Business Psychology

Article No. 338
Customer Psychology Findings, by James Larsen, Ph.D.

Solving a Gift-Giving Dilemma

New research offers a solution to a common customer problem.

Go to your closet and pick out items of clothing that you've never worn. Chances are, they were gifts. Go to your bookcase and pick out the books you've acquired in the last five years. Sort out the ones that you haven't read, haven't even started. Chances are, they were gifts. Go to your display places in your home, i.e. the top of the piano, the top of the chest of drawers, the knick-knack shelf. Count the items you dust that you'd like to put in storage boxes in the basement. Chances are, they were gifts. Finally, recall your most recent holiday gift-giving occasion and list all the gifts you received (if you can remember them). Now, make a notation by each entry using this code: A-1 - appreciated and used every day; A-2 - appreciated but used infrequently; U-1 - unwanted and you feel stuck with it; U-2 - unwanted and likely to be re-gifted or thrown away.

Now, think over this experience. If you're like most people, you're led to the conclusion that people who give you gifts often miss the mark. They often waste their time and their money. And you? What, if anything, do you do about it? Again, if you're like most people, you do nothing at all. Indeed, you actually encourage the very people who give you gifts you don't want. You hide your disappointment. You profess to like gifts you don't like. You describe uses you'll make of gifts knowing full well that you will not do it. And most likely, gift givers go away from you congratulating themselves that their gift was a stunning success, and they make a mental note to repeat the gift at their next opportunity.

Clearly, there is a problem with gift-giving, and retailers are right in the thick of it.

Retailers see gift givers stopped in front of product displays in their stores thinking over their choices. They listen to them and offer advice. They also see gift recipients when they return unwanted items. If these customers are kind, then they offer face-saving excuses, i.e. they're returning the gift because it was the wrong color or size. But if gift recipients aren't kind, then their request for a refund may be punctuated with a tone that accuses retailers of defrauding their customers by carrying such merchandise and blaming them in part for the inconvenience of having to return it.

Francesca Gino from Harvard Business School feels the pain of retailers. In a series of studies, she documented these gift-giving / receiving problems and explored the thinking behind them. Gift givers do over-estimate the appreciation gift receivers will experience when receiving their gifts, and gift givers often ignore explicit requests for gifts, such as gift registries, believing such gifts to be impersonal. Gift givers often prefer to give unrequested gifts believing that gift receivers will appreciate the extra thought that went into such a purchase. Professor Gino found that they are wrong, and the same recipients who lament receiving unwanted gifts turn around and give unwanted gifts themselves. It is a blind spot most of us share.

In Gino's final experiment, she tested a solution. She had demonstrated in earlier work that explicit gift requests are often ignored, so she tried reducing the number of entries in the gift request to one. In this trial, she worked with 208 adults from a representative U.S. sample, and she asked gift recipients to request one item within a specific price range. She presented this request to gift givers. This time, the choice of ignoring the request and picking an unrequested gift didn't look so attractive. All their reluctance to select the gift that had been explicitly requested disappeared, and gift givers were confident that gift recipients would appreciate receiving the requested gift and would think it was thoughtful and considerate. This time, they were right. That's exactly what gift recipients thought of the gift and the gift giver. Finally, gift giving was a success.

Professor Gino's research offers retailers an opportunity to improve the gift buying and receiving experience for their customers. A little creativity, customer research, and record keeping will fill the need. For example, sales people often keep notes on their regular customers. They could easily ask the question, "Did you see anything you'd like as a gift?" as a sale was being rung up, and then note the answer on an index card. Including the parting comment, "Send your spouse to me on your birthday!" could give you an easy sale. Here's another idea. In locations where customers must wait, i.e. lines at a cash register, have a display stocked with forms that ask customers to identify one item from the store in different price ranges that they would like as a gift. Collect the forms and identifying information at the register and enter it into a data base customers can access and edit from your website. With luck, your website and your data base will become popular, and sales will follow.

Reference: Gino, Francesca and Francis Flynn ( 2011) Give Them What they Want: The Benefits of Explicitness in Gift Exchange. Journal of Experimental Social Psychology, 47, 915-922.

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