Unintended negative consequences of loyalty programs: endowed vs earned loyalty

Abstract

Purpose Loyalty programs are pervasive across service industries. However, the examination of cross-customer effects represents a critical gap in the loyalty literature. To address this gap, this research conducts two between-subjects experimental design studies to examine traditional versus endowed loyalty status earner attitudinal loyalty intention toward the company, switching intentions and perceived unfairness. Design/methodology/approach Study 1 conducts a 2 (self: earned vs endowed) × 2 (others: earned vs endowed) between-subjects experimental design on the direct effects of attitudinal loyalty intention toward the company and switching intentions. Study 2 builds upon these findings by examining the mediation effect of perceived unfairness on the attitudinal loyalty intention toward the company and switching intentions. Findings Results from Study 1 find that cross-customer comparisons exist, and traditional loyalty members have negative attitudinal loyalty intention toward the company and switching intentions when comparing their rewards to endowed earner rewards. Study 2 examines an airline context and finds that unfairness mediates the relationship. Originality/value The research builds upon the literature surrounding cross-customer comparisons, loyalty programs, equity theory and endowed status and discusses the unintended negative consequences related to endowed loyalty rewards on other customer intentions that have critical managerial implications.

Use it or lose it: point expiration and status demotion

“…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.…”

“…This practice of status endowment, that is, awarding elevated status to customers who are not entitled to it (Eggert et al, 2015) or similarly offering unearned or discretionary preferential treatment to certain customers (Butori and De Bruyn, 2013;Jiang et al, 2013;Wu et al, 2015), is gaining traction in managing loyalty programs because of its positive effects on target customers. However, it is not clear how endowed customers may respond to HLP design characteristics (Baker and Legendre, 2020;Eggert et al, 2015). Considering that endowed customers did not earn their elevated status via point accumulation or spending in the first place, one might expect that they would react less negatively to point expiration following status demotion compared to customers who earned their status.…”

Consumer value‐based edible insect market segmentation [edible insect market segmentation]

“…The survey was launched on the Qualtrics platform. Study Participants were recruited from Amazon Mechanical Turk, where it provides a nationwide consumer panel with high quality data (Baker & Legendre 2020; Legendre et al . 2020b).…”

The gateway bug to edible insect consumption: interactions between message framing, celebrity endorsement and online social support

“…Edible insects and consumer acceptance Entomophagy, the practice of eating insects, is traditional in many cultures but not in Western countries (Baker and Legendre, 2019). Edible insects have a long and ancient history , with over 1,900 types of edible insects consumed globally and two billion people already eating insects throughout the world (Baker and Legendre, 2020). Many scientists identify insects as one of the more sustainable sources of nutrients able to satisfy global food needs .…”

“…To eliminate cultural influence, this study sampled only general US consumers. MTurk provides nation-wide quality data (Baker and Legendre, 2020) and is often used in hospitality research . To ensure quality, respondents who failed quality control checks were omitted, as respondents and workers needed to have a minimum percentage of Human Intelligence Tasks to qualify (Kim and Baker, 2020;Migacz et al, 2018).…”