Philanthropic Campaigns and Customer Behavior: Field Experiments on an Online Taxi Booking Platform

41 Pages Posted: 22 Mar 2016 Last revised: 3 Jun 2017

See all articles by Jasjit Singh

Jasjit Singh

INSEAD; INSEAD

Nina Teng

INSEAD

Serguei Netessine

The Wharton School, University of Pennsylvania

Date Written: May 31, 2017

Abstract

Firms commonly undertake philanthropic campaigns as a means of attracting and retaining customers. Such campaigns often take the form of charity-linked promotions, whereby a firm donates a specific amount to a charitable cause when a customer takes up the promotion through a related purchase. We carried out three field experiments to study such promotions in the context of an online taxi booking platform. Customers were randomly assigned to different treatment groups, which received either a charity-linked or a discount-based promotion from a range of monetary amounts. Take-up rates for charity-linked promotions were not only much smaller than for discount-based promotions but also less sensitive to the exact amount involved, consistent with a view that the decision to take up a charity-linked promotion was driven in part by a “warm glow” from mere association with giving. We also find a selection effect in promotion take-up: charity-linked promotions were disproportionately taken up by people who had already been more active customers. Although a promotion take-up does seem to represent new demand rather than mere substitution of a booking that would have occurred anyway, longitudinal data analysis reveals little evidence of a lasting treatment effect on long-term demand beyond the promotion period for either kind of promotion. Given the high cost relative to benefit for the promotional bookings themselves, this finding raises concerns regarding the prevalent practice of firms devoting significant funds for short-term promotions without rigorously examining their exact impact.

Keywords: Corporate Philanthropy, Corporate Social Responsibility, Field Experiments, Customer Behavior, Online Marketplaces

Suggested Citation

Singh, Jasjit and Teng, Nina and Netessine, Serguei, Philanthropic Campaigns and Customer Behavior: Field Experiments on an Online Taxi Booking Platform (May 31, 2017). INSEAD Working Paper No. 2017/37/STR/TOM. Available at SSRN: https://ssrn.com/abstract=2752883 or http://dx.doi.org/10.2139/ssrn.2752883

Jasjit Singh (Contact Author)

INSEAD ( email )

1 Ayer Rajah Avenue
Singapore, 138676
Singapore
+65 67995341 (Phone)

HOME PAGE: http://faculty.insead.edu/singhj/

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Nina Teng

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Serguei Netessine

The Wharton School, University of Pennsylvania ( email )

3730 Walnut Street
Philadelphia, PA 19104-6367
United States
(215) 573 3571 (Phone)

HOME PAGE: http://www.netessine.com

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