelt’s famous quote212 should be amended into, “the only thing we have to fear is fear by itself”213.
Game Techniques in Loss and Avoidance
You have learned more about the motivational and psychological nature of Core Drive 8: Loss & Avoidance, but to make it more actionable, I’ve included some Game Techniques below that heavily utilize this Core Drive to engage users.
Rightful Heritage (Game Technique #46)
A common game technique that utilizes Core Drive 8: Loss & Avoidance is something I call the Rightful Heritage. This is when a system first makes a user believe something rightfully belongs to them (remember expectations matter a lot?), and then makes them feel like it will be taken away if they don’t commit the Desired Action.
The Rightful Heritage game technique can sometimes be implemented in a simple word change. Have you ever been on a website, where you click around before you stumble upon the conversion page (“sign-up” or “purchase”), and then see some offer that reads, “Purchase now and instantly get a 20% discount!” or “Sign-up now to receive 3000 free credits”? Often, we dismiss these offers as gimmicky, and a poor appeal to Core Drive 4: Ownership & Possession, so we ignore them.
However, some sites integrate game techniques into the experience by harnessing our loss aversion tendencies. Imagine as you click around a website, there is a little popup widget that says, “Great! Your actions have earned you 500 credits!” As you click on more places, it will continue to say, “Great! Your actions have earned you 1500 credits!” Finally, when you get onto the landing page, the text reads, “You now have 3000 credits. Sign-up to save your credits for later!”
Even though this is the exact same result as “Sign-up now to receive 3000 free credits,” the experience design makes signing up feel more compelling. Previously, the hassle of signing up did not justify the 3000 credits, but now it feels like you have “earned” these credits from your “hard work” of clicking around the site and the idea of losing what you have rightfully obtained feels absurd. As a result, there is a much higher chance of you signing up.
For eCommerce sites, imagine if a little widget showed you messages like, “Thanks for visiting our site during work hours. You have earned a 5% discount code. Click here to get the code.” As you dismiss the small 5% discount and continue to browse, the message says, “Thanks for comparing prices on our site! You have earned a 10% discount code! Click here to get the code” and then followed by, “Thanks for checking out our awesome user reviews. You have earned a 15% discount code. Click here to get the code.” Finally, a flashy message reads, “You have earned the maximum discount of 20%! Click here to get the code.”
At this point, y
ou may feel like your “hard work” of browsing around an eCommerce site has earned you a discount code. Even if you didn’t want to make a purchase, you’d feel justified in getting the code anyway. Once you obtained the 20% discount code, another push of Loss & Avoidance emerges, similar to the expiring mail coupon mentioned previously. You now feel like you would be losing something if you don’t use this coupon before the code expires. As a result, the odds of you making a purchase in order to use the discount code now increases.
In the startup world, companies often give their employees a comfortable amount of equity in the form of stock options, but with a couple of caveats. The first is a “vesting schedule,” where employees obtain the entire package only if they stay with the company for a specified period - typically 4 years in length, obtaining 1/48 of the promised equity each month.
The other caveat is the “cliff”, a period (often one year) after which employees begin to realize their vested options. Thus, if an employee leaves after 3 months, they get nothing. After staying for a year, they will immediately get 1⁄4 of their entire equity package, and then start accumulating 1/48 every month from that point on. The purpose of the cliff is to make sure there isn’t a plethora of ex-employees who own equity when they have barely contributed to the company.)
Because of this design, I have seen many employees who wanted to leave a company, stay much longer than intended because they didn’t want to lose the months vested that they had deservedly accrued. Of course, if the company isn’t able to turn around their motivation to leave (hint: probably because of a bad boss) by installing more White Hat elements such as purpose, autonomy and mastery, the employee will leave immediately after the cliff is reached.
Ironically, most companies don’t give employees their deserved raises or promotions until they too are motivated by Core Drive 8: Loss & Avoidance, when the employee has already accepted an offer from another company. Based on sound motivational design, companies should actually reward their employees when they execute the Desired Actions of performing well; not when the employees perform undesirable actions of asking for more money or finding other offers. If you only reward people when they do undesirable actions, you simply encourage them (and all their coworkers) to do more of these actions.214
The Rightful Heritage game design technique can be very useful in many scenarios to motivate users in taking action. Similar to how some siblings fighting guilefully against each other over a large inheritance - which they have done little to deserve; when people feel like something is their rightful heritage, they often fight for that inheritance to the very end215.
Evanescent Opportunities (Game Technique #86) and Countdown Timers (Game Technique #65)
An Evanescent Opportunity is an opportunity that will disappear if the user does not take the Desired Action immediately. One of the biggest sensations in the game Diablo III is a little monster called a Treasure Goblin. The Treasure Goblin is an enemy creature that appears randomly, but runs away when being attacked instead of attacking the player. With a significant amount of Hit Points (HP, health, or life), players will all rush to attack the Treasure Goblin as it runs away. Defeating the Treasure Goblin will sometimes (but not often) result in great treasures. However, if the Treasure Goblin is not defeated within a certain time frame, it will jump into a portal and disappear.
When a Treasure Goblin is spotted, players often ignore other monsters that are attacking them and solely pursue the goblin for the chance of obtaining its treasure. Some Youtube game broadcasters have been known to say things like, “I’m just going to show you how to defeat this boss, so right now I’m going to ignore all these monsters to get to the boss as soon as possible…OH LOOK, A TREASURE GOBLIN! Come on, don’t run away! Argh, these monsters are in my way. No, don’t go that way! Ah! I got killed… I blame the monsters for this.” Even in a live performance, the Evanescent Opportunity steals the show.
In the real world, every limited-time offer that forces you to decide whether to buy the product or lose the offer forever uses this Game Technique. Used car salespeople love to tell you, “Look, I just had the biggest argument with my boss about how if you got the car at a deal like this today, you would be so happy that you would become a lifetime loyal customer. That finally convinced him! I couldn’t believe it! Now, of course there’s no real pressure for you to actually become a lifetime customer, but you have to take the deal today. If you walk away, I guarantee you my boss will quickly come to his right senses again and change his mind.”
You snicker because you know the tactics car salespeople use and automatically put up a mental guard against them. But what about charity fundraisers? “We just got a generous donor that said for every dollar we collect in the next hour, he will match it! Your donation dollar will serve double the impact!”
Evanescent Opportunities motivate us to act quickly for fear of losing a great deal. Matching well with this technique is the simple feedback mechanic called the Countdown Timer.
A Countdown Timer is a visual display that communicates the passage of time towards a tangible event. Sometimes the Countdown Timer is to introduce the start of a great opportunity, while at other times it’s to signify the end of the opportunity.
Earlier we mentioned that actually applying an Ultimate Loss to the user benefits no one, and that the Executable Loss is simply to make users take the Ultimate Loss more seriously. The smaller loss is meant to reinforce avoidance of the significant loss. However, if the user is not aware of the loss, the entire motivational factor is squandered.
Countdown Timers ensure that users recognize the presence of the Evanescent Opportunity better than a simple expiration date because the user constantly sees the window of opportunity narrowing, establishing a sense of urgency in the process. Intuitively for this purpose, Countdown Timers should display the smallest time interval that is appropriate (more often that not – seconds), instead of showing longer intervals such as weeks or months.
Status Quo Sloth (Game Technique #85) and the FOMO Punch (Game Technique #84)
Sometimes Core Drive 8: Loss & Avoidance comes in the form of simply not wanting to change your behavior. I call this lazy tendency of behavioral inertia Status Quo Sloth.
Every once in a while, a startup entrepreneur will tell me, “Hey Yu-kai, there’s absolutely no reason why a customer wouldn’t use our product. We save them time, we save them money, and we make their lives better!” On lucky occasions, even the customer himself would say, “Yeah, there’s no reason why I wouldn’t use your product. It saves me time, it saves me money, and it makes my life better. I’ll definitely sign up tomorrow!”
For those who are experienced in launching new and innovative products, you might recognize that the key phrase here is “I’ll definitely sign up tomorrow.” More often than not, the true meaning of “tomorrow” is “never.” Not because the person isn’t being genuine, but due to the fact that with so many distractions in life, there simply won’t be enough motivation to perform the Desired Action.
As experience designers, our goal is to build Status Quo Sloth into the Endgame phases of our products by developing highly engaging activity loops that allow the user to turn Desired Actions into habits.
Nir Eyal, an expert in building habit-forming products, developed the Hook Model to describe a cycle of Triggers, Actions, Rewards, and Investments that eventually attract users into performing daily activities without exerting any mental effort216. In fact, once an activity becomes a habit, users actually need to spend consistent mental and emotional energy before they can remove themselves from the habit permanently.
This Hook Model focuses on creating internal and external triggers that remind the user to take the Desired Actions on a daily basis. After the user commits the Desired Action, a variable (and often emotional) reward is provided, finally prompting the user to input an investment, where the user will build value for themselves when they return again via the next trigger. Investments are things like adding a photo, t
agging friends, customizing folders, where the user builds value into this process (aligning with Core Drive 4: Ownership & Possession).
If done correctly, users begin to feel motivated by Status Quo Sloth, which means they may even work harder to prevent a change in behavior.
On the other hand, in order to counter the Status Quo Sloth that is working against you, something I call the “FOMO Punch” might be implemented. FOMO stands for “Fear of Missing Out” and it’s trick is to apply Core Drive 8: Loss & Avoidance against itself.
In life, we fear losing what we have, but we also fear losing what we could have had. This fear of regret, when prompted correctly, can penetrate through the behavioral inertia of Status Quo Sloth and trigger the Desired Action.
When Steve Jobs wanted to recruit Pepsi executive John Sculley into Apple as the new CEO, he famously said, “Do you want to spend the rest of your life selling sugar water, or do you want a chance to change the world?”
Boom! That was a powerful FOMO Punch that prompted Sculley to think he would miss out on the opportunity of a lifetime if he “wasted” the rest of his career at Pepsi. He later remembers, “I just gulped because I knew I would wonder for the rest of my life what I would have missed.”217 (Ironically, Sculley’s lasting legacy would likely be known as the guy who fired Steve Jobs and ran Apple into the ground - just for Steve Jobs to return and resurrect).
As the context suggests, FOMO Punches can be very effective in the Discovery Phase of an experience when users are trying out a new experience. In contrast, the Status Quo Sloth technique plays a bigger role in the Endgame phase when the designer wants to keep the veterans in the system.