The Eli Broad College of Business continues to impact tomorrow’s business by giving real-time assistance to Michigan companies through the college’s Demmer Center for Business Transformation. The Demmer Center most recently worked with Biggby Coffee to redo the company’s loyalty program.
“Working with the Demmer Center and the Broad College has been a perfect example of how to set up win-win partnerships between the university and business. In the case of the project that Biggby Coffee partnered on, it has been even better — a win-win-win-win! Our entire system will benefit from the research conducted and the relationships we’ve established along the way. It has been a rewarding experience all the way through,” said Jamie Stepanian-Bennett, Vice President of the Brand Sphere for Biggby Coffee.
The Demmer Center for Business Transformation fosters mutually beneficial relationships between Michigan businesses and the Broad College. This advances the college’s strategic research, education, outreach and engagement initiatives while providing real-world transformational solutions for the businesses and organizations supported.
Many companies face the same obstacles as Biggby Coffee, making the Demmer Center’s research relevant to any business currently offering a loyalty program. Once they are enrolled in a loyalty program, a majority of customers remain inactive and do not experience adequate benefits to sustain their participation. This is the problem Broad College researchers sought to solve.
Based on the premise that customers derive higher satisfaction levels from purchases of experiences than material objects, researchers in the Broad College proposed that Biggby Coffee offer experiential rewards to customers as opposed to material rewards. They believed this would lead to a higher lift in customers’ purchases and a more favorable evaluation of the loyalty program.
To test this theory, researchers from the college ran two field studies with Biggby Coffee customers. Loyalty program participants who qualified for an award were offered a choice between a material and an experiential reward.
Results from the field studies showed that the option of an experiential reward shaped customers’ evaluations during their initial exposure to the loyalty program. In addition, the studies found, they spend more while pursuing experiential rewards and following redemption. These results demonstrate the superior value of experiential rewards in keeping customers engaged with the loyalty program.
“As a result of this project, the research team at the Broad College produced novel research insight that has the potential to be published in top-tier academic journals and help to reinforce the Broad College’s reputation,” Farnoosh Khodakarami, assistant professor of marketing, said.