Loyalty program structure and consumers' perceptions of status: Feeling special in a grocery store?

Loyalty programs are business practices increasingly pursued by companies in order to achieve customer loyalty. Recent studies have focused on the relationship between loyalty program structures (i.e., number and size of hierarchical tiers) and status levels (i.e., exclusivity) perceived by members. The current study examines two potential moderators of this relationship between program structure and perceived status. Specifically, the aim of our research was to test whether loyalty program structure affects status perceptions in more and less exclusive industries, and among consumers with more and less positive attitudes toward loyalty programs.An experimental design based on different scenarios was used. Two industries and three loyalty program structures were examined. In the airline industry, which is higher in perceived exclusivity, perceived status in the top tier of the loyalty program increased as the number of customers in the top tier decreased and as the number of tiers increased. Notably, however, loyalty program structure had no effect on perceived status in the supermarket industry, which is lower in perceived exclusivity. Moreover, even in the airline industry, status effects were only observed among respondents with a positive attitude toward loyalty programs. Those with neutral or negative attitudes toward loyalty programs were unaffected by the structure of the loyalty program. Thus, the effect of loyalty program structure on consumers' perceived status varied systematically across industries and across individuals.     

Status Has Its Privileges: The Psychological Benefit of Status‐Reinforcing Behaviors

Many firms use loyalty programs to stratify their customers into status tiers and reward those with high status with special privileges. This research documents how consumers with high status willingly incur a cost to utilize the exclusive privileges, termed “status‐reinforcing behaviors,” that accompany their high status because doing so reinforces their high‐status identity. They do so in the absence of threats to their high status or self‐worth and also in the absence of an opportunity to conspicuously signal their high status to others through face‐to‐face interactions. This suggests that the behavior is undertaken neither for compensatory nor conspicuous reasons. Across two studies, results indicate that consumers who hold high status in a loyalty program engage in “status‐reinforcing behaviors,” even when doing so offers no material or conspicuous signaling benefit and in fact causes them to incur some costs. Engaging in status‐reinforcing behaviors yields a distinct psychological outcome—elevated feelings of prestige. Results indicate that when high status is made salient, individuals demonstrate a greater propensity to engage in status‐reinforcing behaviors. However, individuals who have a reinforced sense of status (i.e., already validated their high‐status position) are less likely to engage in status‐reinforcing behaviors, which suggests that utilizing status privileges does serve as a reinforcing behavior, even in the absence of a status threat.     

Further insights into perceived value and consumer loyalty: A “Green” perspective

“Green consumption” is an increasingly important topic in today's society. The effect of the ecological value provided by traditionally non‐green products, such as automobiles, on their consumer's post‐purchase behavior, such as brand or model loyalty, requires further clarification. The present study provides qualitative and quantitative insights from car users on how the ecological aspect of consumption integrates into the link between perceived value and consumer loyalty intentions (value–loyalty link). In general, car usage is accompanied by perceived functional, economic, emotional, and social value. Perceived ecological value is shown to have a significant impact on these four value dimensions. The relevance of “green to have quality,” “green to save money,” “green to feel good,” and “green to be seen” in relation to loyalty intention is discussed. Results of a structural equation model and multigroup analysis provide the opportunity to derive both theoretical and applied implications. © 2011 Wiley Periodicals, Inc.     

Status demotion in hierarchical loyalty programs: effects of payment source

Hierarchical loyalty programs are being operated currently by many firms to improve customer relationships. While past work has demonstrated the negative effects of status demotion in such programs, research on how these effects may vary across different customer group based on payment source is almost nonexistent. This paper examines the moderating role of payment source (‘own money’ versus ‘others money’) on the effects of status demotion on customer attitudes and behavior in hierarchical loyalty programs. Analysis of data collected from members of airline loyalty programs show that the negative effects of status demotion on customer attitudes, loyalty intentions, and share-of-wallet are stronger for demoted ‘own money’ customers than for demoted ‘others money’ customers. The study provides a deeper insight about the effects of status demotion and points out that firms could possibly be endangering the loyalty of many potentially valuable customers, in particular among the ‘own money’ customer group.     

Can the label ‘member’ in a loyalty program context boost customer satisfaction?

ABSTRACT

This study examines if labeling customers as ‘member’ versus ‘non-member’ in the context of a firm’s loyalty program can influence the customers’ evaluations of the firm. It was assumed that firms’ membership-related labels, which typically are euphemisms in relation to the mere discounts offered by many loyalty programs, can (a) prime customers so that positively charged content in a general member category is activated, and that (b) this content can have a positive impact on evaluations of firms with loyalty programs. An experiment showed that evoking customers’ membership status resulted in a higher level of sense of belonging, and higher customer satisfaction, for members than for non-members. Sense of belonging mediated the impact of evoking membership status on customer satisfaction. A second study confirmed that the content of customers’ general member construct is indeed associated with sense of belonging and satisfaction.     

Do Consumption Goals Matter? The Effects of Online Loyalty Programs in the Satisfaction‐Loyalty Relation

This study investigates the effects of online loyalty programs in the customer satisfaction‐loyalty relationship. It is proposed that loyalty programs may induce loyalty toward programs (program loyalty), which may then influence loyalty toward stores (store loyalty). According to the results of a two‐wave survey, consumption goals matter in the effects of program loyalty on online store loyalty. For consumers with hedonic goals, hedonic program loyalty (e.g., free gifts) has a significant effect on online loyalty. For consumers with utilitarian goals, however, utilitarian program loyalty (e.g., coupons) has a significant influence on online loyalty. Theoretical and managerial implications are also discussed.     

Status reinforcing: Unintended rating bias on online shopping platforms

Online shopping platforms have gradually begun to use hierarchical loyalty programs to distinguish customers. Previous studies have focused mainly on the effect of such programs on loyalty and repurchase behavior, and little is known about how customer statuses in hierarchical loyalty programs affect their online product evaluations. Drawing on social status and social conformity theory, this study investigates the impact of customer status on the valence of online reviews. An instrumental variable is proposed to address the endogeneity issue. The results show that a customer's need for status leads to a negative rating bias when leaving online reviews. At the same time, people encounter social pressure from crowds. The need for social conformity can alleviate such rating bias. This study contributes to the understanding of the effect of social status on post-purchase behavior and provides practical implications for both managers and platforms.     

Cross-reward effects in a coalition loyalty program: The impact of a point currency devaluation

While single-brand reward programs encourage customers to remain loyal to that one brand, coalition programs encourage customers to be “promiscuous” by offering points redeemable across partner stores. Despite the benefits of this “open relationship” with customers, store managers face uncertainty as to how rewards offered by partners influence transactions at their own stores. We use a model of multi-store purchase incidence and spend to show how the value of points shared among partner stores can explain patterns in customer-level purchases across them. We also allow reward spillovers to be moderated by three measures of store affinity that characterize a coalition’s portfolio: the relative popularity, geographic distance, and overlap in product categories between each pair of stores.For the coalition studied, popularity affinity was the main determinant of the valence of cross-reward effects, both before and after the devaluation. In contrast, category and geographic affinity had a smaller and more heterogenous impact. Through the use of an event where the loyalty program uniformly devalued the entire coalition’s value of reward points, we show that cross-reward effects changed (lessened), leading to larger financial losses for the most popular stores. While we do not observe changes to the composition of the coalition’s portfolio, our results also suggest that the value of a shared reward currency may be driven by the inclusion of smaller partners.     

Introducing a three‐tier sustainability framework to examine bike‐sharing system use: An extension of the technology acceptance model

There is growing interest among the general public and researchers in the sharing economy, because of its profound impact on individuals, businesses and governments today. A particular kind of the sharing economy is bike‐sharing systems which provide benefits for users, societies and the environment, suggesting sustainability could play an important role in their use. With this in mind, the purpose of this paper is to examine bike‐sharing users through a three‐tier framework, where sustainability is considered at multiple tiers, that is, micro (personality), mezzo (relations) and macro (system) tiers. In line with this proposition, the conceptual model is an extension of the Technology Acceptance Model (TAM), representing factors at the macro tier, that is, perceived sustainable usefulness and ease‐of‐use, influenced by bike quality. The effect of sustainable subjective norms on loyalty plays out at the mezzo tier, while sustainable extraversion is linked to loyalty at the micro tier. The model was tested on a sample of bike‐sharing system users. The results show that bike quality positively influences perceived sustainable usefulness, but not ease‐of‐use; however, ease‐of‐use positively influences loyalty among users, while usefulness does not. In addition, sustainable subjective norms and sustainable extraversion have a significant positive effect on user bike‐sharing system loyalty. The findings offer a range of implications for the providers of bike‐sharing systems, municipalities and governments which are promoting alternative means of transportation to reduce the carbon footprint.     

Health Insurance,Job Lock,and the Supply of Self‐Employment

Unlike most wage earners, self‐employed Americans have limited access to health insurance and face higher costs. Thus, social commentators and policymakers argue that many potential entrepreneurs are “locked” into their current jobs for fear of losing their health coverage even though they could be more productive in self‐employment. Using a large data set for the period 2000–2008, we find the availability of employer‐provided health insurance to be negatively correlated to the likelihood of self‐employment in the long run, but the effect to be mediated by individual and family health status. However, we find employer‐provided health insurance to have no significant effect on the probability of switching in the short run. Finally, we find differences in the magnitude of the effects between our samples of husbands and wives.     

Factors affecting non‐green consumer behaviour: an exploratory study among Chinese consumers

The purpose of this study was to explore the factors that affect a typical non‐green consumption behaviour among Chinese consumers. A conceptual framework was developed and an empirical study was conducted using a geographically diverse sample of Chinese consumers. Based on the consumer choice theory, the conceptual framework in the current study included both economic and non‐economic factors. Ten research hypotheses were developed under the framework. A survey was conducted among 600 consumers in four cities in China in 2013. Confirmatory factor analysis and hierarchical regression analysis were used for hypothesis testing. The empirical results showed that consumer preference, reference groups, and face perception have a significantly positive effect on the consumers’ non‐green consumption behaviour; whereas budget constraints and social responsibility consciousness have a significantly negative effect on the consumers’ non‐green consumption behaviour. Furthermore, the current research demonstrated that the relationships between consumer non‐green behaviour and its four antecedents – budget constraint, reference groups, social responsibility consciousness and face perception – are significantly moderated by extravagant atmosphere; whereas the relationship between consumer non‐green behaviour and consumer preference is not moderated by extravagant atmosphere.     

Consumers' choice among peer‐to‐peer sharing platforms: The other side of the coin

Many peer‐to‐peer sharing platforms are transforming their business model from sharing for free to renting with or without in‐person interactions. How will these changes affect consumers’ participation in peer‐to‐peer sharing of personal items? The work studies consumers’ choice among three business models that vary on two dimensions: “free versus renting” and “with or without in‐person interactions.” The novelty is to consider that consumers’ choice can be driven by their perceptions of relationships among peers, which are shaped by the business models of sharing platforms. Perceptions of communal sharing (CS) relationships among peers are found to differ across business models and to predict consumers’ choice among the platforms above and beyond the economic and social benefits that consumers seek. Interestingly, perceptions of CS are not only found to explain the choice of a sharing for the free business model over the two others, but also the choice of renting with in‐person interactions over renting without in‐person interactions. For managers of peer‐to‐peer sharing platforms, this means that renting does not make sharing completely similar to traditional market exchanges as long as in‐person interactions are involved. For scholars, this calls for more work on the factors that bring about perceptions of CS.     

Evaluating the impact of VAT-free promotion: the role of loyalty program membership and category characteristics

This study examines the impact of value-added tax (VAT)–free promotions on sales performance. VAT-free promotions are a recently adopted form of price promotions where consumers are exempted from paying the VAT amount across almost all products in the assortment during a limited number of days. They are typically organized once per year and surrounded by a large amount of media attention from the involved retailer. To test the effects of this promotion on store and category sales, and investigate the differences between loyalty program (LP) members and non-LP members, the authors use scanner data from a Dutch durable goods retailer across a range of categories. The results show that VAT-free promotions positively impact store performance. Moreover, the findings indicate that more non-LP members are attracted to the store and that they increase the amount they spend in the store. While LP members also spend more in the store, this increase in shopping basket size does not compensate for the significant drop in the number of LP members that visit the store, leading to an overall decrease in sales coming from LP members during VAT-free days. We furthermore find that the positive effect of VAT-free promotions for non-LP members (rather than LP members) generalizes across all investigated categories. Our results provide key insights for retailers and direct marketers with regard to the effectiveness of VAT-free promotions in order to strategically segment the customer base.

     

Tactical use of rewards to enhance loyalty program effectiveness

A key member benefit for participating in a loyalty program (LP) is the rewards earned for points accrued. One popular reward structure is a catalog of many diverse items. The rewards among this broad selection are likely to differ in their appeal due to their intrinsic differences and customer heterogeneity. Prior research has shown that after redeeming a reward, LP members are more motivated to increase their purchase volume/frequency and share-of-wallet within the program, thereby becoming more active. In this study, we fit a hidden Markov model to a 4½ year longitudinal data set of points accrual and reward redemption activity for about 4500 members of a large coalition LP. Our analysis reveals three latent states — active, hyperactive and inactive. We then investigate the likelihood of LP members transitioning between these states across successive time periods, and examine the reward categories and marketing effort associated with these transitions. Subsequently, we use our model to optimally promote particular reward categories to encourage LP member migration to managerially desirable states or prevent them sliding into a less desirable state. Our proposed optimal reward strategy potentially increases the estimated proportion of LP members in the hyperactive latent state from 35.7% to 40.1%, with a resultant increase in sales revenue for retailers and service providers in the LP of 7.7%. We find that rewards which are more fungible have the strongest influence on increasing points accrual activity.     

Are reward cards just a business deal? The role of calculative versus emotional card commitment in driving store loyalty

Recent research has challenged the wide-spread use of reward cards in the retail/service sector by arguing that in many cases, they offer rewards that fail to add value and increase loyalty to the store (Leenheer et al., 2007, Meyer-Waarden, 2015). Consequently, researchers have examined a variety of loyalty programs in order to determine which specific designs have a greater impact on the program's performance (Breugelmans et al., 2015, Meyer-Waarden, 2015). The underlying assumption of this view is that consumers will favour those programs which offer the “best deal”, potentially excluding the role of consumers’ affects in forming loyalty. In contrast to this view, this research draws on attachment theory to develop and test a more integrative model which concurrently assesses how consumers’ emotional, normative and calculative commitment to the card impacts store loyalty. We demonstrate that it is not calculative but emotional commitment that drives store loyalty in the long term. We conclude by discussing the theoretical and managerial implications of our findings, which collectively call managers to rethink current CRM practices that emphasizes rewards as a driver of customer loyalty.     

To pursue personality or conformity: A study on the impact of face view on consumers’ need for uniqueness

Chinese people are very focused on “face,” the desire to pursue face, and the fear of losing face. Face has a broad and profound impact on the behavior of Chinese consumers. By adopting Zhang's face dimension method, this study divides consumers’ face view into “the desire to gain face” and “the fear of losing face,” and develops a model to investigate their impacts on consumers’ need for uniqueness. Data from 360 college students and graduate students were used to validate the proposed model through structural equation modeling. Results show that the desire to gain face and the fear of losing face have indirect effects on consumers’ need for uniqueness, with the mediation of independent self‐construal and consumer's susceptibility to normative influence. The study provides both theoretical and managerial contributions, and a new perspective to better understand Chinese consumers’ face view and consumers’ need for uniqueness. Managerially, the study offers suggestions for consumers about how to properly obtain face, for enterprises about how to formulate targeted marketing strategies using consumers’ face view, and for the government on how to guide consumption trends through consumers’ face mentality.     

For Indian online shoppers,have saying and doing parted ways?

Grounded in the theory of planned behavior (TPB) and based on both perceptual as well as behavioral data, the study explores e‐service quality (e‐SQ) dimensions’ influence on merchandise value perception (MVP) and how these value perceptions, in turn, impact shopper loyalty intention, finally leading to word‐of‐mouth (WOM) and store patronization behavior. The model was tested for measurement and structural validity, mediation by MVP, and moderation by gender. Findings suggest that: (1) e‐SQ dimensions of efficiency and fulfillment have direct effect on MVP; (2) MVP is a key mediating variable facilitating “indirect‐only” mediation between e‐SQ dimensions and online shoppers’ loyalty intentions; (3) mediation by MVP is not moderated by gender; (4) strong association between shoppers’ loyalty intention and intention to spread positive WOM; and (5) “saying” and “doing” are incompatible because online shoppers’ loyalty intentions or WOM do not translate into store patronization behavior.     

Using the “best‐fit” approach to investigate the effects of politico‐economic and social barriers on SMEs' internationalization in an emerging country context: Implications and future directions

The way this study has used the “best‐fit” approach has facilitated the investigation of how three hypothesized constructs of political, economic, and social barriers can deepen our knowledge of their impacts on small and medium‐sized enterprises (SMEs)' internationalization within a small developing country context. Based on a quantitative analysis of the three hypothesized barriers, we used the “best‐fit” approach to measure the extent to which the SMEs' internal variables like people, products, services, and practices might best fit some of the people and non‐people factors external to the businesses. The application of the “best‐fit” approach onto the three hypotheses—politics (H1), social (H2), economics (H3), helped us in explaining the major social and politico‐economic barriers faced by a developing economy' (Bangladeshi) SMEs' internationalization despite previous literatures' emphasis on the impacts of globalization, market drivers or their oversight. Based on the findings, we point to future research trajectory. This study used primary survey data from 212 Bangladeshi SMEs and successfully validated an HR model by using Smart PLS3 software. The results from the hypotheses were used to produce the HR model to help SMEs identify the significance of people and economic factors and propose these aspects for inclusion in the “best‐fit” approach, SME, and globalization research.     

Loyalty programs,loyalty engagement and customer engagement with the company brand: Consumer-centric behavioral psychology insights from three industries

Firms make large investments in loyalty programs (LPs) to build customer relationships with customer loyalty as one of their primary goals. Despite the popularity of LPs, their effectiveness is questioned and the subject of academic debates in relation to outcomes such as profitability. Moreover, extant research has not investigated if customers engage with LPs through LP perceived value and how LP engagement improves LP loyalty, brand loyalty, and customer engagement (CE) with the company brand. This study examines, from a consumer-centric behavioral perspective, LP engagement (LPE) behavior, and how LPE behavior impacts brand and LP loyalty, as well as CE. We introduce LPE behavior, a relatively new concept, in the form of a multi-dimensional set of hierarchically-ordered dimensions. We show a differentiated view of the relationship between the antecedents of brand loyalty as well as LP loyalty and CE. External, convergent and discriminant validity are confirmed by testing our model with a representative sample (n = 593) of the U.S. LP population with participants being members of either a grocery retail chain, department store chain, or airline frequent flyer LP. We show that perceived LP value engages customers with LPs. Subsequently, LPE behavior improves LP loyalty and brand loyalty as well as CE with the company brand.     

In Search of the “Meta‐Maven”: An Examination of Market Maven Behavior across Real‐Life,Web, and Virtual World Marketing Channels

Recently, a new set of channels for consumer and business interaction have emerged—three‐ dimensional “virtual” worlds. This study attempts to better understand the nature of market maven behavior (diffusers of general marketplace and shopping information) across three different channels—virtual worlds, the Web, and real‐life—and to examine the extent to which market maven behavior is transferable across channel context (i.e., “fluid”) or channel dependent. Using data from two surveys (one in the virtual world “Second Life” and a follow‐up Web survey for the same respondents), this paper explores differences and determinants of maven behavior. Employing partial least squares analysis, the findings indicate that market maven propensity is transferable across channels (i.e., high‐scoring market mavens retain this across channel). However, while there may be the transferability of market maven behavior across channels, the findings demonstrate that maven propensity is influenced by the channel context. Consequently, individuals with high maven propensity tend to exhibit channels in which this behavior is more prominent. Therefore, market maven behavior might not only span general product categories, but also the channel itself (i.e., maven behavior remains fairly constant—or fluid—across channel). The findings also point to possible characteristics that may be used in the identification of market mavens: market mavens typically have greater cognizance of other mavens, are technology‐savvy and individualistic, are of either gender and tend to be older and more intensive and experienced users of Web platforms and also intensive users of virtual worlds than those with low maven propensity. The findings of the study contribute to understanding market maven behavior, and provide an insight into the practices of mavens in a multichannel context, particularly in the case of the emerging channels that are virtual worlds.