Effects of gifting on relationship performance: Strategies for avoiding suspicion and unfairness perceptions

Abstract

In competitive markets, firms employ marketing perks (e.g., unexpected free gifts) to develop customer relationships, though customers’ evaluations of the value of and intentions behind such promotions, and the resulting firm outcomes, remain unclear. To clarify the usefulness of free gifts, this study accounts for the potential effects of relational stages. With a randomized field experiment and four laboratory studies, the authors establish that matches (mismatches) between a gift’s perceived value and relational stages have beneficial (detrimental) effects on performance outcomes. Three relational zones (over-investment, under-investment, and targeted) emerge as relationships develop over time, and a system of mechanisms (gratitude, suspicion, unfairness) underlies the effectiveness of free gifts within each zone. Simultaneously, this research identifies two managerially relevant strategies—transparent firm communication and gift customization—that can mitigate the negative mechanisms.