Benefitting a few at the expense of many? Exclusive promotions and their impact on untargeted customers

Abstract

It has been a widely held notion that firms can benefit from using preferential treatment in their customer relationship management strategies. For example, many firms provide select customers (i.e., recipients) with exclusive promotional offers that they purposefully do not extend to other customers (i.e., non-recipients). However, today’s empowered consumers are more socially aware than ever of such divisive practices (via social media, deal websites, etc.), and firms must now better account for the negative backlash from non-recipients that may ensue. In this research, we conceptually define exclusive promotions and outline how they differ from other more heavily-studied customer prioritization tools. We then take a divergent approach from the majority of the extant literature by focusing primarily on how and why non-recipients (rather than recipients) respond to exclusive promotions. Study 1a findings reveal that non-recipients have negative attitudes toward exclusive promotions, as well as negative attitudes and lower patronage intentions toward the firm using them. Perceived social exclusion was shown to underlie these unfavorable responses. In Study 1b, we rule out an alternative equity-based explanation of our findings by assessing loyalty to the firm as a potential moderator. We then extend our investigation to a field setting in Studies 2 and 3. There we replicate our Study 1a results, and assess consumers’ actual purchasing behavior in response to a real exclusive offer for enhanced generalizability. Lastly, in Studies 4 and 5 we empirically test two strategies that firms can potentially use to mitigate the negative effects of exclusive promotions documented here.