Retailers regularly give rewards to their customers. If they really want to increase customer satisfaction they ought to proffer a non-monetary thank-you, recent research suggests. This seems to hold true both for bricks-and-mortar outlets and online sellers.

Customer Reward Programmes: Are Non-Monetary Gifts More Effective than Cash ?


Consumers are often less satisfied when they buy or receive products whose value can easily be calculated. This is because it makes them focus on value instead of the pleasure of the experience, concludes a study* carried out by researchers at the Kellogg School of Management at Chicago-based Northwestern University. Does this mean that merchants - whether we’re talking about bricks-and-mortar stores or online commerce - should concentrate on giving products rather than cash-back when they want to reward customers and create loyalty?  Yes, reckon the Chicago researchers.  One might imagine that if two consumers receive the same dollar value, in cash or as a gift, they ought to show the same level of satisfaction. However, in their experiments with a panel of volunteers, the Kellogg team discovered that the opposite was true. What they did was to reward consumers unequally manner, either with cash or slices of cake. Among the volunteers who received cash, the ones who were given a substantial amount unsurprisingly declared themselves satisfied while those receiving less cash were dissatisfied.But when the reward took the form of slices of cake, the level of satisfaction was much less affected by whether they received more or less than others.

Non-monetary rewards the best bet?

Given that with slices of cake it was less easy for people to calculate how much they were getting, they seemed quite happy with what they were given. The experiment showed that when consumers received a slice of cake, they were more likely to focus on how delicious it was and tended to ignore the number of slices that other consumers had received. This leads the researchers to conclude that rewards which are easily counted, such as air miles for frequent travellers, may turn out to be less satisfying for consumers than those which are less easy to measure, such as free products or vacation packages.  “Some things are more easily translated into cash than others. A personal gift tends to break through the connotation of cash value,” Nicolas Herpin, consumer sociology specialist and Research Director Emeritus at CNRS, explained to L'Atelier.

Showing real appreciation

This is why Herpin agrees with the Chicago researchers that merchants should be giving rewards that look more like real presents, which make it harder for the recipient to do a quick assessment of the price. And so much information about people is available on the internet these days that one should be able to personalise each gift, he points out. “If you tailor the reward to the person, the customer will feel appreciated as an individual in his or her own right, rather than being treated as just any old consumer who should be happy with anything he gets.” A non-monetary gift scores better than cash since it can better embody the principle that it’s the thought that counts. In everyday life, when you give a present, there’s often an underlying message, such as “You can count on me”, “I’ve personalised this for you”, which shows that“You’re important to me and I care about you”, underlinedNicolas Herpin.

*The Countability Effect: Comparative versus Experiential Reactions to Reward Distributions, by Jingjing Ma and Neal J. Roese, published in the Journal of Consumer Research