Business Psychology - Latest Findings

Article No. 152
Customer Psychology Findings, by James Larsen, Ph.D.

Buying Customers

Researchers find a problem with entertainment promotions and suggest a way to correct it.

Do you ever buy customers with promotion dollars? Do you spend very much? When you see unfamiliar faces mixed in with your regular customers, do you ever wonder what kind of customers they are? Whether they'll become regular and loyal? After all, you're paying good money to attract them.

Kirk Wakefield and Jeff Barnes, from the University of Mississippi, recently took a hard look at customers attracted by promotions, and their findings may give you pause. They may not be worth the price you pay for them.

Wakefield and Barnes examined patrons attracted to promotions at minor league baseball games and compared them to regular fans. The promotions on the nights they studied included a fireworks display, a pennant giveaway, and an explosive stunt called the "Dynamite Lady." These promotions were intended to add emotional value to the overall entertainment experience, rather than to help people enjoy baseball or reduce their ticket prices.

Minor league baseball is a leisure service, like an amusement park or a movie theater, and people use discretionary income to pay for admittance, so owners prefer not to call attention to admission prices in their promotions.

Wakefield and Barnes found that approximately 55% of the audience at these games were regular fans, and would have attended regardless of the promotion; 11% would not have attended without the special event, and the remaining 34% were influenced to some degree.

People most likely to respond to the promotion scored high on a measure of variety seeking. They looked for special promotions to guide their entertainment choices and weren't likely to come again unless another special attraction lured them to come. They also tended to regard ticket prices as too high, and to doubt the value of this leisure experience.

People scoring high on a measure of loyalty were regular fans, and they were not influenced by the promotions. Indeed, many of them were irritated by these efforts to attract people who lacked an appreciation for the game. They also felt some of the attractions distracted from their enjoyment, for example, female fans failed to get much entertainment from "Bikini Night."

Loyal fans also felt the ticket price was fair and represented a good value, but they tended to gauge value on the physical environment, such as rest rooms and seating, rather than on promotions. Variety-seeking patrons, people unlikely to return, cared little for the physical setting.

Wakefield and Barnes believe promotions train a segment of a leisure market to patronize infrequently, only when an attractive promotion is offered. They also believe that enhancements in the service environment improve people's estimates of value. So improving the facility will lead people to believe that the ticket price is a good value, and this should increase the number of people who become regular customers. The researchers found that value assessments were the driving force behind decisions to come again.

The choice for leisure retailers is clear, say the researchers. They should hire carpenters and plumbers to renovate the rest rooms rather than pay pyrotechnists to set off explosives.

Still, it is enticing to see customers pour in, even if only for one night, so Wakefield and Barnes have a suggestion.

Design promotions to enhance the enjoyment of the primary service experience, so loyal customers get to experience more of what they want, and variety-seeking customers get to experience the primary service more fully. For example, a restaurant could give away two free meals to every tenth customer on their next visit. This promotion would bring customers back with a friend to select your most expensive (and best) entrees.

Reference: Wakefield, Kirk L., and James H. Barnes (1996) Retailing Hedonic Consumption: A Model of Sales Promotion of a Leisure Service. Journal of Retailing, 74 (4), 409-427.

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