What Are Extrinsic Rewards?

How Do Extrinsic Rewards Apply to Marketing?

Henry Foster
Last updated: Aug 14, 2020
Originally published: Apr 11, 2019

Also Known As: positive reinforcement, conditioned rewards


An extrinsic reward is a physical reward given to someone for doing a task. Extrinsic rewards are valuable ways to motivate new customers who have yet to try a new experience.

Extrinsic Rewards Examples:

Loyalty Programs. Loyalty programs have become a mainstream marketing tool for airliners and ecommerce stores. But what’s the value of turning a new customer into a loyal customer?

Let’s assume your average order value is $100 and a loyal customer buys once a month. This comes to $1,200 in annual revenue. At a 30% profit margin, a loyal customer is worth $360 in yearly profit. The one-time customer would bring in $100 of revenue and $30 of profit. That means a loyal customer is worth $330 more!

But, you can do one better. Let’s say you offer a free t-shirt to any new customer who joins your loyalty program. The cost of a t-shirt is $10.

That means every new customer that becomes a loyal customer is worth an extra $350 ($360 annual profit - a $10 shirt). Additionally, would also benefit from the word-of-mouth created from this happy customer.

See Also: Salience

Do you want your startup to achieve product-market fit?

Then secure your copy of Scaling Startups by pre-ordering today.

The pre-order price is just $30, 40% off the regular retail price of $50.
Want to Learn The 14 Principles Used to Double Decibite’s Annualized Revenue in 6 Months?
Sign up below to join our product marketing newsletter. You'll get the tactics & strategies we use to help companies grow from idea to scale.

Ready to achieve product-market fit?

Buy Scaling Startups today to learn how startups get product-market fit

My startup advise has been seen on:

Henry Foster

Henry Foster is a digital marketer from Boston, making money for B2B companies by generating leads via paid search and social.

My articles
More Resources