Attracting new customers to loyalty programs: The effectiveness of monetary versus nonmonetary loyalty programs

Abstract

What type of reward attracts customers to loyalty programs? Given the increasing importance of loyalty programs, this question matters. Six sequential studies investigated whether monetary rewards universally attract people more than nonmonetary rewards. Results suggest that monetary rewards elicit a very robust attractiveness premium both on the level of individual rewards as well as on the level of entire reward programs. Across different industries, the more monetary loyalty program was consistently perceived as more attractive, and it was more likely to inspire intentions to join the program. Even in light of variations in consumption goals (hedonic vs. utilitarian), the effect persisted. The effect is not only consistent; it is also nonnegligible with medium effect sizes emerging in most settings. We discuss ensuing variations in effect sizes and conclude that monetarism holds a pervasive temptation for consumers that managers cannot ignore.

A study of loyalty programs in the Chinese market: the impacts of reward type, reward characteristic and product involvement

“…In the existing literature, reward type is classified differently to estimate its effect on the design of reward programs. Most studies simply divide the reward type into economic vs. social (Hanzaee and Esmaeilpour, 2017), direct vs. indirect (Bombaij and Dekimpe, 2020) or monetary vs. non-monetary (Ruzeviciute and Kamleitner, 2017;Sharma and Verma, 2014). The present study supports constructing the reward type as single and plural (McDermott et al, 2008).…”

“…Chen et al (2021) reviewed existing articles related to reward programs and concluded that numerous studies have attempted to explore factors through customers' preferences or adoption of rewards. For example, Ruzeviciute and Kamleitner (2017) investigated the effectiveness of monetary vs. nonmonetary reward programs. Zhu and Lin (2019) highlighted the importance of reward characteristic (utilitarian Loyalty programs in the Chinese market vs. hedonic) when designing a program.…”

“…direct vs. indirect or monetary vs. non-monetary) of rewards to estimate their effects on the programs (e.g. Bombaij and Dekimpe, 2020;Ruzeviciute and Kamleitner, 2017;Sharma and Verma, 2014;Wu and Tsui, 2020;Zhu and Lin, 2019). However, a customer's decision also varies under the considerations of single and plural rewards (McDermott et al, 2008).…”

What influences Chinese fashion retail? Shopping motivations, demographics and spending

“…Hedonic and utilitarian shopping motivations have been used with great success in contemporary research to define behaviour in contexts such as consumer engagement ( Jones et al, 2006;Ruzeviciute and Kamleitner, 2017), technology enhancement (Blázquez, 2014), experience marketing (Tynan and McKechnie, 2009), sustainability (Ozdamar Ertekin et al, 2015) and cultural influences (Giovannini et al, 2015;Kooti et al, 2016). In each of these contexts hedonic and utilitarian motivation are established as powerful discriminating variables.…”

Consumer Behavior Research: Theoretical and Methodological Paradigms Trending

“…For any business, it is imperious to establish how to maintain current customers and attract new customers to buy their goods. Today, researchers are studying the effectiveness of monetary versus non-monetary loyalty programs (Ruzeviciute & Kamleitner, 2017), and have also focused their search on online allegiance behavior. For example, in the field of online games, online game social migration affects game devotion and addiction (Wei et al, 2017).…”