Context
Today, reward programs have proven to be an efficient way to boost consumer loyalty. They allow firms to keep control of consumer relationship and retention… or so they think! In an article published in 2021 in the Journal of Business Research, Philip and Pyle argue that prior experiences unrelated to the purchase and way beyond the firm’s control may influence consumer loyalty and switching behaviors.
Research questions
Indeed, the authors believe that consumers carry the baggage of prior negative experiences, which will affect their loyalty and switching behaviors in unrelated future contexts. Based on the compensatory consumer behavior model, they hypothesize that future consumption in unrelated contexts should make up for previous experiences and they ask the following research questions:
– Do prior negative consumption experiences affect consumer behavior in unrelated future contexts?
– What mechanisms may explain this potential effect?
Method
To answer these research questions, the authors conducted 3 studies:
– Study 1 analyzed the influence of prior negative consumption experiences on switching brand behaviors. 150 participants were asked to choose one out of several brands of chips and to recall past consumption experiences (positive, neutral or negative). Finally, participants were told that they would be entered in a lottery to receive three bags of chips that they could choose from the original list of brands.
– In study 2, 150 Amazon Prime members were asked to recall past experiences (positive, neutral or negative) and their switching behavior (from Amazon Prime to other services) was studied. Additional measures of the participants’ self esteem were made.
– In study 3, 260 participants had to recall a consumption experience at a restaurant and were randomly asked to describe the decisions that either they or the firm made that resulted into the negative experience. Finally, participants were asked if they would like to keep their current cellphone provider.
Results
– Switching behaviors are lower after recalling negative experiences unrelated to the current choice than after recalling positive or neutral experiences. In other words, following a negative consumption experience, consumers adopt loyalty-consistent behaviors in unrelated consumption contexts, which means that they tend to turn to brands that have already been chosen and preferred in the past.
– This effect follows from the fact that negative experiences undermine the consumer’s faith in his/her competence. It is even greater when the individual is usually quite confident in his/her abilities (high trait self-esteem). For individuals with a high trait self-esteem, negative consumption experiences induce a discrepancy between their personality (trait self-esteem) and their evaluation of the self following their negative experience (state self-esteem). This discrepancy in evaluations of the self is particularly unsettling for consumers, which explains why negative consumption experiences will induce more loyalty-consistent behavior among people with a high trait self-esteem. Put differently, following negative experiences, consumers strive to restore the feeling of competence, which drives them to favor an “easy win” consumption by reinforcing their loyalty towards brands that have already been preferred in the past.
– This effect also follows from the fact that consumers feel they are partly to blame for their wrong choices (because “they should have known better”), even when the firm is at fault. When the blame is attributed to the firm, switching behaviors decrease.
Why is this article relevant for researchers?
This article enriches the literature on the compensatory consumer behavior model by adding another compensatory action (reinforcement of loyalty towards brands that have been preferred in the past) allowing the consumer to make up for self-discrepancies. Moreover, it contributes to the art on carry-over effects (ie the fact that a prior experience will influence following experiences). Finally, this paper contributes greatly to the literature about loyalty, first, by highlighting the role of self-perceptions in loyalty-consistent behaviors, second, by proving that loyalty should be thought of as a sequential rather than a holistic concept. This new approach of loyalty opens avenues for future research.
For instance, researchers could consider other factors explaining why negative experiences increase loyalty for other brands, such as other traits of the buyer’s personality (pride, risk aversion, curiosity etc) or elements of context (publicness of the negative experience, interaction with other aggrieved consumers). Moreover, this research focuses on the positive outcome of negative experiences, but does not address the outcome of positive experiences.
Why is this article relevant for professionals?
This article shows loyalty may arise from circumstances way beyond the firm’s control. This does not mean that firms have no room to manoeuvre in such contexts. Though they have no pull on their customers’ prior experiences, firms should endeavor to become the comforting shoulder consumers turn to when they are disappointed. This implies building strong customer relationship and loyalty. For instance, Amazon Prime was devised to become a staple of their members’ lives (it allows fast and speedy delivery of purchased goods, grants access to videos, music etc), thus ensuring consumer loyalty. This system is so successful that it has paved the way for a whole new generation of loyalty programs. Since self-perceptions seem to be a key driver of loyalty, brands should focus on making consumers feel competent and confident about their decisions. For example, Buick and GMC set up financial deals that reassure consumers about their smart spending.
This research may also benefit consumer organizations by informing them of unconscious mechanisms that orient consumer behavior and that individuals should be aware of, for an enlightened decision-making process. As advertised by the Consumers Association of India, the purpose of such organizations is to “spread consumer awareness, empower consumers and teach them their responsibilities and rights as consumers”.