The Starbucks effect: When name-based order identification increases customers' store preference and service satisfaction

Abstract

Retailers traditionally use a number system to match a product or service to a customer, ensuring that the customer receives the right product (e.g., a specific hot drink). However, some retailers have started to match an order by using a customer's name. Six studies, including an incentive-compatible experiment and field study, examine whether, when, and why order identification by a customer's name can either benefit or harm retailers. In contrast to prior research suggesting a negative effect of using a customer's name in marketing communications (e.g., online ads), the current research demonstrates a positive effect of identifying an order by name, which we refer to as the “Starbucks effect.” This positive effect, however, is mitigated or even backfires under specific circumstances. The results suggest that managers can use customers’ names while avoiding the use of numbers to increase customer preference for stores and service satisfaction, but with caution, especially in situations where privacy concerns may arise, even when the customer is only asked for their first name and could provide a fake name.