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Free Perks Might Actually Embarrass Customers

Everybody likes free stuff, right? Not necessarily, researchers say. Customer reactions depend heavily on the context.
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Customers may not enjoy free goodies as much as you think, according to a new study published recently by the Journal of Consumer Research.

"Preferential treatment is often conferred in public settings. When preferential treatment is unearned rather than earned, the presence of other consumers who do not receive the same treatment can diminish satisfaction for the consumer receiving preferential treatment," wrote authors Lan Jiang (University of Oregon), JoAndrea Hoegg, and Darren W. Dahl (both University of British Columbia).

In other words, customers like to feel that they deserve the awards bestowed on them--especially when those awards are bestowed in front of others.

How'd they figure this out? In the study, researchers set up a booth offering free product samples to consumers. Some were given extra samples and told that they had earned them by being a loyal customer, while others were given extra samples with no explanation.

The researchers found that customers who had recieved extra goodies with no explanation were less likely to feel satisfied by the exchange. Instead, those customers experienced social discomfort at being singled out in front of other, perhaps equally deserving, bystanders and perceived the gift to be unfair.

Recepients who felt they had earned their reward through a loyalty program, however, were more satisfied with the freebies.

"Social influence is a critical issue that must be considered by companies considering a preferential treatment program. If companies want to employ preferential treatment practices in public settings for publicity purposes, they should ensure that this special treatment is earned through effort or loyalty and that the rationale is understood by all of their customers," the authors conclude.

Last updated: Jun 21, 2013

FRANCESCA FENZI | Staff Writer

Francesca Fenzi reports on entrepreneurship, technology and small business news from San Francisco. Her work has previously appeared in TIME, USA Today, Pop City and The Northside Chronicle.




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