It will soon be Christmas again! Even though many things are different in this Corona year 2020, many people are currently thinking about gifts not only in their private lives but also in their professional contexts. Christmas is a popular occasion for companies to show their customers appreciation and gratitude for their purchases with promotional gifts. Billions of dollars are used worldwide to give customers one or two small and large gifts and thus bind them to their own company in the long term. These gifts are also intended to show customers: Loyalty pays off. But are the enormous expenditures for companies worth it? In addition to this: This year, many companies have seen their customers less often in person, so the question of the "right" promotional gift may be more important than in previous years before the COVID 19 pandemic.
Professor André Marchand and his colleagues, Professors Michael Paul, Thorsten Hennig-Thurau and Georg Puchner, are investigating the influence of promotional gifts on customers and their consumer behavior. The marketing researchers focus on the effect of promotional gifts on customer perception and the real spending behavior of customers. They are using data from around 2,000 customers for a field experiment. "We were able to show that promotional gifts have an effect on the perceptions of customers and thus actually have a significant influence on their spending," explains Professor Marchand, first author of the study, and continues: "Promotional gifts deserve the attention of managers and appropriate budgets in companies. But managers must also understand that there is no generalizable effect of gifts. Not all gifts lead to higher revenues for a company. Instead, the effect depends heavily on the design of the gifts."
The researchers recommend that managers focus on gifts that are directly related to the company and its main products and that offer financial benefits to customers. These benefits motivate customers to adapt their behavior to the type desired by the company. The authors explain this by saying that in such cases, customers are convinced that their loyalty is worthwhile, so that these gifts have a similar effect to other financial incentives (e.g. discount stamps). Furthermore, gifts ("social gifts") that are not related to the company (e.g. unbranded chocolate hearts) are effective. "Financial, company-related gifts are most effective for short-term sales, while social, noncompany-related gifts are more effective for long-term customer relationships," explains Professor Marchand.
For strategic considerations of companies on the use of promotional gifts, the experts recommend staying power anyway. Companies may need to consider long-term repeated gifts - rather than one-off gifts - to maintain customer loyalty. However, this could also lead to customers accepting the gifts with gratitude but not changing their behavior any further because of the gifts. Managers can use these results to design effective gifts and management processes (e.g., gift performance monitoring).
The article "How Gifts Influence Relationships with Service Customers and Financial Outcomes for Firms" was published in the Journal of Service Research and can be downloaded here.
We wish you a Merry Christmas!
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