I Deserve That Deal! Effects of New Customer Exclusive Promotions on Existing Service Customers

Abstract Given the inherent profitability in retaining existing customers over recruiting new ones, this research examines negative consequences of exclusive promotions used to recruit new customers to a service organization. It explores existing, loyal customer perceptions of the distributive justice of such promotions and their subsequent behavior toward the organization. Findings suggest that receiving a similar or better offer may increase feelings of distributive justice among existing customers for a new customer promotion. Further, higher loyalty increased feelings of distributive justice. Negative perceptions of distributive justice regarding the exclusive offer drive customer alienation and entitlement, which can then lead to negative relational behavior from existing customers such as lower repurchase intentions, intent to switch service providers, and complaint behavior.