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Above the surface, your engagement looks green, healthy. Climbing underneath, there's something you're not looking at. And it is a lot bigger than the part you can see, and that is behavioral debt. And once you start to read the whole balance sheet, you can start building real engagement rather than just paying or servicing an initial loan. Look, I know somewhere inside a Fortune 500 company that I cannot disclose, employees are sitting down with their families to work out which reward to go for next. Where does the best value for the effort lie? It has become a household decision. But here's the thing. Nobody budgets with a badge. You only do that with income. And that program, which was designed to motivate people into committing desired actions, it has slowly and quietly become part of the budget, of the way people budget around their lives. Even inside the family, it's not a reward anymore. It has actually become part of their income. The bigger issue here is that as a company, you cannot just turn it off without a massive outpour. So I'm Rob, I'm the head of engagement strategy in Europe for the Octalys Group, the behavioral design and gamification prime consultancy in the world where we are regularly oftentimes restructuring these behavioral debts for companies that need our help and getting massive results turning a debt into an actual ROI situation. And the big issue with most engagement advice that you will find out there is that oftentimes they assume that you're designing from scratch, that it's just a startup situation. You listening right now? You probably aren't. You inherited some form of a points program, discount habit, bonus structure that has been installed for years, maybe even decades. So the thing is, you're probably already in debt and everything starts with actually reading what does the balance sheet look like today? Almost every single engagement fixed is simply borrowed motivation. You get the behavior today and you keep paying for it with interest, by the way, for the rest of the existence of maybe even the whole company. And if you want to get better at reading and understanding these kinds of situations and how not to fall into those kinds of traps, all you have to do is click on the link in the description where I have a guide called Core Drives in the Wild. Get just a few emails, see these situations out there in the wild in corporate situations and of course my own consultant read on how they worked or why they didn't. One of the things that makes this kind of issue harder to see is that it's usually hiding a success. Technical debt is, you know, it's usually shown as a slowing down of velocity. Behavioral debt starts showing up as green dashboards. Engagement goes up, redemption goes up. Metrics that you might be wanting to use to spot this kind of debt are actually the ones where the motivation is being inflated. And the issue, the bigger issue is when and oftentimes it does, the interest starts to compound. Like in regular debt, the same discount that has been motivating people, the same reward that has been getting your people to take action, suddenly needs some spike. It's feeling like not much. So what do you do? You up the amount of points you're needing to get for the same behavior. You need to start getting more points. When you do that, essentially you are paying with more points and it's servicing that debt. Oftentimes that also ends up meaning more money that you need to invest in getting the motivation that initially you got with a quote unquote simple points program. And the default can be absolutely sudden, violent. Switch it off and the behavior doesn't just drift down, it stops. It can entirely almost disappear. An example of this was back in 2012. A guy named Ron Johnson, I think was his name, was appointed from Apple to J.C. penney. What did he do? He took all discounts, the coupons, and scraped them off entirely. He said this is nonsense, which kind of makes sense, and substituted that with everyday low prices. By the way, this is a strategy that has been very, very successful. The everyday low prices has been very successful for many, many businesses out there. The problem is there was already a behavioral debt existing and he tried to cover the whole debt in a single move. The results, well, guess What? Sales fell 25%. That's roughly $4.3 billion in a single drop. And for him personally, he was gone by 2013. His successor, obviously. What did they do, bring back the discounts and the coupons? The problem is they brought that back. But the whole business was not back in the place where it was well before that. And to be fair, in this case, the numbers were already showing that the debt was there. Ron Johnson himself said that 1% of sales happened without any of the discounts. Let me read that again the other way around. 99% of the sales happened with coupons and discounts. Everything else was not getting purchased for not getting purchases at that time. That is borrowed motivation. Nobody was calling it debt. So back to the case. I started this episode with those points at that Fortune 500 company were given to employees for reaching certain performance target metrics. They were usually well beyond reach to get the absolute totality of those points. So since there was no real finish line, they didn't really have a chance to renegotiate. Oh, we finally made it there. What do we do now? How do we renegotiate this? How do we go about this starting now that the previous stage finished? The points that the employees were receiving were relatively easy to convert into dollar value because you got gift cards which literally give you dollar value. Houseware, electronics, which if you didn't get an exact dollar value, you could see in two or three places, look at what that was worth and know how much effort you were putting in for how much money it was overflowing with core drive four, ownership and possession, as well as core drive eight, loss and avoidance, you didn't do the behavior. You didn't get that it was starting to become functionally, even though you know there were. You can talk about many other implications, but functionally, it was becoming part of their income. That was what they were needing. That was what they were getting. That is how they were viewing this whole situation. And people, of course, took this core drive for ownership and possession very, very seriously. This motivation meant that it was these points that they were attached to, not necessarily the work that needed to be done, because they were making decisions on what work to prioritize over another through the lens of those points. And of course, when the company wanted to prioritize something, guess what was the strategy to make sure that was top of mind for these employees? They raised the amount of points that you got for that compared to other activities. Hence raising the bar every now and then when you need to give something priority. And bringing it back to the technical debt that I also mentioned earlier. The thing with technical debt is that you take it on almost intentionally, and you have a repayment plan that is very, very clear. With behavioral debt, nobody writes, we're borrowing motivation this quarter, which we will repay the next one or the next year. Nobody is really taking care of that oftentimes, if not every single time. This behavioral debt is incurred by accident, not by design, and hence no one is able to track it. And also, to be fair, not every single one of these debts is compounding. A small, stable reward that doesn't need to grow is basically a fixed cost. The bigger debt is the one that you keep having to increase. That is when it becomes a very, very serious issue for the motivation of the behaviors you want to get. So we've realized already that you cannot just stop. Stop is entering default. Essentially, you're talking in debt terms. You build the durable thing while still servicing the debt that you have. You cannot just suddenly stop everything you can slowly start diminishing it while building something that is more durable. In the Octalysis group, there is a published case about Latam Airlines that was doing exactly this kind of work. The problem, as usual with most loyalty programs from airlines, in fact I discussed that in another episode, was transactional fatigue. Users were so used to these static points that the points had stopped doing any real motivational work. So what did they do? They kept the miles. Miles were still there. I would bet that they are still in that sense working mostly the same way. What actually changed in this case was the delivery. It was a narrative treasure hunt built on CD7 unpredictability and curiosity and CD3 empowerment of creativity and feedback by changing and switching up the strategy. What did Latam Airlines get? With the help of the Autelsis Group, 153% increase in credit card acquisitions. JCPenney tried to repay in a single lump sum and almost defaulted. They lost 25% of their business overnight. Latam kept servicing the debt while it was also building in the replacement for that motivation and hence got the fantastic results that you can observe on the case study. I spent a whole episode arguing how airline miles are actually training disloyalty of their loyal members. That is completely true when you use airline miles, as has been the case for decades, all by themselves. And the Latam Airlines case is what it looks like when someone adds the layer that was missing to make sure the motivation is really there, using behavioral science and behavioral design and gamification for a real case that gets real results with massive significant changes, not only in the behaviors, but in the business results that you're actually after. And this is not just customer programs looking sort of outwards. There's also a case which you can look up where a bank, a standard incentives program has started to drift to, you know, something like 10% participation and rebuilding it around a collective purpose took it to 90%, by the way, an increase in revenue of $1.06 billion. So you can see there's many successful implementations of this situation out there in the wild within the Octalysis group's case studies. But this is very case by case. Compare the two that I've just told you, the Latam Airlines and the Caixa Federal of Brazil. One, they are very, very different. They're very distinct. You cannot just go ahead and copy what somebody else did successfully. Latam did work for their audience, for their moment, for their situation. The diagnosis that we're sharing here can easily transfer the prescription that you get for what is actually going on in your business and what you need to change around the situation for what you are looking for, that does not that is changing specific and very, very crucial to take into account very, very seriously. And those results are what expert deployment gets you. So as you can see, there's many motivation loyalty programs out there that are not motivating or making anybody loyal at all. They're currently just in the best of cases, servicing a debt for a loan that somebody took years ago and nobody wrote it down as debt. So once again, if this is something that interests you, we want to see more cases of how the core drives actually apply successfully and not so successfully out there. All you have to do is click on the link on the description, get our free Core Drive in the Wild guide one email per day for a few days and you'll get a much better read at what does motivation look like in real life through the lens of the eight core drives and of course my own personal professional consultant experience and take on the subject. And as always, at least for now and for today, it is time to say that it's game over.