Efua Obeng describes herself as an altruistic person who regularly writes checks to charities. But several years ago she began taking note of how she reacted when asked for donations while paying for purchases in stores. “I hated it,” says Obeng, an assistant professor of marketing at Howard University. Conversations with family and friends confirmed that she was not alone. Yet research showed that philanthropic organizations relied heavily on such solicitations. So Obeng decided to investigate the practice and 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 coauthors found that customers perceive 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 upended. Study participants imagined that they were shopping at a grocery store and were either asked for a donation or checked out without such a request. Afterward they rated their satisfaction with the store and the extent to which they believed it had violated the social contract. Subjects who were asked for a donation were far likelier than others to perceive a social-contract violation. The request also diminished customer satisfaction by up to 10% and decreased the likelihood of recommending and revisiting the store. Controlling for other factors that might account for those results, the researchers ruled out guilt, loss of trust, and dislike for the retailer. If a retailer’s social-contract violation erodes 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 explains. 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 did 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 $17 million 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 by the professional association Engage for Good found that participation in any one campaign averaged 18%. The subjects in Obeng’s studies were not asked to say 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 given campaign to be roughly 30%. Customers who do make donations express more satisfaction with the retailer and a greater willingness to return—so if retailers can increase participation, it should benefit them and their charity partners alike. To that end, Obeng and her coauthors offer several strategies for inspiring customers to donate while minimizing the risk of a backlash. Retailers can: Reward customers for donating. As the social-contract studies demonstrate, “retailers that utilize 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. Carefully choose the donation method and make the process simple. A study involving two of Obeng’s coauthors found that the rounding-up technique—giving customers the option to bump up their payment to the nearest full dollar amount, 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 explains. “Any extra bells and whistles will harm a program’s effectiveness.” Train employees. Even if the donation request is made silently, via PIN pad, store workers should be informed and engaged to serve as the charity’s ambassadors, Obeng says. And customer service can be crucial to a campaign’s success. In another recent study, she and her collaborators found that people experiencing high-quality service are twice as likely to donate as those experiencing normal levels of service—and nine times as likely as those experiencing inferior service. The psychological mechanism responsible is similar to the one in the social-contract study, she explains: “The consumer feels grateful to the retailer and reciprocates to keep the relationship in balance.” A caveat: If shoppers doubt the authenticity of the superior service—because, for example, they’ve learned that employees are paid on commission—the tactic is likely to backfire. Study participants in that condition were less willing than members of the control group to make a donation. 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 CSR activities more broadly and to publicize that involvement—say, with signage in stores. Retailers should also 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. “People Want to Know Where Their Money Is Going” For more than two decades Maureen Carlson has held positions related to corporate social responsibility and social good. She is currently the lead strategist at On Purpose, a social-impact consultancy that guides charities and sponsoring companies. She recently spoke with HBR about trends and best practices in point-of-sale campaigns. Edited excerpts follow. Phil Kline What makes for a good match between charity and retailer? There are two ways to look at it. If the cause and the retailer are a natural fit—if they operate in the same sphere—the consumer doesn’t have to wonder why the retailer is backing that particular cause. But on the flip side, you could say to a supermarket, for example, that if everyone else is supporting food-related nonprofits, maybe there’s an opportunity for you to sponsor something different and cut through the clutter in the marketplace. It has to be something the retailer cares about, and it should be something its customers have some passion or affinity for. How can retailers demonstrate that they care about the cause? Make sure your outreach to consumers is across-the-board, and make it part of your culture—a natural extension of who you are. Don’t limit your efforts to point of sale; move them across all your channels—digital and brick-and-mortar. As a consumer, if I’m asked by a retailer to give at the register but not over mobile or e-commerce, it can seem disjointed and less sincere. This can be challenging for retailers—their IT teams have other priorities—yet they’re doing it, slowly but surely. One of the findings of this research is that retailers should reward customers for donating. Do you agree? There’s a lot of conversation about whether incentives are needed. We’ve actually found that most people just want to be thanked. It sounds so obvious, but for years we weren’t seeing big thank-yous to consumers and employees at the end of a campaign. We really pushed for that: Thank people with the same vigor you had when asking them to give. Some observers have noted that customers increasingly want information about the causes they’re asked to contribute to and the impact their donations would have. Does that jibe with your experience? It does, and it’s not unique to point of sale. Transparency is critical. The intensely popular TOMS “One for One” campaign—for every pair of shoes sold, the company donates a pair to a child in need—was a defining moment in terms of nonprofits’ waking up and understanding that they have to specify the use of donated funds. People got used to seeing that model, and now they want to know where their money is going. That means, in part, educating employees so that they truly understand the cause and can give a one-sentence “why” when customers ask. What other trends are you seeing from consumers? People want to be asked digitally—quietly, by PIN pad. And they increasingly prefer being asked to round up rather than to give a flat amount. It’s much easier psychologically to add however many cents to your bill. Even though the individual donations are smaller, more people respond positively to the request, so it yields larger total amounts, we’ve found. For example, Children’s Miracle Network Hospitals has a long-running campaign with Casey’s General Stores. They recently moved to a round-up campaign and saw a 101% increase in funding. Select the right charity partner and the right time to launch. Customers are likely to perceive a partnership between a pharmacy and a nonprofit that funds medical research—two organizations operating in a similar space—more positively than one between a pharmacy and a literacy campaign, Obeng says. And she sounds a note of caution about retailer-operated charitable foundations: People may believe they are being asked to give to the retailer in the guise of the foundation. In terms of timing, campaigns launched in response to national tragedies or natural disasters—events that tug at customers’ heartstrings—tend to yield higher rates of participation than year-round campaigns. “Point-of-sale campaigns can be a win for the customer, the retailer, and the charity if executed carefully,” Obeng says. “Rather than haphazardly launching campaigns, retailers must strategically craft them to ensure success.” About the Research: “Would You Like to Donate Today? Why Charity at Checkout May Backfire,” by Efua Obeng, Casey E. Newmeyer, Katie Kelting, and Stefanie Robinson (working paper)
