Does That Free Bottled Water Pay Off?

Service providers often provide extra goodies (amenities) to try to satisfy their customers and differentiate themselves from their competitors. How can they tell whether those extras pay off? Recently Rebecca Hamilton, Roland Rust, Michel Wedel and Chekitan Dev conducted a large-scale study in conjunction with a major hotel chain. They built an ROI model for service amenities and tested it across many hotel brands and properties, examining the ROI of free bottled water, fitness centers and wifi. The bottom line from their study is that sometimes giving away free stuff can be surprisingly profitable, often providing a substantial ROI from the initial investment and ongoing costs in less than a year. An academic article (Hamilton, Rust, Wedel & Dev 2017) appears in the February 2017 issue of the Journal of Marketing Research. A managerial article describing the study in a way more accessible to a general readership (Hamilton, Rust & Dev 2017), appears in the Winter 2017 issue of the MIT Sloan Management Review.

Roland T. Rust
Distinguished University Professor and David Bruce Smith Chair in Marketing
Executive Director, Center for Excellence in Service
Executive Director, Center for Complexity in Business
Department of Marketing
Robert H. Smith School of Business
3451 Van Munching Hall
University of Maryland
7699 Mowatt Lane
College Park, MD 20742-1815
301-405-4300 TEL
301-405-0146 FAX
rrust@rhsmith.umd.edu
http://www.rhsmith.umd.edu/directory/roland-rust