How Much Appreciation is Too Much Appreciation?

Businesses are always aiming to have better relationships with their customers. One way of doing this is by customer appreciation. You know what I’m talking about, that awesome time once a year when your favorite food joints have “customer appreciation day” and give out free food. Yeah, those days are the best!

However, there are other ways to appreciate your customers than handing out free lunches. Researchers from Duke University, University of Pittsburgh, and Vanderbilt University came together to determine if a simple “thank you” is enough to ensure that customers feel appreciated after consuming a business’ product or service.

 Jumping to the conclusion, the study found that, “the inclusion of a financial benefit can actually subtract from, rather than add to, customer goodwill.”

So why is that? Why do customers sometimes feel more appreciated when they’re given a “thank you” without a monetary incentive? Well, as Lance A. Bettencourt puts it, “like many things in life, we compare what we get to norms of what we expect rather than nothing.”

One study tested the ways of “appreciating” people after taking an online survey in a hotel lobby. Some people were given a letter of thanks from the hotel and the others were given a letter of thanks in addition to a financial gift (worth $0.05). In the end, participants with the simple thank you letter felt significantly more appreciated. Most likely because a financial gift so small is lower than expectations resulting in disappointment whereas a simple “thank you” is sometimes more than expected all on its own.

Another study looked at financial acknowledgements in the form of a certain percentage off of a future purchase. In this case, consumers felt less appreciated when they received a 5% discount (compared to receiving nothing), equally appreciated with a 10 to 25% discount, and more appreciated when they received a discount of 30 to 40%.

In the end, a simple “thank you” can go a long way while sometimes monetary gestures can backfire. If a monetary gesture is the plan for appreciation, make sure it’s substantial enough to go above expectations.