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New publication on corporate gifts

Article by Professor André Marchand in Journal of Service Research

Porträtfoto von André Marchand

Companies spend several billion Euro every year on corporate gifts. Corporate gifts are benefits that a firm confers voluntarily on its customers, in its attempt to communicate appreciation and gratitude for their past purchases. In contrast to loyalty programs, they do not require recipients to perform any action (e.g., collecting points or miles) to receive them.

Professor André Marchand researches the impact of advertising gifts on customers and their consumer behaviour. The article “How Gifts Influence Relationships with Service Customers and Financial Outcomes for Firms” by Professor André Marchand and colleagues (Professors Michael Paul, Thorsten Hennig-Thurau, and Georg Puchner) has been published in the current issue of Journal of Service Research, the world’s leading service research journal.   

The authors study the effect of such corporate gifts on customer perceptions and real-world spending behavior. They use data from about 2,000 customers of a German airline—combining a longitudinal field experiment with internal customer database information. Their results show that corporate gifts can influence important customer perceptions (e.g., perceived relationship investment) and spending in a powerful way. “Corporate gifts deserve relationship marketing managers’ attention and budget allocations, but managers also must realize that there is no such thing as a ‘generalizable’ effect of gifts. Instead, our results strongly depend on the gifts’ design and underlying dimensions,” explains André Marchand, the study’s lead author.

The scholars investigate whether gifts are related to the core product and services of the firm and whether they have an economic or social motivation. They recommend that managers select economic related (e.g., flight coupons) and social unrelated (e.g., unbranded chocolate hearts) gift designs over economic unrelated (e.g., coupons for products from other companies) and social related (e.g., exclusive events with company chairpersons) ones. “In our study setting, economic related gifts work most effectively in terms of revenues and contribution margins, and social unrelated gifts appear most effective for relationship perceptions. In contrast, the economic unrelated gift even decreases revenues, which should inform managers’ decisions when designing gifts and allocating budgets,” says André Marchand. The negative impact for economic unrelated gifts may indicate that it causes a shift in customers’ interest to other companies, which in the study’s case implied traveling by rental car instead of air travel.

Economic gifts seem to function similarly to other monetary incentives, leading customers to adapt their behavior in the way desired by the company, because their loyalty “pays off.” However, managers should be aware that in the long run, repeated (instead of one-time) gifts for customer loyalty might be necessary; otherwise, the reciprocity process could wear out. These findings are situated in theoretical arguments, so they should transfer to other service industries and settings too. Managers may use these findings to design effective gifts and management processes (e.g., gift success tracking).

Abstract and full paper:
Marchand, André, Michael Paul, Thorsten Hennig-Thurau, and Georg Puchner (2017), “How Gifts Influence Relationships with Service Customers and Financial Outcomes for Firms,” Journal of Service Research, 20 (2), 105-119.