Behavioral Design: Reward strategy to increase engagement

I've worked for a start-up who provides an app with entertaining content and in-app purchases. They wanted to improve their retention rate.

I've conducted extensive qualitative user research before that the behavioral analysis builds up on.

The goal of the project was to improve the retention rate. That translates into a higher user engagement which means the users are supposed to pick up the app daily and increase their time spent in the app. To reach that goal I designed a reward strategy that is based on external rewards that are supposed form a habit and to trigger some internal motivation to use the app in the end.

We want to increase user engagement using a reward strategy that creates positive feedback for the users to increase the chance the users perform the desired behavior repeatedly. Before we start designing a reward strategy, we have to answer the following questions:

Who is the target audience?

What is the desired behavior?

What actions should be directly rewarded?

What do users perceive as a reward?

To increase user retention, we take a look at the CAR-Model that is used to drive behavior change. The reward strategy contains different combinations of cue-action-reward depending on the subset of targeted users and the actions that are supposed to rewarded. That way, different dynamics can be designed that each make sure that the user engagement in the app increases and the customer retention improves.

Cue:To make the user perform the desired action, we need to create a set of clues as triggers. This can be as easy as a push notification as an external cue, some ads or simply seeing the app icon on the phone.

Action: The user then performs the desired action after being triggered by the cue. According to our goal, the action can be to take out the app, to read in the app or to start exploring new content in the app.

Reward: In this context, a reward is a benefit or some other instant gratification the users get as a result of a certain action. From the users' point of view, the rewards need to be perceived as desirable, like points, discounts or free content. Right after the users perform a part of the desired action, the users get rewarded to trigger a positive emotional response. This positive feedback makes it more likely to do this action again. This way, the user basically learns what behavior to repeat via external rewards.