Studies of consumer psychology tell us that consumers are motivated by rewards and recognition. Entice them with economic rewards and soft benefits that induce positive feelings about your brand, and they will buy more, buy more often, tell their friends, and develop a lasting relationship with your brand that instills customer loyalty. Do the same techniques work to motivate personal behavior changes that lead to life improvements? The jury is still out—but a new smart phone app aims to test the theory.
By Rick Ferguson
Sweatcoin is an iOS and Android app designed to motivate more active lifestyles by rewarding smartphone users with promotional currency called, naturally, sweatcoins, which can in turned be redeemed for anything from small-denomination gift cards up to a new iPhone X. The tiered app is free at the basic “Mover” level, with options to move up to three higher fee-based tiers that accelerate earning. In this iteration, Sweatcoin only rewards currency for outdoor walking; indoor activities such as walking/running on a treadmill or track don’t yet count towards rewards, although the company claims to be working on an update that counts indoor activities.
While there’s a temptation to assume that a wellness app would offer such a low funding rate that the rewards would be unmotivating, Lifehacker is modestly pleased with the earning velocity:
“You [can] get to a few rewards reasonably quickly. Roughly every 1,000 steps you take is worth 1 sweat coin. At 10k steps a day you’d be able to get a FitBit Flex (550 coins) in close to 2 months, which might turn into close to four if you’re not getting credit for everything. Other prizes start at much lower price points and can be nabbed after just a few days.”
If you’re wondering whether a garden-variety points program is a big deal—even one that rewards you for walking—then you may be interested to know that, according to the New York Times, Sweatcoin has become the most downloaded health and fitness application in the US on both Apple’s App Store and Google Play. London-based Sweatco raised $1.6 million in venture capital to launch the app, and should close on another round soon. That success is due entirely to the app’s business model, which is based on classic loyalty marketing techniques.
Still, the app is not without its detractors; central to customer complaints are the 5 percent breakage the app mandates in its terms and conditions—which the company calls “commission to keep the lights on”—and its mysterious tendency to withhold earned sweatcoins, which the company claims is an algorithm-driven process designed to combat fraud. Money quote from the Times:
“[Oleg] Fomenko, the Sweatcoin co-founder, told me the app’s ‘draconian algorithm’ is meant to deter cheating techniques like, say, strapping a phone to a pet dog. And that fraud-deterrence system may verify fewer steps than users expect, he said. In practice, according to the app’s help section, that means the Sweatcoin algorithm typically verifies 65 percent of a user’s total steps.”
The Times review also mentions that the app is making a potentially fatal mistake: removing rewards from its redemption catalog before users can earn enough currency to redeem for them. The company receives a fee from manufacturers and brands who market their products to Sweatcoin users, which makes the company beholden more to its reward suppliers than it is to users. High-end rewards, meanwhile, are relatively unattainable—it can take five years of walking to earn an iPhone X, for example—which can also be demotivating. The company must also resist the siren song of selling users’ data, which it claims to have no intention of doing—for now.
These missteps aren’t yet fatal, as the number of downloads and the relatively strong user ratings attest. To build sustainable user loyalty, however, Sweatcoin will need to refine its approach. It’s a great start—let’s hope that the company can reach the finish line.
Rick Ferguson is Editor in Chief of the Wise Marketer Group and a Certified Loyalty Marketing Professional (CLMP).