Free experiences > free products

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📝 Context

Topic: Promotions
For: B2C. Can be tested for B2B
Research date: August 2025
Universities: Michigan State University, San Diego State University, University of Alabama

You’re trying to incentivize customers of your productivity app to upgrade to a new, larger package.

You’re debating between offering two offers to nudge the switch:

• A free table organizer

• A 15 minute walkthrough of your top productivity tips

The science says the second option could be up to 4 times more popular if it provides customers a meaningful experience.

P.S.: Asking people to earn rewards by completing activities with friends (e.g. take a picture together), instead of alone, can make them up to 21% more likely to redeem their reward.

📈 Recommendation

Free experiences (e.g. a 30 minute class with an expert) are more effective as rewards than physical gifts. 

If you are offering a physical item, frame it as an experience instead of an object (e.g. “win Italian cafe-style mornings” instead of “win a coffee machine”).

People will be willing to spend more both to achieve the reward, and after they’ve redeemed it. They’ll also be more likely to recommend you.

🎓 Findings

• Experiences (e.g. win a virtual factory tour) are more effective customer rewards than material rewards (e.g. a free dessert) at increasing customer spending. Rewards framed as experiences also increase word of mouth, customer loyalty and reward redemptions.

• As part of a series of 3 experiments, researchers found that:

  • Customers at a hair salon:

    • Were 4x more likely to choose an experience (e.g. massage, manicure or pedicure) over a material reward (e.g. conditioner, hair brush, conditioning spray) worth the same amount. 

    • When offered an experience as a reward they spent:

      • 43.3% more than those offered a physical object and 63.7% more after redeeming the reward

      • 2.2x more than customers not taking part in the promotion.

  • Offering experiential rewards (e.g. tickets to a beer festival, a pass to a water park) instead of physical items (e.g. a waterproof blanket, a beer carrier) led to:

    • 12.2% higher intentions to spend more in the future

    • 11.2% higher word of mouth intentions

    • 10.8% higher intentions to buy again

  • Frequent visitors to a coffee shop were 2x more likely to choose a movie ticket reward over a coffee mug.

  • People were 8% more inclined to buy again and 9.2% more likely to spread positive word of mouth about a loyalty program when a scented candle reward was framed as an experience (e.g. “enjoy citrus aromas across your home”) instead of a description of the item (e.g.“a long-lasting, clean burning candle”).

• The effect works the same for both large and small rewards. However, small experiences also perform slightly better than large material rewards.

🧠 Why it works

• We believe what we buy shows part of our identity (e.g. if I buy a lot of books, then I’m a well-read person). We also consider experiences (e.g. being in a book club) to be more revealing of our identity than physical objects (e.g. owning books). This makes us engage more with experiences than physical items.

• We believe experiences make us happier and are more valuable than physical objects. This makes us willing to spend more to gain an experience.

• An experience also provides us with “story utility”, the feeling of happiness we get from sharing stories about experiences with others. This drives us to talk about an experience more than a physical object.

💜 Behind the scenes at Science Says: A fun project we’re working on

Over the past few weeks, my team and I have been having a ton of fun nerding into the research for a new client project:

💆 How to build psychological anticipation for customers ahead of their spa visit (before they even start their treatment!)

And you would not believe the amount of research that can be used to improve spa customer journeys. We’re at 33 studies, and 8 contributions from leading researchers (e.g. Cornell, Uni of Minnesota, Nanyang Technological University).

With recommendations like:

• Hint at a ‘surprise’ customers will get when they arrive (feel +12% more positive about deciding to book)

• Show photos of your staff during booking (+9% quality perception)

• Encourage them to make small customizations (e.g. choose preferred scent; -46% cancellations)

The playbook is commissioned by the International Spa Association (ISPA), and will be available in February exclusively for all member spas. Unfortunately, since that also means I won’t be able to share much more with you about it. 

But if you’re interested in science-based recommendations for your clients, employees, or thought leadership content, you can reach out on our enterprise services page, or by replying to this email 

✋ Limitations

• It wasn’t tested, but it’s likely the effect may diminish if the same experience (e.g. a latte art demonstration) is offered as a reward multiple times.

• The study focused on the service industry (e.g. hair salon, coffee shop), where people may already be primed for experiences, rather than items. It’s unknown, but likely, that physical items may be more effective rewards for some types of products (e.g. accounting services, tech products).

• The research didn’t look at whether different types of rewards may work better for different stages of the customer journey (e.g. a sign-up reward for new customers vs. a loyalty-based reward for returning customers vs. an upsell reward for upgrading a package).

👀 Real-life example

Bakery and coffee shop Liv Breads’ loyalty program offers free items after customers spend a certain amount.

❌ Issue: Their rewards are physical items, instead of experiences, which would be more effective at driving customer spending.

✅ Solution: They can optimize their rewards program by:

• Offering an experience, like a baking workshop or coffee tasting to customers at a new higher tier (e.g. 25 points).

• Reframing their current physical items (complimentary coffee, tea, espresso) as experiences (e.g. “A free boost of coffee, espresso or tea to start your day off strong”).

• Offering coupons for activities done in groups or with friends (e.g. a discount for posting a picture of a meal paired with their loaves) to increase chances of redemption.

• Changing their reward structure to add uncertainty (e.g. “A chance to win 25% off all purchases” instead of “Get an annual 10% back”). Uncertain rewards are more effective and profitable.

🔍 Study type

Online experiments and field experiments (198 customers of a coffee shop for 30 days and 116 customers of a hair salon)

📖 Research

When rewards connect to the self: Unlocking customer engagement through experiential rewards. Journal of Retailing (August 2025). 

🏫 Researchers

• Ayalla A. Ruvio. Broad College of Business, Michigan State University

• Farnoosh Khodakarami. San Diego State University

• Forrest V. Morgeson. Broad College of Business, Michigan State University

• Clay M. Voorhees. University of Alabama

Remember: This is a new scientific discovery. In the future it will probably be better understood and could even be proven wrong (that’s how science works). It may also not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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