How Fair Rewards Motivate Customers to Engage On-Line: An Abstract

Abstract

This study demonstrates that customers change their motivation to engage in on-line settings depending on the interaction between the company and other customers. When customers can observe how others are treated, they compare their own treatment with that of others (Adams 1965). In on-line settings, where customers can observe how the company rewards other customers, customers compare own treatment with that of others, and consequently change their motivation to engage. Previous studies clarify the effect of rewards on customer motivation by studying customer referral programs or conducting classroom experiments (Kumar et al. 2010; Verlegh et al. 2013). However, they do not consider the effect of rewards on other customers who just observe the rewarding activity. This research provides theoretical and managerial implications on how companies can manage customer motivation when companies’ behavior to the individual customer is visible to all customers. In order to understand how a company’s attitude toward an individual influences other members’ motivation, this study introduces organization citizenship behavior’s theoretical framework. It researches how companies treat employees who in engage in citizenship behavior is visible to other employees in the firm. This situation is similar to the interaction between the company and customers in on-line. Therefore, knowledge about motivating employees in the organization can apply to customer engagement management in on-line. Organization citizenship behavior research points out the importance of expectancy and fairness. The member who sees that other members are rewarded by the firm is motivated to engage with the firm, because of the expectancy. In addition, the member who observes a firm’s consistent attitude to all members who engage is more motivated to engage with the firm, because of the fairness. The analysis presented in this paper is based on a unique data set of company and customer interactions drawn from YouTube, consisting of 1.2 million comments. This study defines a user comment as a customer engagement and a video maker (i.e. YouTuber) replay as a reward. In order to determine whether the customer changes motivation by viewing the company attitude toward other customers, this study analyzes whether the reply ratio, which is the firm’s pattern of rewarding other customers at time t (reply ratiot), affects the likelihood of user comment in the next time period (commentt + 1). This research suggests that firms can maximize engagement from customers through providing rewards to all customers in a way that is perceived as fair. In an on-line context, when a firm cannot reward all customers, not providing any rewards may be the best strategy.