Retaining Customers Through Endowment

Retaining Customers Through Endowment

Lemuel Galpo
Written by Lemuel Galpo
April 21, 2015

Customer retention has always been difficult to maintain, even with strategies designed to deal with it. It will and always depend on the loyalty of the customer to the website. This is where endowment comes in. Sometimes, getting the customer or hooking a client is not the hardest part of marketing. For longevity in any business, and in any market, you need to retain customers. As one of the basics in marketing, you need to know how to keep your customers coming back for more.

In a recent blogcast, host Bobby Hewitt of Creative Thirst discussed the advantages of the endowment effect on increasing conversion rate. Website owners need to learn about the effect of endowment on conversion, how the endowment effect can increase it, and how to take advantage of it to improve the customers’ sense of ownership. With understanding endowment, marketers will also know how to retain their customers and keep them happy.

Do Your Web Visitors

The Effect of Endowment on Conversion

As defined, endowment effect is the hypothesis that people ascribe more value to things merely because they own them. This is illustrated by the observation that people will tend to pay more to retain something they own than to obtain something owned by someone else—even when there is no cause for attachment, or even if the item was only obtained moments ago.

We can clearly relate this cause to websites’ and customers’ experiences in both offline and online, most importantly to online conversion rate. Customer engagement to a certain website or product can lead to endowment effect and future conversion rate. This is so effective and important to marketing and conversion. This is why many businesses are keen to offer free trials, money back guarantee option, test drive, free taste, etc. because customers are far less likely to turn it down even if they do not plan to obtain it.

How the Endowment Effect Improves Your Conversion Rate

According to an article about Irrational Behavior written by Talia Wolf,

Using the the endowment effect in your conversion optimization efforts can increase both psychological ownership of the product and positive reaction toward the product (relating to the product even more). Ownership is about creating a connection between your customer and your product, if you succeed in doing this, you’re on the highway to higher conversions.

In marketing, once the prospect acquires membership to a website, it is where you can take advantage of the endowment effect. Probably not for all, but certainly for almost any website, as long as you frame endowment around your conversion goals. Here is how conversion can happen through the endowment effect;

  • It develops a pool that makes your product or service become more valuable to your market that is also in line with your micro conversions.
  • A website has a higher potential for conversion if tools are built to enforce the endowment effect around key conversion goals of their site.
  • Each step that customers took down the conversion funnel, with every element they have acquired from the site based on their interest can establish a sense of ownership, value and personal space.
  • Website features, offers and queue are considered a micro conversion that supports the endowment effect and increases a sense of ownership for customers.

[Tweet “Wish lists, gift organizers, ratings, and items are tools that can be used to engage customer ownership.”]

As a website owner, you are in a position to provide your customers what they need, where they can choose to keep it, and make it too invaluable for them to lose. How about you? How can endowment be designed into your product or service to increase your conversion rate? Do your web visitors own your conversion rate? If you want to know more about conversion optimization you can visit us at Convert.

Originally published April 21, 2015 - Updated April 15, 2019
Lemuel Galpo
As Customer Content Manager, Lem is responsible for bringing learnings in conversion optimization and testing to the world. He is part of's growth team and coordinates all writers, editors and illustrators.
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