Framing as status or benefits? Consumers’ reactions to hierarchical loyalty program communication

Purpose A fundamental aspect of hierarchical loyalty programs is that some consumers get rewards that others do not. Despite the widespread use of such programs, academics have long debated whether these benefits are outweighed by the potential negative impact of the differential treatment of customers. This study extends our understanding, examining the impact of message framing on consumers’ reactions to hierarchical loyalty structures. Design/methodology/approach Three online studies were conducted. Study 1 uses advertisements to manipulate the message frame’s emphasis (benefits vs. status). Study 2 manipulates consumers’ frame of thought by directing their attention to either changes in benefits or status. Finally, Study 3 uses the proposed framework to reconcile contradictory findings from past research. Findings Low-frequency customers who do not expect to qualify for a superior customer tier tend to reject hierarchical programs when thinking about status. In contrast, when these customers think about concrete rewards, loyalty program messages produce no negative reactions. High-frequency customers are positively affected by communication regardless of the type of benefits framed. Research limitations/implications All studies were done online potentially limiting the external validity of the results. Nevertheless, the impact of message framing on perceptions about the loyalty program seems to be quite robust across different studies and manipulations. Practical implications When communicating with low-frequency customers managers should avoid promising status; customers should instead be motivated based on concrete rewards. High-frequency customers are indifferent to alternative emphasis of communication frames. Originality/value Marketing academics have acknowledged the importance of being able to reward top customers without demotivating light and moderate users. Our research is the first to provide a solution to this issue.

Woolies' new loyalty program offers a glimpse into the future

Woolworths is set to launch its new loyalty program, Woolworths Rewards, claiming that the new scheme will enable shoppers to redeem cash discounts off their shopping basket, much faster than ever before. It is estimated shoppers will acquire the necessary points to save $10 automatically of their grocery bill within seven weeks. Resembling the model used by UK retailer Morrisons, the new Woolworths Rewards program is a smart move for the retailer hoping to claw back some market share and curtail operational costs. However, there is no such thing as a free lunch.

Loyalty program attributes and their influence on retail customer satisfaction

This paper empirically examines the extent to which loyalty program attributes explain variations in satisfaction with the retail offer. Two dimensions of loyalty program attributes are introduced including hard attributes and soft attributes. Store satisfaction is examined in terms of the elements of the retail offer. The results suggest that emphasis on hard and soft attributes enhance customer satisfaction with a retailers’ merchandise, trading format, customer service and customer communication. Additionally, hard attributes have a more significant influence than soft attributes on satisfaction with all elements of the retail offer excluding merchandise.

Assessing the relationship between loyalty program attributes, store satisfaction and store loyalty

After a decade of research there is still much to understand about the relationship between loyalty programs and whether they deliver on their promise of building customer loyalty towards a store and understanding the mediating role of store satisfaction. Our results suggest that loyalty program as a summary construct, explains a significant proportion of the variance in store satisfaction and store loyalty. However, disaggregation of the construct into hard versus soft attributes, promotes greater specificity, precision and accuracy in uncovering the differential impact on store satisfaction and store loyalty.

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