Beedie study investigates the “Entourage Effect”

The following article was published by canada.com on August 28, 2013.

The mensch connection: VIPs feel more status when sharing perks with their friends.

If a velvet rope lifts in your honour, but none of your friends are there to see it, does your ego still get a boost?

Canadian researchers investigated “the entourage effect” to determine whether a VIP’s experience of status changes in the presence of accompanying guests. Although reward-sharing should weaken the sense of being special, as it reduces exclusivity, a variety of lab and field experiments reveal the opposite is actually true.

Across five studies with nearly 900 people, VIPs felt higher levels of status when they could share their preferential treatment with friends – and this occurred even when it meant sacrificing the elite nature of the rewards.

“What we found most interesting was not just that people wanted to bring guests, but that they were willing to trade off scarcity of rewards in order to do so,” said study co-author Brent McFerran, who has joint appointments at Simon Fraser University and the University of Michigan.

“People are willing to trade rare rewards for more common ones, if they get to share these experiences with their friends.”

Using such real-world settings as a luxury suite at a football game, as well as imagined scenarios such as a VIP dinner with “a political figure of your choice,” the researchers uncovered a number of important findings about the effect of a posse.

First, that VIPs feel enhanced status when they can share their rewards with friends. Second, that the heightened sense of importance isn’t a function of not wanting to be alone, of bestowing a gift or of creating a sense of indebtedness in others. And third, that the effect persists even when the addition of an entourage dilutes VIP treatment.

Co-author Jennifer Argo, a professor of marketing at the University of Alberta, said the guiding factor in all this is connection.

“You’re the hub of a network when you’re a VIP and bring people with you,” said Argo. “It’s that sense of social connection that magnifies the amount of status you feel.”

There are, however, a few limitations: the posse has to be accompanying you (that is, giving away your VIP passes doesn’t confer the same boost); the people sharing the perks with you can’t themselves be VIPs; preferential treatment needs to be involved (the social connection of the entourage alone isn’t enough); and that there’s a limit to how large the posse can get before the VIP halo loses lustre.

The study, to appear in the Journal of Consumer Research, has vast implications for consumer loyalty programs, in which billions are invested by companies each year to appease top spenders. This bears out further in a sister project by Argo in which the guests of VIPs demonstrated some surprising behaviours.

“We find (VIPs’ guests) feel even more status that the actual VIP, and that they use fewer of the amenities associated with preferential treatment,” said Argo. “So they’re cheaper and they feel more status – and they’re more willing to spread positive word of mouth than the VIPs.”

The message to airport lounges and swanky hoteliers is clear: the barbarians are at the gate, and you just might want to let a few in.

Click here to view the article in its entirety on canada.com.