Emphasize investments

Customer loyalty means customers stay, even when alternatives exist. One factor driving this is past investments—time, money, and effort. Rationally, these shouldn't influence decisions since they're already spent. The question is: Do past investments actually shape future decisions, and if so, how can this effect be leveraged—and what does the evidence tell us?

Studies

Knee-deep in the Big Muddy

Barry Staw from the University of California conducted a 1976 experiment that would coin the term "Sunk Cost Fallacy." He presented 240 MBA students with a fictional business case: They were to assume the role of a CEO whose company had invested $10 million in a new product two years earlier. The product was performing poorly and the competition was superior. Now they had to decide: Invest another $10 million or stop the project? The twist: Half the participants read that they themselves had made the original investment decision two years ago. The other half had inherited the project from a predecessor. The result was striking: The "self-deciders" invested an average of 85% more money in the failing project. Notably, the objective situation was identical. But those who had made the initial mistake couldn't let go. Giving up would have meant admitting their own error—and that weighed more heavily than losing additional money.

The Theater Season Experiment

Hal Arkes and Catherine Blumer from Ohio University tested whether the sunk-cost effect influences everyday decisions. They sold season tickets to 61 theatergoers at three different prices: $15 (full price), $13, or $8. The allocation was random, and buyers were unaware that others had paid different amounts. Over six months, the researchers tracked attendance at each performance. The result: During the first ten weeks, full-price payers attended significantly more performances—an average of 4.1 compared to 3.3 for discount buyers. Those who had paid more felt more obligated to attend, even though the money was already spent and unrecoverable. A surprising side effect: After week 10, the difference disappeared completely, as if the brain had mentally written off the costs and started fresh.

Time as Sunk Cost

The sunk-cost effect applies not only to money—invested time also binds us. Alejandro Navarro and Edmund Fantino from UC San Diego demonstrated this in an elegant experiment. They had 48 students wait for downloads on computers. After a certain waiting period, a pop-up appeared: "A faster server is available. Switch now?" Switching would have accelerated the download—but the time already spent waiting would be "lost." The result: The longer participants had already waited, the less likely they were to switch. After only 2 minutes of waiting, 71% still switched to the faster server. After 8 minutes, only 23% did. The already "invested" waiting time bound them to the inferior option—even though this time was irrecoverably lost and switching would objectively have been faster.

Principle

Which principle for Customer Experience Design can be derived from this? The sunk-cost effect demonstrates that customers become more strongly attached to a product or brand as they invest more time, effort, or money. This psychological attachment occurs because abandoning the relationship would mean losing those investments—a prospect people instinctively want to avoid. This effect is particularly powerful with complex products or services that require customers to invest learning effort, enter data, or develop habits. Companies can leverage this natural tendency by creating investment opportunities and making them visible to customers. The following guidelines show how to implement this principle in practice.

Guidelines

Make progress continuously visible

For longer processes or content, continuously display progress using scrollbars with chapter markers, "You are at step 3 of 7" notifications, or estimated time remaining for forms. The mechanism: progress indicators create small goals and moments of achievement that sustain attention. Without orientation, the process becomes a monotonous, endless loop—ideal conditions for mind-wandering. Particularly effective: non-linear progress bars that fill faster toward the end, leveraging the goal-gradient effect.

Promote user-generated content

Enable customers to actively contribute to product design through their own content, configurations, or self-completed onboarding tasks rather than passive tutorials. Make their contributions permanently visible so the investment becomes non-transferable. The more tangible their customization, the stronger their emotional attachment. The following examples illustrate this guideline:

• Spotify: Playlists, year in review ('Your Year in Music'), personalized recommendations based on history. None of it is transferable – switching means starting from scratch.
• Notion: Complex workspaces, databases, templates. The more you set up, the more you invest – and the higher the switching costs.

Learning curve as commitment

Build intentional switching costs through learning investment, personalized data accumulation, and deep workflow integration. Customers who have invested time mastering your product resist switching to alternatives—sunk costs create natural retention. The following examples illustrate this guideline:

• Adobe Creative Suite: Complex software with a steep learning curve. Years of expertise are not transferable. The switching costs are enormous – even with more affordable alternatives.
• Vim/Emacs: Legendary learning curve, legendary loyalty. Those who have internalized the keyboard shortcuts won't give up that investment.