Rewards programs: When do consumers compare experience over value?

"Numbers make us feel more certain of what is in front of us. When we count, we understand exactly how big, expensive, heavy, or old something is. But when we buy or receive products that are easily counted, we may be less satisfied," write authors Jingjing Ma and Neal J. Roese (both Kellogg School of Management, Northwestern University).

What happens when consumers are compensated with gifts such as a toaster or a winter coat instead of cash? If two consumers receive the same dollar value, it shouldn't matter if it comes in the form of gifts or cash. But it does matter.

In one study, the authors rewarded consumers with either cash or slices of cake. Predictably, consumers who received more cash were happy with the outcome while those getting less cash were upset. But whether people received more or less cake didn't affect their satisfaction nearly as much. Because the cake slices were less easily counted, people were just as happy with less as with more. When consumers received a slice of cake, they were more likely to focus on how delicious their cake is and ignore how much cake others received.

Another study showed that when people miss out on a deal, they are more upset when that deal was countable (buy one, get one free) rather than uncountable (get a larger bottle at the regular price). This suggests that programs offering rewards that can be easily counted such as airline frequent flyer miles may be less satisfying to consumers than less easily counted reward programs such as those offering free products or vacation packages.

"Countability drives comparisons. When rewards are easily counted, people are more likely to compare themselves with others. But when rewards are less easily counted, people focus mostly on the unique aspects of their own experience," the authors conclude.