The reward gap in hierarchical loyalty programmes: how to enhance bottom-tier customers’ loyalty without alienating top-tier customers

Chaabane, Aïda Mimouni; Pez, Virginie

doi:10.1080/0267257x.2019.1694565

Cited by 6 publications

(4 citation statements)

References 44 publications

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“…Only recently have researchers examined the negative effects of HLPs (e.g. Baker and Legendre, 2020;Kim and Baker, 2020;Mimouni-Chaabane and Pez, 2020). Therefore, this study expands the emerging literature by uncovering the two design elements of HLPs that contribute to understanding the "dark side" effect of HLP.…”

Section: Introductionmentioning

confidence: 85%

“…Previous research supports this apparent contradiction in which customers who invested less money and effort into their relationship with a firm express higher levels of perceived unfairness in response to the firm's preferential treatment than those who invested more (e.g. Mimouni-Chaabane and Pez, 2020;Pez et al, 2017;Steinhoff and Palmatier, 2016). Even if this judgment of the endowed customer is irrational (Finkel, 2000), the mere fact that they are receiving disadvantageous treatment can trigger a feeling of embarrassment due to aggravated perceptions of inferiority (Henderson et al, 2011;Steinhoff and Palmatier, 2016), which then fosters perceived unfairness.…”

Section: H2mentioning

confidence: 97%

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Use it or lose it: point expiration and status demotion

Shin

Casidy

2021

JSM

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Purpose In managing hierarchical loyalty programs (HLP), firms often use a reward point expiration and status demotion policy to reduce financial liability and to encourage repeat purchases. This study aims to examine how point expiration and status demotion policies affect customer patronage, the role of extension strategies in mitigating the negative effects of these policies on customers and the moderating role of status endowment in the effect of point expiration on customers patronage following status demotion experience. Design/methodology/approach Three experiments were conducted using the hotel industry as the context. The hypothesized relationships were tested using ANOVA and a serial moderated mediation analysis using SPSS PROCESS Macro. Findings Customers subjected to reward point expiration exhibited a higher level of anger and perceived severity of the problem than those subjected to status demotion in HLP. Consequently, when customers experienced both point expiration and status demotion, the point extension strategy rather than the status extension strategy was found to be a more effective remedy for reducing perceived unfairness, although there was no change in the level of patronage reduction between the two extension strategies. Importantly, the effect of point expiration on patronage reduction was stronger among endowed-status customers than earned-status customers, serially driven by heightened feelings of embarrassment and perceived unfairness. Originality/value The study adds to the existing literature on HLP by comparing the effects of point expiration and status demotion on customer patronage with practical insights for HLP managers.

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Section: Introductionmentioning

confidence: 85%

Section: H2mentioning

confidence: 97%

Use it or lose it: point expiration and status demotion

Shin

Casidy

2021

JSM

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“…The principle of exclusivity reduces low-tier customers’ perceived fairness and the perceived control of relationship strategies. It also improves high-tier customers’ cognitive evaluation of perceived fairness and perceived control (Chaabane and Pez, 2020). High-tier customers enjoy higher-level relationship benefits than low-tier customers (Belli et al , 2021), leading to a favorable downward comparison and a sense of superiority (Dreze and Nunes, 2009).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

“…Research has found that, in long-term relationships, membership benefits have diminishing marginal returns on company performance (Cooil et al , 2007; Lee et al , 2015). The effectiveness of loyalty programs depends on whether the membership benefits they provide maintain customer stickiness and improve relationship performance (De Wulf et al , 2001; Lacey et al , 2007; Chaabane and Pez, 2020). Kim et al (2020) proposed that enterprises should adjust such membership benefits continuously to meet the dynamic benefit expectations of loyalty program customers.…”

Section: Introductionmentioning

confidence: 99%

Hedonic adaptation to preferential treatment: the moderating effect of the structural characteristics of loyalty programs

Ren

2023

NBRI

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Purpose As internet dividends are gradually disappearing, loyalty programs have become the panacea for monetizing traffic, attracting new customers and retaining existing customers. Improving their effectiveness has thus become key to enterprises’ market competitiveness. However, member customers’ hedonic adaptation to this relationship strategy undermines its effectiveness. Based on the hedonic adaptation theory, this study aims to analyze the process of member customers' hedonic adaptation to preferential treatment in loyalty programs and explore the boundary conditions of alleviating this effect. Design/methodology/approach This study surveyed 271 member customers in China and tested the hypothesized relationships using structural equation modeling and multigroup analysis. Findings Preferential treatment suffers from hedonic adaptation to member customer engagement and customer gratitude, and customer tenure is a key condition for these effects. Customer gratitude is an intermediary mechanism that explains the hedonic adaptation effect of preferential treatment to member customers engagement. In addition, the structural characteristics of loyalty programs form the boundary condition that alleviates hedonic adaptation. The authors found that high-tier and -payment strategies are more likely to mitigate hedonic adaptation of preferential treatment to customer gratitude. Originality/value This study elucidates the factors that influence the effectiveness of preferential treatment and provides constructive insights into customer relationship management and for improving enterprise performance.

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Reinventing Loyalty Programs in the CSR Age

2024

New Frontiers of Customer Strategy

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The reward gap in hierarchical loyalty programmes: how to enhance bottom-tier customers’ loyalty without alienating top-tier customers

Cited by 6 publications

References 44 publications

Use it or lose it: point expiration and status demotion

Use it or lose it: point expiration and status demotion

Hedonic adaptation to preferential treatment: the moderating effect of the structural characteristics of loyalty programs

Reinventing Loyalty Programs in the CSR Age

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