How ‘green’ programs create happy customers

Consumers who participate in a company’s “green” programs—like recycling or reusing a hotel towel—are more satisfied with its overall service, a new study suggests.

Doing good makes customers feel good, and that “warm glow” shapes opinion, says Tomas Hult, professor of marketing in the Eli Broad College of Business at Michigan State University. But it gets more complicated when companies throw incentives into the mix.

“Companies are increasingly adopting sustainability initiatives and ultimately these ‘green’ programs are intended to be good for the environment and also increase customers’ satisfaction,” Hult says. “Our research helps strike the right balance between incentivizing customers to participate in green programs and focusing on the bottom-line performance of the company.”

Researchers conducted four studies in three service settings: restaurants, hotels, and online retailing. Findings show that the types of rewards offered by companies to participate in sustainability programs could affect satisfaction.

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The researchers tested two types of incentives: those that benefit solely the consumer (i.e. loyalty points) and those that benefit another organization (i.e. charitable donations). For green program participants, rewards that benefit another organization created the highest rate of satisfaction about the business.

And for those who chose not to participate in a green program, self-benefiting rewards cast doubt about the program’s motive. That scenario offers nonparticipants an opportunity to rationalize their decision to not participate, and lack of guilt translates into feelings of satisfaction about the business.

People will interpret incentives in whatever way best suits their egos, Hult says. And managers, particularly in the hospitality industry, are often reluctant to introduce sustainability initiatives that might negatively influence the guest experience.

For both groups to be happiest, a company should allow customers to choose between a reward that benefits themselves or another organization, Hult says.

Researchers from Cornell University and Florida State University are coauthors of the study in the Journal of Marketing.

Source: Michigan State University