Cialdini’s principles online
Case Study at Budget Energie
SOPHIE DE JONG
10416293 MASTER’S THESIS GRADUATE SCHOOL OF COMMUNICATION MASTER’S PROGRAMME COMMUNICATION SCIENCE BARBARA VAN SCHOUTEN 2018, JUNE 29 WORD COUNT: 7411
Abstract
With an online experiment including a survey with 302 respondents, it is studied whether influence principles (consensus, scarcity and reciprocity) in a retention e-mail positively influence customer loyalty among customers of energy supplier Budget Energie. Furthermore, it is studied whether loyalty intention has a mediating effect and whether message credibility has a moderating effect on the effect of influence principles on customer loyalty. The results showed that there is no significant effect of influence principles on either loyalty intention or customer loyalty. Despite the fact that loyalty intention has a significant effect on customer loyalty, loyalty intention does not have a mediating influence in the effect of influence principles on customer loyalty. Finally, message credibility has a significant positive main effect on loyalty intention. Message credibility also has a significant, positive moderating effect on the relationship between the scarcity principle and loyalty intention and between the reciprocity principle and loyalty intention. In conclusion, this study contributes to existing literature by applying influence principles in an online setting instead of an offline setting. Also, it analyzed the influence of message credibility, instead of source credibility as most previous research did. With this study, Budget Energie can further perfect the content of their retention e-mails in order to improve customer loyalty. The results of this study are also usable for other companies in the service industry, in which customer loyalty is a central concept.
Keywords: influence principles, customer loyalty, loyalty intention, message credibility, energy supplier, service industry.
Introduction
As the Dutch government has been liberalizing the energy market since 1998 (Wieringa & Verhoef, 2007), competition between energy suppliers has been growing significantly.
energy contracts. Retention is important, as new customer acquisition can be five to six times more expensive than costs made for retaining existing customers (Ibáñez, Hartmann & Calvo, 2006). Also, long-term customers are often more profitable (Bolton, Lemon & Verhoef, 2004). Retention is therefore critical for an energy supplier’s success. In literature, retention is specified as customer loyalty (Ibáñez et al., 2006).
Budget Energie is the fourth biggest energy supplier in the Netherlands (290.000 customers), distributing 100% green energy. Two months before a customer’s contract ends, Budget Energie sends an e-mail with a retention offer. However, the content of this e-mail is not yet based on methods proven in scientific research in order to positively influence retention. Therefore, research is needed to perfect the e-mail, which will presumably lead to more retention. This research is a case study at Budget Energie.
One content method proven to be effective in sales is the use of ‘influence principles’: persuasion strategies that positively change customers’ attitude and behaviors (Kaptein, Markopoulos, De Ruyter & Aarts, 2015). According to Cialdini (2001), there are six influence principles: (1) authority, (2) consensus, (3) consistency and commitment, (4) scarcity, (5) liking, and (6) reciprocity.
In this study, the consensus, scarcity and reciprocity principles are applied to retention e-mails of Budget Energie. Consensus is the principle of social proof (Cialdini, 2007). When people are uncertain in their choice, they look at others to decide how to behave. An example of this principle is “2.000 other customers agreed with the deal”. Secondly, the scarcity principle is explained by the fact that something seems more valuable when availability is limited, because apparently it is desired. For example: “you have two days left to benefit from this offer”. Finally, the reciprocity principle states that when someone makes a concession to us, we will also feel obliged to make a concession to that person, because of a feeling of debt. For example: “we have personally improved your original offer with an even better deal”.
According to the authority principle, people look at an influence attempt by asking themselves if the source is truly an expert and therefore an authority, or that the request is purely beneficial to the source (Cialdini, 2001). As retention e-mails are a sales attempt and therefore beneficial to the source, the authority principle is not used in this study. Furthermore, the ‘consistency and commitment’ principle is not used as the retention offer in the e-mail is given straight away with only one simple request: “extend your contract”, leaving no room for multiple requests. Finally, the liking principle is not used as Budget Energie uses a straightforward communication style without glorifying communication, so flattery is not possible in retention e-mails.
Many researchers have proven the effectiveness of Cialdini’s principles on customer loyalty (Kaptein & van Halteren, 2012; Kaptein et al, 2015; Weyant, 1996). However, most literature used the ‘Susceptibility to Persuasive Strategies Scale’ to research this relationship (Orji, Mandryk & Vassileva, 2015), thereby focusing on customers’ susceptibility to the principles. Not much research is available in which influence principles are actually applied in messages’ content in order to analyze their effects on customer loyalty. Besides, the principles are originally designed to use in offline sales. With growing online communication, it is important to further investigate the effect of influence principles in online communication, as online use of the principles might have different effects. For instance, literature on influence principles often focused on personal and face-to-face communication, in which further persuasion with body language is possible. Retention e-mails are, other than the personal introduction by using name and address, mostly impersonal and online, which leaves no possibility for face-to-face communication and further persuasion. The effect of influence principles therefore highly depends on the written application. Therefore, it is important to further analyze the effects of influence principles online. Finally, although many companies
effects with the scientific field (Kaptein et al., 2015). This study will therefore contribute to existing scientific literature about the effect of influence principles on consumer loyalty, by applying the principles to online marketing content in a case study. This way, results will show the actual influence of the principles when applied to retention communication, thereby providing important insights for practitioners.
In service industries, retention behavior is conceptualized as ‘customer loyalty’ (Dawes, 2009; Ibáñez et al., 2006; Polo & Sesé, 2009). As customer loyalty is of greatest importance for energy suppliers and this is the main goal of retention e-mails, ‘customer loyalty’ is included as dependent variable in this study and conceptualized as retention behavior. According to the Theory of Planned Behavior (TPB) (Ajzen, 1991), the best predictor of actual behavior is behavioral intention. Therefore, ‘loyalty intention’ is used as mediator in this study.
In addition, trust has proven to be a significant predictor of customer loyalty in service industries (Gustafsson, Johnson & Roos, 2005; Ibáñez et al., 2006; Walsch, Groth & Wiedmann, 2005). Trust is measured by credibility, which is divided in three separate concepts: source credibility, message credibility and media credibility (Appelman & Sundar, 2016). In literature, trust is mostly measured by source credibility. In reaction to this, Appelman and Sundar (2015) point out the importance of message credibility, as messages only work when people trust its content. They conceptualize ‘message credibility’ as “an individual’s judgement of the veracity of the content of communication” (Appelman & Sundar, 2016, p. 63). In their study, they plead for more focus on message credibility as a source for customer loyalty, thereby creating a ‘message credibility scale’. According to the authors, this scale provides a way to test this particular concept of credibility without conflating with medium and source credibility. According to Poston and Speier (2005), message credibility has a positive moderating effect on the influence of online content on decision-making, as a high message credibility gives people a reason to believe that the content is valid and stimulates them to rely on it. Therefore,
‘message credibility’ is included as moderator in this study. This study will contribute to existing literature by focusing on the influence of message credibility in particular (rather than source credibility) on the effect of influence principles on loyalty intention. This will lead to interesting insights which practitioners can use to perfect their marketing content in order to improve customer loyalty.
The purpose of this study is to gain more insights in the effect of influence principles on customer loyalty by applying them to direct marketing content in retention e-mails. By looking at the effect of influence principles online instead of an offline setting, this study will contribute to existing literature in further analyzing the wider usability of influence principles. Furthermore, by incorporating ‘message credibility’ as a moderator, thereby focusing not only on the influence principle, but also on the content of the message in particular, this study will contribute to literature by further analyzing the influence of message credibility on behavior instead of medium and source credibility. With the results, Budget Energie can further perfect their retention e-mail content in an attempt to improve customer loyalty. Furthermore, this study can provide practical insights in the use of influence principles in sales attempts for the service industry. To conduct this study, the following research question has been formulated:
What is the effect of influence principles (consensus, scarcity and reciprocity) on loyalty of Budget Energie’s customers, and what is the mediating effect of loyalty intention and the moderating effect of message credibility?
Theoretical framework Influence principles
In 1984, Robert Cialdini wrote the very popular and well-known book ‘Influence: The Psychology of Persuasion’, in which he looked at factors influencing individuals’ willingness
to say ‘yes’ to requests of others, also described as ‘compliance’. In analyzing this process, he introduced the term ‘influence principles’: persuasive techniques to influence compliance to requests. These influence principles are also called ‘weapons of influence’: the principles lead to automatic psychological reactions (Cialdini, 2007). Based on the Elaboration Likelihood Model (Petty & Cacioppo, 1986), influence principles provoke a persuasion via the peripheral route, induced by heuristic cues. In total, Cialdini came up with six influence principles: (1) authority, (2) consensus, (3) consistency and commitment, (4) scarcity, (5) liking, and (6) reciprocity. Today, these principles are still used in sales to change customers’ attitude and behavior (Kaptein et al., 2015).
As discussed before, the influence principles used in this study are consensus, scarcity and reciprocity. In the next paragraphs, these principles will be further explained.
Consensus principle
The consensus principle is also called the concept of social proof (Cialdini, 2007). Central to this principle is that the greater the number of individuals that approve something, the more this will be seen by others as correct and approved. This process is explained by the difference between two types of norms: injunctive norms and descriptive norms (Cialdini, Reno & Kallgren, 1990; Elek, Milley-Day & Hecht, 2006). Injunctive norms are perceptions of what people are required to do and are based on rewards and punishments imposed by others. Descriptive norms are perceptions of what most others actually do; it is the standard behavior. When people are uncertain about a choice they have to make, they will look at behavior of
others (injunctive norms) and use this as evidence to decide how to behave themselves (Serviere-Munoz & Counts, 2014). This tendency of people to always look at what others do leads to the phenomenon of ‘pluralistic ignorance’: situation in which individuals have beliefs that differ from what they think the beliefs of the rest of the group are (Allport and Katz in Miller & McFarland, 1987). This difference in beliefs leads to a systematic misconception of others’ beliefs. People privately reject the group norm but yet believe that all other group members accept this. This misconception between the perception of injunctive and descriptive norms causes individuals to act differently from what they actually believe. Allport and Katz (in Miller & McFarland, 1987) therefore state that the absence of support for someone’s own beliefs leads to group conformity, as individuals will follow others’ beliefs.
An example of the consensus principle is when bars put a few dollars in a tip jar to give customers the impression that tipping is normal behavior as other people gave a tip as well (Cialdini, 2007). This leads to more tips by other customers. Another example used in sales is when companies advertise that their product is the best-selling product. By communicating this, people will think that the product is of good quality, because many others think so and bought the product. Buying the product seems to be the correct thing to do, which will lead to an increase in purchase intention (Cialdini, 2007).
Based on the literature, it is expected that using the consensus principle in retention e-mails will lead to a higher loyalty intention than using no influence principle. According to the consensus principle, the greater the number of people that renew their energy contract, the higher will be the loyalty intention of other customers. The following hypothesis is formulated.
H1: Using the consensus influence principle in a retention e-mail leads to a higher loyalty intention than using no influence principle
Scarcity principle
The scarcity principle is explained by ‘the rule of the few’ (Cialdini, 2007). According to the Commodity Theory, people find something more attractive when it soon becomes unavailable. As Chesterton (n.d.) quoted, “the way to love anything is to realize that it might be lost”. Something seems to be more valuable when availability is limited, because apparently it is desired. In this way, scarcity is used as a heuristic cue (Baumeister & Bushman, 2010). Also central to this principle is the concept of loss: people tend to want what they cannot have (Serviere-Munoz & Counts, 2014). Aristotle argued that “what is rare is a greater good than what is plentiful” (Baumeister & Bushman, 2010). Dijksterhuis, Smith, van Baaren and Wigboldus (2005) showed that the scarcity principle leads to a higher purchase intention of supermarket customers, because the quality of products is perceived to be better when they are scarce and when there are less available options. This proves that the scarcity principle has a positive influence on behavioral intention. Also, according to the ‘psychological reactance theory’ (Brehm, 1989), people desire to maintain their free choice. When something becomes less available, we lose freedom. This reduction in our choices and alternatives leads to a state of psychological reactance. People will behave in order to reestablish the freedom that was lost. Hotel booking websites apply the scarcity principle by using the sentence “only one room left”, which is called the ‘limited-number tactic’ (Cialdini & Trost, 1998). This implicates that there is competition for this room and it soon becomes unavailable, which increases scarcity. Consumers will therefore have a higher intention urge to book the room (Badgaiyan & Verma, 2015). Another example is communicating that an offer is only temporarily available, also called the ‘deadline technique’ (Cialdini, 1998). Pressing a time limit increases the desirability of consumption goods (Gierl, Plantsch & Schweidler, 2008).
Based on the literature, it is expected that using the scarcity principle in retention e-mails will lead to a higher loyalty intention than using no influence principle. Therefore, the following hypothesis is formulated:
H2: Using the scarcity influence principle in a retention e-mail leads to a higher loyalty intention than using no influence principle
Reciprocity principle
The reciprocation rule states that there is an obligation to give, an obligation to receive and an obligation to repay. If someone makes a concession to us, we will make a concession back to that person. When people feel they are in debt to someone, they more easily comply with a request from that person (Cialdini, 2007). Reciprocity has shown to be a very strong principle, as it leads to individuals complying with requests that they normally would refuse when there was no feeling of debt (Cialdini, 2007). The reciprocity principle is used in practice with the ‘rejection-then-retreat’ technique, in which the first request is large and most likely to be rejected. The second request is smaller, which implies a concession by the requester. This way, someone will feel in debt because the requester made a concession, which leads to a greater chance of compliance with the request. Also, someone will be more satisfied with the final request, which also leads to a higher chance of compliance.
An often-used example of the application of the reciprocity principle in sales is “buy one and get a free gift”. By offering the consumer a ‘gift’ even before they have bought the product, the brand shows concession. As the gift is a sign of generosity and kindness, this will lead to a feeling of debt by the consumer (Serviere-Munoz & Counts, 2014). Consumers feel the obligation to repay this feeling of debt, which will lead to an increase in purchase intention
cupcakes. When customers ask how much they cost, one seller will answer “cupcakes cost one euro, but I am leaving soon so for you they are just 75 cents” (Burger, 1986). This led to an increase in the purchase rate of the cupcakes (compliance with the request). Customers agreed to a smaller request after hearing a larger request.
Based on the literature, it is expected that using the reciprocity principle in retention e-mails will lead to a higher loyalty intention than using no influence principle. The following hypothesis is formulated:
H3: Using the reciprocity influence principle in a retention e-mail leads to a higher loyalty intention than using no influence principle
Theory of Planned Behavior
“Behavioral intentions are instructions that people give to themselves to behave in certain ways” (Triandis, 1980, p. 203), for example: “I intend to do X”. According to the Theory of Reasoned Action (TRA) (Fishbein, 1979), people behave based on their behavioral intentions.
Today, the most dominant theory in explaining the relationship between behavioral intention and actual behavior is the Theory of Planned Behavior (TPB) (Ajzen, 1991). According to the TPB, the best predictor of actual behavior is behavioral intention. A meta-analytic review of 185 independent studies conducted by Armitage and Conner (2001) showed that the TPB accounted for 27% of the variance in behavior and for 39% of the variance of behavioral intention. Behavioral intention in its turn is influenced by three motivational determinants: attitude, subjective norm, and self-efficacy. Attitude is explained by the overall evaluation someone has about a certain behavior, either positive or negative (Ajzen, 1991). The more positive someone’s attitude towards a behavior, the more likely the person will have the intention to perform the behavior. The subjective norm refers to the perceived social pressure
from others to perform the behavior. Finally, self-efficacy refers to perceived behavioral control and is explained whether someone trusts he or she is able to perform the behavior (Ajzen, 1991). The more favorable behavioral attitude and subjective norm towards the behavior and the higher self-efficacy, the stronger is behavioral intention.
Based on the literature, it is expected that the use of influence principles in retention e-mails will lead to a higher loyalty intention, which in turn will lead to a higher customer loyalty. Therefore, the following hypotheses are formulated:
H4: The higher the loyalty intention, the higher the customer loyalty
H5: loyalty intention has a mediating influence on the effect of influence principles on customer loyalty
Comparison influence principles
Orji et al. (2015) studied the overall persuasiveness of the six influence principles by comparing them with each other. The results showed that the overall persuasiveness of the influence principles was respectively commitment, reciprocity, authority, liking, scarcity, and consensus. Focusing on the three influence principles used in the current study (consensus, scarcity, and reciprocity), reciprocity is suggested to be one of the best techniques to motivate people to comply (Orji et al., 2015). Scarcity and consensus showed to be the least persuasive influence principles. The authors suggest that a possible reason for this result is that there are three antecedent conditions that explain the persuasiveness of influence principles: level of uncertainty, risk and similarity. For instance, the consensus principle is most powerful in situations of high uncertainty, high risk, and when others are seen as similar. However, in most
limitation of this study is that the persuasiveness of the influences principles was tested by looking at participant’ susceptibility. The results could be different with the actual implementation of the influence principles in persuasive content.
The current literature is not sufficient enough to formulate a clear hypothesis regarding a comparison of the influence principles. However, as the comparison is important for Budget Energie to choose which influence principle to use in their retention e-mails, the following research question has been formulated:
RQ 1: Which influence principle has the highest effect on customer loyalty?
Message credibility
Most literature on credibility focuses on source trustworthiness (Appelman & Sundar, 2015; Hovland & Weiss, 1951; Smink, 2013). However, as Appelman and Sundar (2015) argue, message credibility is important too, as messages only work when receivers trust the content. Message credibility is defined as the extent to which the content of a message is perceived as trustworthy, believable and reliable (Appelman & Sundar, 2015; Flanagin & Metzger, 2000). Previous research has shown that message credibility has a positive influence on attitude towards the message and purchase intention (Petty & Wegener, 1999; Smink, 2013). Also, when consumers are exposed to an online purchase-related message, they focus on message credibility in order to make a judgment (Folkes, 1988). The Prominence-interpretation Theory states that this judgment is based on someone’s interpretation of the credibility elements of an online message (Fogg, 2003). A high message credibility makes people believe that the message content is valid, which stimulates them to rely on the content (Poston & Speier, 2005). Message content with strong arguments is also perceived as more persuasive than message content with weak arguments and this representation of a credible message has a positive influence on
attitude towards the message (Verhoeven & Schellens, 2008). Connecting this to the TPB, in which attitude has a positive effect on behavioral intention, message credibility positively influences behavioral intention.
According to the Elaboration Likelihood Model (ELM) (Petty & Cacioppo, 1986), there are two routes to persuasion: the central route and the peripheral route. In the central route, persuasion depends on someone’s conscious consideration of message content, focusing on the message’s arguments. With a positive consideration, persuasion will lead to a resistant and enduring positive behavioral intention. In the peripheral route, on the other hand, persuasion depends on someone’s association with heuristic cues in the message (either positive or negative), for instance the display of the message and message credibility. As discussed before, influence principles lead to automatic psychological reactions and are therefore seen as heuristic cues (Baumeister & Bushman, 2010, Petty & Cacioppo, 1986). According to Erb and Schmalzle (1998), when an issue is of low relevance, people have little effort to process a message. They will focus on heuristics, for instance on the majority (consensus principle), time left (scarcity principle) or a feeling of debt due to a concession (reciprocity principle). Therefore, it is expected that the effect of influence principles on loyalty intention is mediated by message credibility
Based on the literature, a higher message credibility will lead to a greater effect of influence principles on loyalty intention. Therefore, the following hypothesis is formulated:
H6: A high message credibility leads to a greater effect of influences principles on loyalty intention than a low message credibility.
Figure 1. Conceptual model
Method
To answer the research question, an online experiment including a survey was conducted. This is the most fitting method, as this study analyzes the causality between the independent variable ‘influence principle’ and the dependent variable ‘customer loyalty’. Furthermore, an experiment is conducted to test circumstances close to reality. Also, the independent variable can be manipulated, by which any effect on the dependent variable can be explained by the change in the independent variable (Boeije, 2016). The respondents were recruited through the Budget Energie customer database (290.000 customers) and filled in the survey in their own environment, which promotes the external validity of this study. A survey is an easy way of asking many respondents about their attitudes and opinions, providing much data (Birmbaum, 2000; Wright, 2006), which also promotes external validity. Finally, an online experiment has several advantages, like low cost, no bias of an interviewer and time efficiency (Kehoe & Pitkow, 1996).
Research design
The research design is a 4x1 between-subject factorial design (table 1). The independent variable ‘influence principle’ consisted out of four conditions: ‘control’, ‘consensus principle’, ‘scarcity principle’ and ‘reciprocity principle’. The respondents were randomly divided over
the conditions. The ‘control’ condition contained the standard retention e-mail with no influence principle in the text. The ‘consensus principle’ condition contained a retention e-mail with the consensus principle incorporated in the text. The ‘scarcity principle’ condition contained a retention e-mail with the scarcity principle incorporated in the text. Finally, the ‘reciprocity principle’ condition contained a retention e-mail with the reciprocity principle incorporated in the text.
Table 1 Survey design
Point of time t1
Group 1 R X1 01 Control condition Group 2 R X2 01 Consensus principle Group 3 R X3 01 Scarcity principle Group 4 R X4 01 Reciprocity principle
Manipulation material
The independent variable ‘influence principle’ was manipulated by changing the textual content in the retention e-mail. In all four conditions, the customers were asked to fill in the survey by clicking on a hyperlink. The control condition consisted of the original retention e-mail used by Budget Energie, without any changes in the textual content (except the link to the survey). The ‘consensus principle’ condition consisted of the original retention e-mail with the following text addition: “2.000 people went ahead and renewed their contract with Budget Energie! Do not hesitate, renew your contract and stay assured of the lowest rates. Do something fun with it!”. The ‘scarcity principle’ condition consisted of the original retention e-mail with the following text addition: “this offer expires in two days. Be on time, renew your contract and stay assured of the lowest rates. Do something fun with it!”. Finally, the ‘reciprocity principle’ condition consisted of the original retention e-mail with the following text addition: “we have fine-tuned your personal offer once again, take advantage of the most advantageous offer
now! Do not hesitate and renew your contract. Do something fun with it!”. In appendix 1, the initial manipulation material is shown.
Pretest
A pretest was conducted among 41 respondents, sampled through the researcher’s personal network, to test whether the manipulation material had the anticipated effects in order to use it in this study. The respondents were randomly shown one of three conditions: a retention e-mail including either the consensus, scarcity principle or reciprocity principle. After looking at the retention e-mail, respondents provided information about their gender, age, and educational level. The respondent group consisted of 18 males (43.9%) and 23 females (56.1%). The respondents’ age ranged from 20 to 58 (M = 27.93, SD = 8.61) and the average educational level was ‘WO’ (university). Afterwards, participants were asked to answer nine questions about the retention offer.
The first six items tested the general trustworthiness and clarity of the offer in the retention e-mail and were similar for all three conditions. The items were measured on a 5-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree). Consecutively, the six items were “the offer is…”: “clearly structured”, “personal”, “understandable”, “trustworthy”, “realistic” and “striking”. A descriptive analysis showed the mean scores for the consensus condition (M = 3.71, SD = 0.77), the scarcity condition (M = 3.32, SD = 0.89) and the reciprocity condition (M = 3.60, SD = 0.92) (see appendix 2 for further results). Trustworthiness and clarity did not differ between the conditions, F(2, 38) = 0.74, p = .485.
The consensus principle was measured by three items with a 5-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree): “the offer is…” “popular”, “socially accepted” and “loved”. The mean score of the consensus scale (M = 3.64, SD = 0.67) showed that the respondents slightly above moderate perceived the offer as popular, socially accepted
and loved. The scarcity principle was measured by three items with a 5-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree): “the offer is…” “unique”, “exclusive” and “scarce”. A descriptive analysis showed that the mean score on the scale was low (M = 2.44; SD = 1.07). This indicates that the respondents did not sufficiently perceive the offer as unique, exclusive and scarce. The reciprocity principle was measured by three items with a 5-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree): “the offer…” “has been refined”, “is a compensation” and “is a concession”. The scale’s mean score showed that the respondents slightly above moderate perceived the offer as refined, as a compensation and as a concession (M = 3.50; SD = 1.03).
The pretest showed that all three influence principles had to be made more present and convincing in order to increase the anticipated effects of the retention e-mail. Therefore, the text in the consensus condition was changed into: “7.900 people went ahead and renewed their contract with Budget Energie! Do not hesitate, renew your contract and stay assured of the lowest rates. Do something fun with it!”. “7.900 people” was highlighted in yellow. The text in the scarcity condition was adjusted into: “this unique offer expires in two days already! Be on time, renew your contract and stay assured of the lowest rates. Do something fun with it!”. “Expires in two days already” was highlighted in yellow. The text in the reciprocity condition was adjusted into: “we have made a compensation, we have fine-tuned your personal offer once again. Do take advantage of the most advantageous offer now! Do not hesitate and renew your contract. Do something fun with it!”. “Fine-tuned your personal offer” was highlighted in yellow. The manipulation material based on the pretest is shown in Appendix 3.
Final adjustments
with an additional trigger: a raffle of five Mediamarkt vouchers of €200,- each among the respondents. With this, the response rate raised from 0.1% to 5.6%. This strategy change was also implemented in the retention e-mail, as the explanation and conditions for the raffle were added. The final manipulation material used in this study is shown in Appendix 4.
Procedure
By clicking on the hyperlink ‘click here’ in the retention e-mail, respondents were led to an online survey designed in Qualtrics. First, a factsheet and informed consent form were shown with important information about the survey. Only respondents who agreed with the ethical review could prosecute with the survey. The first part of the survey incorporated demographic questions, including gender, age, educational level and for how long respondents had been customers of Budget Energie. Afterwards, questions were asked about the offer in the retention e-mail. With these questions, the concepts ‘attitude towards the message’ (control variable), ‘loyalty intention’ and ‘message credibility’ were measured. On the final page, respondents were asked if they wanted to participate in the raffle of the Mediamarkt vouchers. If yes, they were asked to fill in their e-mail address. The final open question was to test whether the respondents had any idea about the real purpose of the study. After answering all questions, the participants were thanked for their participation. The full survey can be found in appendix 5.
Measurements Independent variable
The independent variable of this study was ‘influence principle’, including four conditions: ‘control condition’ (value 1), ‘consensus principle’ (value 2), ‘scarcity principle’ (value 3) and ‘reciprocity principle’ (value 4). The measuring level of the independent variable is nominal.
Dependent variable
The dependent variable was ‘customer loyalty’. Customer loyalty in service industries is explained as repurchase behavior (Ibáñez et al., 2006). The variable is therefore conceptualized as contract renewal with Budget Energy and measured by whether customers renewed their energy contract with Budget Energy after seeing the retention offer. It is a binary variable with two values: ‘yes’ (1) and ‘no’ (2).
Mediator
The mediating variable in this study was ‘loyalty intention’, conceptualized by someone’s intention for contract renewal with Budget Energy. As discussed before, loyalty is explained as repurchase behavior. Therefore, loyalty intention is measured by repurchase intention. The measurement of loyalty intention is based on the method of Ibáñez et al. (2006), used in their study on the antecedents of customer loyalty in residential energy markets. This measurement is chosen, because it is a multi-dimensional scale built on different studies, evaluating the attitudinal and behavioral dimensions of loyalty intention. Also, the reliability of the scale is proven to be good (α = .84). Loyalty intention is measured by four items with a 5-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). The items are: “I intend to continue being a client of Budget Energie in the future”, “I would positively recommend Budget Energy to my friends or others”, “I would stay with Budget Energie, even if I had to pay a somewhat higher price”, “I consider Budget Energie my first choice for buying energy services”.
Moderator
The measurement is based on the study of Appelman and Sundar, in which they constructed and validated a scale for message credibility. They concluded that message credibility can be measured by asking people to rate message content on three aspects: accuracy, authenticity, and believability. As they found that the constructed scale was valid, reliable and theory-driven, the scale is useful for this study. Message credibility is therefore measured by three items with a 7-point Likert scale ranging from 1 (strongly disagree) to 7 (strongly agree). The items are: “the offer is…” “accurate”, “authentic”, “believable”. Cronbach’s alpha (α = .89) showed the scale is reliable and valid.
Control variables
‘Attitude towards the message’ was included as a control variable. The measurement of this variable is based on the method used by Yoo and Donthu (2001). In their study, a scale was developed to measure brand attitude. They suggest the scale is usable across different attitude disciplines, because the scale is valid, reliable and parsimonious. Therefore, the scale is used in this study to measure ‘attitude towards the message’. The variable is measured by five items with a 5-point Likert scale concerning the retention e-mail: “the offer is…” “very bad/very good”, “very nice/very awful”, “very attractive/very unattractive”, “very desirable/very undesirable”, and “extremely likable/extremely unlikable”. Cronbach’s alpha (α = .95) showed the scale is reliable and valid.
The second control variable was ‘customer duration’, representing how long respondents already had been a customer at Budget Energie. This variable was included in order to control for the general loyalty of Budget Energie’s customers.
Results Sample
The survey was e-mailed to 6800 Budget Energie customers, recruited through the customer database of Budget Energie. The respondents were randomly divided over the four conditions, each group received a retention e-mail with a different condition. The survey was distributed for two and a half weeks from the 3rd of May 2018 till the 22nd of May 2018. The survey led to
383 respondents, of which 81 were coded as ‘missing’, because they did not agree with the informed consent sheet (N = 59), did not complete the survey (N = 21), or appeared to know the real purpose of the study (N = 1). In total, N = 302 (response rate of 5.6%). The sample consisted of 185 men (61.3%) and 117 women (38.7%). The respondents’ age varied from 21 to 90 (M = 53.68, SD = 16.01). The mean educational level was MBO (M = 4.11, SD = 1.47). Table 2 shows the division of the respondents over the experimental conditions, table 3 shows the demographics of the study sample.
Table 2
Respondents division over the study conditions
Condition Respondents (N) Missing (N) Total (n)
Control condition 124 38 86
Consensus principle 90 13 77
Scarcity principle 77 5 72
Reciprocity principle 92 25 67
Table 3
Demographics of study sample and division over experimental conditions
Factor Total sample CC CP SP RP Gender n 302 86 77 72 67 % Male 61.3 55.8 62.3 59.7 68.7 % Female 38.7 44.2 37.7 40.3 31.3 Age n 302 86 77 72 67 M 53.68 53.55 55.18 50.72 55.30 SD 16.01 14.39 17.37 16.99 15.13 Education level * n 302 86 77 72 67 M 4.11 4.05 4.31 4.13 3.93 SD 1.47 1.61 1.35 1.44 1.46 Customer duration ** n 302 86 77 72 67 M 4.11 4.05 4.31 4.13 3.93 SD 1.47 1.61 1.35 1.44 1.46
Notes. CC = control condition, CP = consensus principle, SP = scarcity principle, RP = reciprocity principle
* = education level had the following values: vmbo (1), havo (2), vwo (3), mbo (4), hbo (5) and wo (6).
** = customer duration had the following values: < 1 year (1), 1 to 2 years (2), 2 to 3 years (3) and > 3 years (4).
Randomization check
Randomization checks were conducted for the demographic variables gender, age, and education level. The results showed that there was no difference between males and females in the condition groups, chi-square (3) = 2.73, p = .435. Age and education level were also equally divided, there were no differences between the groups for age, F (3, 298) = 1.28, p = .282 and for education level, F (3, 298) = 0.89, p = .448. Randomization checks also showed that the control variables were equally divided. There were no differences between the groups for ‘customer duration’, F (3, 298) = 1.10, p = .348, and for ‘attitude towards the message’, F (3, 298) = 0.59, p = .619. Therefore, it is concluded that the randomization was successful.
Analyses hypotheses
Influence principles and loyalty intention
A one-way ANOVA analysis was performed to test the effect of the influences principles (consensus, scarcity, and reciprocity) with the control condition as reference point on loyalty intention. The results showed that the regression model was significant, F (3, 298) = 3.41, p = 0.018, η2 = .033. Therefore, the model is useful to predict loyalty intention, however, the
prediction strength is weak. Table 4 shows the mean scores on loyalty intention between the influence principle conditions. The consensus principle did not differ from the control condition on loyalty intention, 95% CI [-0.16, 0.48]. The scarcity principle did not differ from the control condition on loyalty intention, 95% CI [-0.48, 0.17]. Finally, the reciprocity principle did not differ from the control condition on loyalty intention, 95% CI [-0.12, 0.54]. Based on the results, hypothesis 1, 2 and 3 are rejected.
Table 4
Mean scores on loyalty intention between influence principle conditions
Total sample CC CP SP RP Loyalty intention
n 302 86 77 72 67
M 3.33 3.38 3.22 3.54 3.17
SD 0.77 0.73 0.73 0.83 0.78
Note. CC = control condition, CP = consensus principle, SP = scarcity principle, RP = reciprocity principle
Loyalty intention and customer loyalty
A binary logistic regression test was performed to ascertain the effect of loyalty intention on customer loyalty. The logistic regression model was statistically significant, χ2(1) = 8.38, p =
.004, R2NK = .037. Loyalty intention did have a significant positive effect on customer loyalty, B = 0.45, W = 8.03, p = .005, 95% CI OR [1.15, 2.12]. A higher loyalty intention led to a higher
Influence principles and customer loyalty
A binary logistic regression test was performed to analyze the effect of the influence principles (dummies with the control condition as reference point) on customer loyalty (dependent), χ2(3)
= 0.82, p = .846, R2
NK= .004. Table 5 shows the customer loyalty scores between the influence principle conditions. The consensus principle did not have an effect on customer loyalty, B = -0.23, W = 0.52, p = .471, 95% CI OR [0.42, 1.49]. The scarcity principle also did not have an
effect on customer loyalty, B = -0.24, W = 0.52, p = .470, 95% CI OR [0.42, 1.50]. Finally, the
reciprocity principle did not have a significant effect on customer loyalty, B = -0.24, W = 0.52, p = .469, 95% CI OR [0.41, 1.51]. Therefore, the answer to RQ 1 can be formulated as no
influence principle had an effect on customer loyalty.
Table 5
Scores on customer loyalty between influence principle conditions
Total sample CC CP SP RP Customer loyalty
n 302 86 77 72 67
% Yes 59.9 64.0 58.4 58.3 58.2
% No 40.1 36.0 41.6 41.7 41.8
Note. CC = control condition, CP = consensus principle, SP = scarcity principle, RP = reciprocity principle
Mediating effect loyalty intention
According to Baron and Kenny (1986), three steps have to be met in establishing mediation: (1) the independent variable is correlated with the dependent variable, (2) the independent variable is correlated with the mediator variable, (3) the mediator variable is correlated with the dependent variable. As analyses showed that the influence principles did not have a significant effect on either loyalty intention or customer loyalty, steps 1 and 2 are not met. Therefore, it is clear that there could be no mediation. Hypothesis 5 is rejected.
Moderating effect message credibility
Model 1 for a moderation effect was performed in Process to test the moderating effect of message credibility on the effect of influence principles on loyalty intention. The results showed that the model was significant and could therefore be used, F (7, 294) = 17.06, p < .001, R2 =
.54. The consensus principle did not have an effect on loyalty intention, B = -0.04, t = -0.10, p = .920, 95% CI [-0.85, 0.76]. However, the scarcity principle did have a negative significant effect on loyalty intention, B = -0.96, t = -2.19, p = .03, 95% CI [-1.82, -0.10]. The reciprocity principle did also have a negative significant effect on loyalty intention, B = -1.00, t = -2.49, p = .013, 95% CI [-1.79, -0.21]. Message credibility did have a significant direct, positive effect on loyalty intention, B = 0.21, t = 3.86, p = .001, 95% CI [0.10, 0.31]. The interaction term of the consensus principle and message credibility showed that increasing message credibility did not significantly mitigate the effect of the consensus principle, B = -0.02, t = -0.26, p = .792, 95% CI [-0.18, 0.14]. The interaction term of the scarcity principle and message credibility showed that there was a significant interaction effect, B = 0.19, t = 2.34, p = .020, 95% CI [0.03, 0.35]. The interaction term of the reciprocity principle and message credibility showed that increasing message credibility also significantly mitigated the effect of the reciprocity principle, B = 0.16, t = 2.07, p = .040, 95% CI [0.01, 0.32]. The two interactions are shown in figure 2. Based on the results, hypothesis 6 is partly accepted.
Figure 2. Interaction effects loyalty intention and message credibility.
The scores on the analyses are shown in the conceptual model in figure 3.
Figure 3. Conceptual model with results.
Note. + p < .10, * p < .05. To calculate regression coefficients of influence principles on
Conclusion and discussion
This study examined the effect of influence principles (consensus, scarcity, and reciprocity) on customer loyalty of Budget Energie customers. Also, the mediating effect of loyalty intention and the moderating effect of message credibility were examined. The research question central in this study was:
What is the effect of influence principles (consensus, scarcity, and reciprocity) on loyalty of Budget Energie’s customers, and what is the mediating effect of loyalty intention and the moderating effect of message credibility?
This study shows that the influence principles did not have a direct effect on customer loyalty, neither was there a mediated effect of loyalty intention on this relationship. Furthermore, the influence principles did not have a direct effect, but a moderated effect on loyalty intention, when accounted for message credibility.
Despite the fact that many researchers have proven the effectiveness of Cialdini’s principles in offline settings (Burger, 1986; Cialdini, 2007; Dijksterhuis et al., 2005), this study shows that influence principles are not applicable in an online sales condition. In particular, it is concluded that Budget Energie cannot improve customer loyalty by using influence principles in retention e-mails.
Corresponding with the TPB (Ajzen, 1991), this study shows that loyalty intention has a positive effect on customer loyalty. A higher loyalty intention leads to a higher customer loyalty of Budget Energie’s customers. However, as there was no effect of influence principles on either loyalty intention or customer loyalty, it is concluded that there is no mediating effect of loyalty intention on the relationship between influence principles and customer loyalty of
Finally, message credibility moderates the relation between the scarcity principle and loyalty intention and between the reciprocity principle and loyalty intention. Customers of Budget Energie in the scarcity and reciprocity condition who find the content of the retention e-mail more credible, have a higher loyalty intention compared to customers in these conditions with who find the content less credible. The effect of the consensus principle on loyalty intention is not moderated by message credibility.
In sum, the research question can be answered by the fact that there is no effect of influence principles (consensus, scarcity, and reciprocity) on loyalty of Budget Energie’s customers. Also, there is no mediating effect of loyalty intention on this relationship. However, message credibility positively moderates the relationship between the scarcity principle and loyalty intention and between the reciprocity principle and loyalty intention.
Although previously discussed literature showed that influence principles have a significant effect on customer loyalty (Kaptein & van Halteren, 2012; Kaptein et al, 2015; Weyant, 1996), this study shows the opposite. The results of this study are therefore not in line with existing literature. This study is also divergent from existing literature concerning the mediating effect of loyalty intention in the relationship between influence principles and customer loyalty. Although one would expect that, based on the Theory of Planned Behavior (TPB) (Ajzen, 1991), loyalty intention would have a mediating effect on the relationship between influence principles and customer loyalty, this study shows the opposite. However, this study corresponds with existing literature (Petty & Wegener, 1999; Smink, 2003) regarding the moderating effect of message credibility on the relationship between influence principles and loyalty intention.
One possible explanation for the lack of effect of influence principles on loyalty intention and customer loyalty could be that the influence principles were not notable enough in the retention e-mails to influence Budget Energie’s customers. Future research could use
more striking manipulation material in order to see whether this leads to divergent results. Another explanation could be that people’s choice for an energy provider is highly dependent on the price energy providers charge, as energy is an intangible product (Hartmann & Ibáñez, 2007; Walsh & Wiedmann, 2005). Respondents might have focused purely at the prices in their retention offer, instead of the textual parts of the e-mail, which could account for the absent significant results. Finally, another possible explanation for the absence of significant effects could be that respondents did not have a favorable attitude towards retention at the first place. Future research could add ‘attitude towards retention’ as a variable in order to test whether this does interfere with the existing results.
This study contributes to existing literature by looking at the effect of influence principles in an online setting. Also, by looking at message credibility instead of source credibility as most studies have done before, this study gives new insights into the effect of different aspects of message content on customer loyalty. Concluding, Budget Energie does not profit from using the consensus, scarcity or reciprocity influence principle in their retention e-mails to promote customer loyalty. However, it is advised that Budget Energy delves into possible ways to perfect the message credibility of their retention e-mails, in order to improve the loyalty intention of their customers. The results of this study are also usable for other companies in the service industry, in which customer loyalty is a central concept.
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Appendices
Appendix 1: manipulation material (before pretest)
Appendix 2: analysis manipulation material General questions
A principal component analysis showed that the six items loaded on two factors with an eigenvalue above 1 (EV1 = 3.723, EV2 = 1.149). The factors explained 81.2% of the variance.
A varimax rotation (table 6) showed that the first factor is defined by the trustworthiness, clarity and the notability of the offer (“clearly structured”, “understandable”, “trustworthy”, “realistic” and “striking”). The second factor is defined by the personal relevance of the offer (“personal”). A Cronbach’s alpha test was performed to measure the reliability of the scale. The reliability of the scale is good (α = .85). The six items together form the variable ‘OfferGeneral’. The higher the scale scores, the more the offer is seen as clear and trustworthy. For the ‘consensus’ condition M = 3.71 and SD = 0.77, for the ‘scarcity’ condition M = 3.32 and SD = 0.89 and for the ‘reciprocity’ condition M = 3.60 and SD = 0.92. This showed that all three conditions are above average seen as clear and trustworthy. Because the offer has the typical design and layout of Budget Energie, the overall offer will not be changed for this study.
Table 6
Rotated component matrix general questions Component 1 2 Clearly structured .923 .017 Personal .343 .744 Understandable .882 .170 Trustworthy .900 .279 Realistic .915 -.181 Striking .569 -.680 Consensus principle
A principal component analysis showed that the three items of the consensus principle loaded on one factor with an eigenvalue above 1 (EV1 = 2.115). The factor explained 71.8% of the
reliability of the scale is good (α = .80). The three items together form the variable ‘Consensus’ (M = 3.64; SD = 0.67). The higher the scale scores, the more the offer fits with the consensus principle.
Scarcity principle
A principal component analysis showed that the three items loaded on one factor with an eigenvalue above 1 (EV1 = 2.597). The factor explained 86.6% of the variance. A Cronbach’s
alpha test was performed to measure the reliability of the scale. The reliability of the scale is good (α = .92). The three items together form the variable ‘Scarcity’ (M = 2.44; SD = 1.07). The higher the scale scores, the more the offer fits with the scarcity principle.
Reciprocity principle
A principal component analysis showed that the three items loaded on one factor with an eigenvalue above 1 (EV1 = 2.380). The factor explained 79.3% of the variance. A Cronbach’s
alpha test was performed to measure the reliability of the scale. The reliability of the scale is good (α = .87). The three items together form the variable ‘Reciprocity’ (M = 3.50; SD = 1.03). The higher the scale scores, the more the offer fits with the reciprocity principle.
Appendix 3: manipulation material (after pretest)
Appendix 4: final manipulation material (the address is blurred for privacy reasons)
