How Gifts Influence Relationships With Service Customers and Financial Outcomes for Firms

Abstract

Service companies invest billions of dollars to develop and maintain long-term customer relationships by offering corporate gifts. Yet several questions remain regarding such relationship marketing instruments: What impact do different kinds of gifts have on customers? Which perceptions allow gifts to affect customer behavior? What financial outcomes do these gifts imply for firms? To answer these questions, the authors use data from 1,950 airline customers—combining a longitudinal field experiment with internal customer database information—and explore the effects of different gift designs on customer perceptions and actual spending behavior. The experiment manipulates four gift designs (economic related/unrelated; social related/unrelated) and measures customer perceptions and behavior at different points in time. Multivariate analyses of covariance (MANCOVAs) and spotlight analyses reveal that the congruent combinations of economic related and social unrelated gift dimensions have the strongest effects on customer perceptions of relationship investment. Serial mediation analyses further reveal that the impact of gifts on customer spending is fully mediated by customer perceptions of perceived relationship investment and repurchase intention. Economic related gifts produce the highest contribution margins. Service managers may use these findings to design effective gifts and management processes (e.g., gift success tracking).