Charity at checkout

Trying to get customers to donate to a good cause can backfire.

People asked to donate at the checkout reported greater satisfaction with the retailer when they believed it was truly committed to social responsibility.

Efua Obeng describes herself as an altruistic person who regularly donates to charities. But several years ago she began taking note of how she reacted when asked for donations while paying at the checkout.

“I hated it,” says Obeng, an assistant professor of marketing at Howard University in Washington, DC. Conversations with family and friends confirmed that she was not alone. Yet research showed that philanthropic organisations relied heavily on such solicitations. So Obeng decided to investigate how retailers could mount more effective charity-at-checkout campaigns. That work has led to an explanation for why otherwise altruistic people may react negatively to point-of-sale solicitations.

Across several studies involving hundreds of participants, Obeng and her co-authors found that customers perceived point-of-sale solicitations as a violation of their social contract with the retailer —
a contract built on the principle of reciprocity, whereby the two parties equally contribute to and benefit from the exchange. When customers are asked for a donation, a one-way transaction, the balance is up-ended.

Study participants imagined they were shopping at a grocery store and were asked for a donation or checked out without such a request. Afterwards they rated their satisfaction with the store and the extent to which they believed it had violated the social contract. Those who were asked for a donation were far likelier to perceive a social-contract violation. The request also diminished customer satisfaction by up to 10 per cent and decreased the likelihood of recommending and revisiting the store.

If a retailer’s social-contract violation eroded customer satisfaction, Obeng and her colleagues reasoned, then a similar violation by the customer should restore equilibrium and leave satisfaction intact. So in one of their studies half the subjects were told they were checking out with an expired coupon, while the other half checked out normally.

Those in the latter group who were asked for a donation reported a breach of social contract and decreased satisfaction with the store. But for participants with expired coupons, requests for a donation had no negative effect on satisfaction or perceptions of the social contract. “When customers knowingly take more than they are contributing and then are asked to give, it evens out,” Obeng says.

The final study in the series tested a practical method by which retailers might maintain reciprocity and avoid a hit to customer satisfaction: incurring a donation-related cost of their own. Here, half the subjects who were asked to donate were offered a reusable shopping bag in return. They perceived their relationship with the store to be in greater equilibrium than subjects who were asked to donate without the offer of a bag, and they expressed higher satisfaction with the retailer — in fact, their level of satisfaction was similar to that of subjects who were not asked to donate.

A subsequent statistical analysis suggests significant implications for retailers’ revenues. Starting with a list of the world’s top 100 public retailers in 2017, the researchers identified those that had sponsored point-of-sale campaigns that year. Controlling for factors including ad expenditures, age, debt leverage, and size, and using publicly available financial results, they found that the sponsors had earned $17m less, on average, than their counterparts.

To be sure, there’s little consensus regarding how many customers who are asked to donate at the cash register actually do so. A survey found that participation in any one campaign averaged 18 per cent. The subjects in Obeng’s studies were not asked whether they would comply with the donation request but, on the basis of other research she has conducted, she estimates the average participation rate for any campaign to be roughly 30 per cent.

Here are some strategies for inspiring customers to donate while minimising the risk of a backlash.

Reward customers for donating

As the social-contract studies demonstrate, “retailers that use charity at checkout can offset the decrease in customers’ satisfaction by giving customers something that has a similar value in return,” the researchers write. Obeng says there may be exceptions. For instance, people readily give around the holidays and to causes that help children, so in those cases they may feel no need for a reward.

Make the process simple

A study involving two of Obeng’s co-authors found that the rounding-up technique — giving customers the option to bump up their payment to the nearest dollar, with the difference going to the designated charity — is perceived as less painful than a request for a flat amount. And for simplicity, a yes-or-no PIN pad option is generally best, Obeng says. “Some retailers ask customers to write their names on a sticker or a balloon for display in recognition of their donation, but as customers we’re focused on efficiency,” she says. “Any extra bells and whistles will harm a program’s effectiveness.”

Be altruistic and transparent

In another project Obeng found that people asked to donate at checkout reported greater satisfaction with the retailer when they believed it was truly committed to social responsibility. So it’s important, she says, to invest in corporate social responsibility activities more broadly and to publicise that involvement — say, with signage in stores. Retailers also should be clear about how much will go to the charity in question. That might mean specifying a dollar amount rather than promising to donate a percentage of profits or sales.