Insights: AMA's digest of the latest findings from marketing's top
We have every reason to expect that corporate sustainability initiatives will continue to increase. These programs often generate savings for the company and hold the potential to increase customer satisfaction while developing the image of the organization as being socially responsible.
At Marriott, for example, the company has set a goal “to further reduce energy and water consumption 20% by 2020.” And Amazon touts a multi-year initiative to have packaging that is “100% recyclable [with products that] ship in their own packages without additional shipping boxes.”
Although these initiatives are admirable, companies run a risk of upsetting customers when they introduce sustainability programs that rely on the voluntary participation of customers. When a hotel asks customers to reuse their towels, for example, this might negatively affect the satisfaction of some customers. In fact, some companies have dropped programs when vocal customers have complained.
Given potentially conflicting corporate objectives, it is important to know how participation in a voluntary sustainability program affects customer satisfaction. In addition, it is important to understand if a company can promote a program in a way that spurs both program success and customer satisfaction.
Is Being Green Good for Customer Satisfaction?
In a forthcoming Journal of Marketing paper, “Adjusting the Warm Glow Thermostat: How Incentivizing Participation in Voluntary Green Programs Moderates Their Impact on Service Satisfaction,” researchers from Cornell, Florida State, and Michigan State report on a series of studies they ran to give insight into these issues.
In the first study, the researchers designed a simple investigation to determine how voluntary customer participation in a sustainability program would impact customer satisfaction. They installed recycling bins at a Japanese restaurant and covertly monitored which guests voluntarily sorted their trash between recycling and landfill bins. A survey of those who had and had not voluntarily sorted their trash revealed that voluntary participants were more satisfied with the overall experience at the restaurant, and this was driven by what the researchers refer to as a “warm glow” – the extent to which the customer feels proud, in the right, virtuous, and ethical.
In a second study, the research team analyzed data on hotel stays from the JD Power North American Guest Satisfaction Index. Consistent with the first study, the research team found that guests who had voluntarily participated in a linen reuse program rated the overall hotel experience as more outstanding.
However, a comparison of guests of one hotel in which participation in the program was rewarded revealed an interesting twist. Specifically, guest satisfaction of participants in the rewarded program was not higher than non-participants in the program. In fact, participants in the rewarded program had lower overall satisfaction than participants in non-rewarded programs.
What is going on here? How does rewarding someone for a good behavior detract from overall satisfaction?
As in other contexts, an incentive to do something that is intrinsically good takes away the good feelings from doing that thing because it provides an alternative, more selfish, explanation. In addition, a reward offers justification for not feeling guilty to those who choose not to participate. So a reward for something good can undermine the satisfaction benefits of a voluntary sustainability program. Ouch!
Should You Reward Customers for Being Green?
But the researchers didn’t stop there. Now they wanted to know if there was any way to offer a reward and still get the positive benefits of program participation.
In a third study, the researchers asked some individuals to imagine themselves staying at a hotel on a work trip. They were then asked if they would like to participate in a voluntary linen reuse program in which some were told that the incentive was the donation of snacks to a homeless program.
As anticipated, offering an other-benefitting incentive (i.e., help the homeless) got rid of the problem of rewarding participation seen in the JD Power study. In fact, participants in this rewarded program reported even higher overall satisfaction than participants in a non-incentivized program in the study. They were now doing good twice!
However, there was also a downside that would be problematic for any company wanting to implement such an approach. Non-participants experienced lower overall satisfaction due to heightened levels of guilt and a sense of being in the wrong (the opposite of the warm glow). They were now doing wrong twice!
So, in one final study, the researchers identified a way around this dilemma. Participants in a study were asked if “they would be willing to forgo the manufacturer’s elaborate packaging and instead agree to receive their prize [for the study] in a sustainable, plain brown box.” As an incentive to choose the more sustainable option, participants were told that they would be entered into a drawing.
Half the participants were told that they could win a choice of a $25 donation to one of three charities (an other-benefitting reward option). The other half of the participants were told that they could win one of two gift card choices for themselves or an option to donate to a listed charity (a mixed other- and self-benefitting reward option).
The results showed that the two reward options were just as effective as creating a warm glow and satisfaction (with the overall survey) among program participants. However, the mixed reward option led to much higher warm glow and satisfaction among non-participants. So, the mixed reward option got the upside without the downside of the other-benefitting reward option.
To understand the results, the researchers argue that a mixed reward option allows each person to focus on the reward that makes them feel the best. Individuals who participate can feel just as good about themselves with a mixed reward as with an other-benefitting reward because they can justify participation on the basis of benefitting others. In contrast, non-participants get to ease the guilt of non-participation by focusing on the self-benefitting part of a mixed reward option. Essentially, they get to tell themselves “that’s why I didn’t participate.”
Putting Insights into Action
Overall, the results of the series of studies lead to clear implications for companies. First, voluntary sustainability programs are a good thing. Certainly, some customers won’t like it. But, on the whole, these programs raise overall customer satisfaction by helping customers to feel good about themselves.
Second, an incentive for customer participation in a sustainability program can benefit not only program participation, but also guest satisfaction, but only with one type of incentive option. Specifically, a company should offer a mixed incentive bundle in which customers are allowed to choose either an other-benefitting or a self-benefitting reward for participation. This reward option increases the satisfaction upside to participants and eliminates the satisfaction downside to non-participants.