Pricing · Two large-scale field studies in an insurance company's car-insurance and property-insurance branches, plus a laboratory experiment testing the proposed psychological mechanism.
Relational Price Discounts: Consumers' Metacognitions and Nonlinear Effects of Initial Discounts on Customer Retention
Journal of Marketing · 2018
Summary
Initial discounts had a nonlinear association with retention: moderate discounts of 5%–35% were positive, while discounts below 5% and above 35% were negative. Relative to low and high discounts, moderate discounts produced higher expectations of future relational benefits and lower expectations of future discounts.
For your marketing
Possible founder application
Use this study as a bounded example of relational price discounts: consumers' metacognitions and nonlinear effects of initial discounts on customer retention; assess whether its population, intervention and outcome match your own decision.
Reported result
What the study found
Initial discounts had a nonlinear association with retention: moderate discounts of 5%–35% were positive, while discounts below 5% and above 35% were negative. Relative to low and high discounts, moderate discounts produced higher expectations of future relational benefits and lower expectations of future discounts.
Research question
What the authors investigated
What does relational price discounts: consumers' metacognitions and nonlinear effects of initial discounts on customer retention show about customer decisions or business outcomes?
Design
Two large-scale field studies in an insurance company's car-insurance and property-insurance branches, plus a laboratory experiment testing the proposed psychological mechanism.
Sample and setting
Customers in the two insurance-branch field studies, plus laboratory-experiment participants; the accessible publisher abstract does not report counts.
Scope and transfer
Limitations to keep in view
The accessible official abstract does not enumerate limitations. Full article methods and correction history were not independently reviewed.
Research sources
Publisher page directly retrieved; candidate metadata and reported result checked against that page. Full methods were not independently reviewed.