Research Friday: Don't Reward Him When Someone's Watching

When Will You Use This? 

Creating your preferential consumer treatment programs. Most managers think that customers prefer to receive extra benefits in front of others, however, the recent study shows that this is not always the case.

What’s For Dessert Today? 

Previous studies* confirmed that preferential treatment programs (where only a few people from a crowd are offered extra benefits ) are effective at generating sales, creating stronger consumer-brand relationships and more positive word of mouth.

The current series of experiments** examine preferential treatment that is earned through effort or loyalty versus unearned preferential treatment that is awarded by chance or spontaneously. It is revealed that receiving unearned preferential treatment in front of others generates feelings of unease and discomfort and lowers consumer satisfaction. It also results in customers, receiving unearned preferential treatment, leaving the store faster and purchasing less.

These results are mainly explained by the fact that people who receive undeserved rewards in front of others feel awkward and self-conscious because other equally deserving individuals judge and examine them.

My Personal Example As Consumer

I received unearned preferential treatment only once. I was entering the cosmetic shop in London when a shop assistant asked me to fill a short form for an hourly lucky draw. You guessed it right - I won it. The winner was announced through microphone and asked to come near the counter to receive the prize. I waited for 15 minutes after announcement to approach the counter because I didn’t want to look desperate and I didn’t want any looks from unlucky shoppers. Although I was happy about the prize, it was a bit awkward too, especially when I dropped by the store to get a lip balm only. I also hadn't felt any strong positive emotions towards the shop - I simply felt I was lucky and it was an effortless win. I shopped at that place twice afterwards.

 I feel quite different about the loyalty based preferential treatments. As many promotional loyalty programs inform about the rewards you can expect for your support for the brand, I really like being in control and choosing what benefits I want to “work for”. I like getting private emails about my rewards and sharing those with my family and friends. This way a brand reaches me in a more intimate and cozy way (which I appreciate) and in return I become a more frequent shopper.

Addition To Your Bag of Tricks

• As social environment is an important part of preferential treatment program, you should consider it carefully: if you carry out an unearned preferential treatment strategy (complementary gift, scratch and save discount, instant-win promo), use private communication channels to reach your customers – face to face, insider’s email, private call, personalized postcard, etc. 

• Loyality or effort based campaigns are always appreciated by consumer and received well in public settings. You might want to experiment with your own Frequent shopper program with special benefits and bonuses. 

*Lacey, Russell, Jaebeom Suh, and Robert M. Morgan. Differential Effects of Preferential Treatment Levels on Relational Outcomes. Journal of Service Research, 9 (February), 2007. {Thanks for the material!}

** Lan Jiang, JoAndrea Hoegg, and Darren W. Dahl. Consumer Reaction to Unearned Preferential Treatment. Journal of Consumer Research, October 2013. {Thanks for the material!}
 

P.S. Need some help on creating your Promotional Campaign? Let's do this together.