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3 Ways IKEA and Walmart Apply the Peak-End Rule

minute read

How do the best companies create a customer experience that generates joy, happiness, and fond memories? To answer that question, it’s useful to understand how our brains create memories.

Nobel-winning economist Daniel Kahneman explored this subject in a study about how people remember pain during a colonoscopy. He asked subjects to rate their discomfort during the procedure. Kahneman’s team then compared the patients’ “remembered” pain experiences with data recorded during the procedure.

The team found that subjects rated the pain of their entire experience based on only two points. First, the intensity of pain at its worst point, and last the pain at the end of the procedure.

Kahneman theorized that because our brains can’t remember every moment of an experience, they use mental shortcuts (called heuristics) to pick out what’s important — in this case, pain. One of the most important heuristics is emotion — the more intense and more recent the feelings, the more memorable the experience.

These findings are the foundation of the psychological principle known as the Peak-end Rule.


What is the Peak-end Rule?

The Peak-end Rule states people that judge an experience based on how they felt at its peak and its end, not the average of every moment. And that’s true whether the experience was good or bad.

Peak end rule

Source: Rob Voase

For brands, this means customers will remember their whole experience based on only two moments — the best (or worst) part of their experience, and the end.

People that judge an experience based on how they felt at its peak and its end, not the average of every moment.

That’s great news because, according to science, there’s room for error in your experience. To transform people’s memories of your brand, you only have to perfect two moments — the peak and the end. Let’s take a look at three example of how brands are applying this concept in the real world:


1. IKEA: Making furniture assembly a better experience

IKEA customers have to assemble its furniture themselves — which is a double-edged sword. Sure, the IKEA Effect helps them feel more bonded to the product. But building furniture is also frustrating and mentally draining.

To ease this pain point, IKEA acquired TaskRabbit in 2017. TaskRabbit is a platform for hiring people to do odd jobs, like constructing furniture.

Ikea Task Rabbit 1

Now, for a reasonable fee, IKEA customers can pay a TaskRabbit worker to build their furniture.

But what does furniture assembly have to do with managing a customer experience? It’s all down to controlling the best and worst parts of an experience. In other words, the Peak-end Rule.


How the Peak-end Rule Improves the IKEA Experience

Assembling flat-packed furniture is relatively easy, but it can still be challenging. Many a relationship has ended with an argument about how best to put together an IKEA table. Because building furniture is the end of your experience, it punches above its weight.

Acquiring TaskRabbit gave IKEA more control over the peak and end of their experience. Also, the brand can now gather more data about this critical part of the customer journey.

When TaskRabbit workers visit customers in their homes, they can collect first-person information about how people use IKEA products. These interactions will provide valuable data for IKEA as they continue to innovate their brand.


2. IKEA Part 2: The psychological power of cinnamon rolls

IKEA Cafe 2

Source: Google Images

There are two places you can buy food in IKEA stores — the main restaurant, usually located in the middle of the store, and a small cafe just outside the checkout area.

This cafe sells cheap treats like cinnamon rolls, ice cream, muffins, and hot dogs.

But what does a cafe have to do with a good customer experience?

The last thing you do in an IKEA store is pay for your items.

And if the store is doing its job you might be shocked by how much you spent.

But instead of leaving customers with the emotional shock of a bigger-than-expected purchase, IKEA gives them a place to enjoy a low-priced snack.

And even if a customer doesn’t buy something, the smell of muffins, hot dogs, and other tasty treats can help soften the emotional blow from spending more than they intended.


3. Walmart: Customer Hosts and Greeters

Walmart Peak End Greeters

Source: Google Images

Walmart stores have had Greeters at their door for decades, sharing a friendly “hello” and “goodbye” to customers as they enter and exit.

Recently, they've added a Customer Host position with bigger responsibilities, like making cart runs, cleaning spills, and lifting heavy items for guests. 

Customer Hosts help manage customers' emotional peaks by helping them with their most emotional moments in-store. And both Greeters and Customer hosts leave guests feeling welcomed with a friendly send-off as they exit the store. 

Walmart's internal research also found that Greeters and Customer Hosts make a measurable difference to customers' experiences, leading to protests and complaints when the company attempted to remove the position. 

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The Impact of the Peak-End Rule

The peak-end rule is like the 80/20 principle of customer experience. 20% of your experience drives 80% of what people remember. And the more unforgettable the experience, the better the customer. For example:

  • They’re loyal. Customers who had a “very good” experience are 3.5x more likely to repurchase.
  • They’re advocates. Customers who had a good experience are 5x more likely to recommend the company.
  • They drive revenue. Temkin also built a model to estimate how “a modest improvement in experience would impact the revenue of a typical $1 billion company across in 20 industries.”


Peak-End Rule: The Bottom Line

So how can you apply the Peak-end rule to your own business? Start by asking yourself: 

  • Where do our customers feel the best, and the worst, in our experience? If you’re struggling to figure this out, I recommend creating a customer journey map to understand users’ emotional experience.
  • Where does our experience actually end? Many brands make the mistake of “ending” their experience too early. For example, in eCommerce, the purchase experience or the product unboxing are considered “ends” for the customer. But what if they need to return an item, or your delivery partner loses their package? Again, a customer journey map is critical for identifying the actual ending of your experience.


 Enjoyed the article? Hear more fascinating stories on the Choice Hacking podcast: 


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