When perks don't work: Unearned upgrades embarrassing for consumers

May 28, 2013

(Phys.org) —New research from UBC's Sauder School of Business reveals that giving a free bump in service can backfire for retailers if the perk is given randomly in front of others.

The new paper shows that consumers experience social discomfort when singled out for spontaneous special treatment, which may cause them to close their wallets.

"Managerial wisdom guiding service and retail industries assumes that consumers get an uptick in esteem when they're allowed to skip a queue or get an upgrade," says Assistant Professor JoAndrea Hoegg, a co-author of the forthcoming study to be published in the Journal of Consumer Research. "But our research shows that when people get unearned freebies in front of others they experience a social awkwardness that makes them less inclined to consume."

In one of a series of experiments, researchers treated participants at a product booth in two different ways. One group received free in return for "" and another received free products with no explanation. Some bonus transactions were witnessed, and some were private.

Results show that when the free samples were received with no explanation in front of observers, participants were less satisfied with them. The research also shows that the decline in satisfaction was driven by feelings of social discomfort, and that those who received extra samples without reason browsed for a shorter time at the booth.

"Our research suggests that if a firm is randomly selecting people to receive perks, they should make sure they receive them in private. If doing it in public, it's best that everyone knows the customer earned the upgrade to avoid unwanted ," says Hoegg.

The study, Consumer Reaction to Unearned Preferential Treatment, was co-authored by Assistant Professor Hoegg and Professor Darren Dahl from the Sauder School of Business, and Assistant Professor Lan Jiang from the University of Oregon.

Explore further: What a coincidence! Personal connections improve sales

Related Stories

For tastier food, try a dash of workplace injustice

May 14, 2013

(Phys.org) —A new UBC study from the Sauder School of Business reveals that experiencing unfair treatment at work can sharpen the taste buds, providing evidence that stress has a physiological effect on people.

Recommended for you

Biologists trace how human innovation impacts tool evolution

November 24, 2015

Many animals exhibit learned behaviors, but humans are unique in their capacity to build on existing knowledge to make new innovations. Understanding the patterns of how new generations of tools emerged in prehistoric societies, ...

How experienced buyers can mitigate economic bubbles

November 19, 2015

(Phys.org)—Over the last decade, many people got a tough primer on the effects of economic bubbles, as the bursting of the 2007-2008 housing bubble sent shockwaves through most of the major world economies. But property ...

First Londoners were multi-ethnic mix: museum

November 23, 2015

A DNA analysis of four ancient Roman skeletons found in London shows the first inhabitants of the city were a multi-ethnic mix similar to contemporary Londoners, the Museum of London said on Monday.


Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.