Loyal customers’ tipping points of spending for services: a reciprocity perspective

Abstract

Purpose Controversy exists about the shape of the relationship between loyalty and profitability. This paper aims to address the possibly nonlinear effects of behavioral loyalty (BLOY) on customer spending (as a proxy for profitability). Building on social exchange theory and the norm of reciprocity, it examines the asymmetries between BLOY and customer spending and the moderating influence of personal communication (PCOMM) as a social reward and dispositional positive reciprocity as process evidence. Design/methodology/approach Study 1a (n = 309) gathered customer data from four restaurants and Study 1b (n = 252) data from hotel guests after they checked out. Study 2 is an experimental study with two manipulated factors BLOY and PCOMM). In total, 295 participants from a large German online panel completed the study. Findings The results indicate an inverted-U shaped relationship between BLOY and customer spending: after reaching a turning point, customers gradually curb spending as their BLOY further increases. High PCOMM acts as a reciprocal response while triggering additional customer spending particularly at higher levels of behavioral loyalty; positive reciprocity adjusts the differences in customer spending when social rewards such as PCOMM are present. Research limitations/implications The asymmetric relationship between BLOY and customer spending is tested only for hedonic service settings. Practical implications Not all loyal customers spend more – companies need to meet their reciprocal obligations before they can benefit from increased customer spending. Originality/value The present research re-considers the nature of the relationship between BLOY and customer spending and reveals an inverted-U shaped relationship, with a turning point beyond which greater customer loyalty decreases customer spending. It finds converging process evidence for the mechanism of reciprocity underlying this relationship. This study also details the financial impact of BLOY on the firm by investigating actual customer spending.

Sweat it for sustainability: Impact of physical activity/exercise on sustainable consumption

“…We assimilate the findings from biomedical, clinical, and sports research into consumption domain, to demonstrate that exercise promotes consumers' virtuous consumption endeavors such as sustainable choice behaviors. While rewards in extant marketing literature have largely been conceived as marketer‐induced incentives (e.g., Teichmann, 2021), we draw on dopamine hypothesis of reward to postulate the use of exercise as a marketing intervention to elicit consumers' self‐rewarding/intrinsically rewarding behaviors. The quest to understand consumer behavior grounded in the dopamine hypothesis of reward is directed toward understanding the evolutionary psychology in the marketing domain, i.e., “why” reasons behind product purchases and consumer behaviors (Otterbring, 2021).…”

Service contract type and consumer choice behavior: the contributory roles of perceived value, brand reputation and consumer incentives

“…When services are delivered over time, it is necessary for a relationship to exist between the consumer and provider, and such relationships inherently involve an exchange (Lee et al, 2014a). Social exchange theory is useful in explaining relationships between individuals and providers, as it proposes that in every exchange, each party incurs a cost and reward (Singh and Sirdeshmukh, 2000;Teichmann, 2021). Although most consumers undertake some kind of cost-benefit analysis before making a purchase decision, particularly when buying services that are consumed over an extended period of time, intangible factors such as prestige and happiness may also be influential (Lee et al, 2014b).…”

“…Although most consumers undertake some kind of cost-benefit analysis before making a purchase decision, particularly when buying services that are consumed over an extended period of time, intangible factors such as prestige and happiness may also be influential (Lee et al, 2014b). Social exchange theory suggests that successful consumer-provider relationships are based on mutual reciprocity where both parties are satisfied and view the exchange as fair and reasonable (Teichmann, 2021). Consumers will usually return favors to providers that offer benefits which are valued (Choi and Lotz, 2018;Morales, 2005).…”

“…, 2014b). Social exchange theory suggests that successful consumer-provider relationships are based on mutual reciprocity where both parties are satisfied and view the exchange as fair and reasonable (Teichmann, 2021). Consumers will usually return favors to providers that offer benefits which are valued (Choi and Lotz, 2018; Morales, 2005).…”

Country Equity: An Integrative Review, Conceptualization, and a Proposed Model

“…Country brand loyalty is the most important determinant of country brand equity (Mostafa, 2015), the tendency to be loyal to a focal country as demonstrated by the intention to buy products from the country as a primary choice (Herrero-Crespo et al, 2016). Loyalty is customers' deeply steady commitment to continually repurchase or sponsor a favorite product in the future (Ladhari et al, 2011;Baumann et al, 2011;Zia, 2020;Teichmann, 2021). It is the prospect of a customer's return and willingness to act as an organizational partner, thus, many business firms work to design.…”