Customer frustration in loyalty programs

Abstract

PurposeThis article aims to examine the negative effects of loyalty programs from the perspective of frustration theory. It seeks to develop a model of customer frustration on the basis of frustration theory and an exploratory qualitative study.Design/methodology/approachFirst, frustration is defined as a special form of dissatisfaction and a general model of frustration in business relationships is developed by evaluating the literature on frustration theory. Second, an explorative and qualitative focus group study among participants of a loyalty program for frequent travelers is conducted. A multi‐level iterative content analysis of the participants' statements reveals the existence of different categories of frustration incidents. Third, the findings of the study are used to develop a system of propositions that generate a specific model of customer frustration in loyalty programs.FindingsSeven categories of frustration incidents that were triggered by the loyalty program and lead to frustration sensation and subsequent frustration behavior, like protest or avoidance, could be identified. With four categories of incidents – inaccessibility, worthlessness, qualification barrier and redemption costs – customers' frustration sensation and behavior are directed on the program itself (program‐related frustration incidents). For the other three – discrimination, economization and defocusing – frustration sensation and behavior also affect the perception of the relationship with the firm (relationship‐related incidents).Research limitations/implicationsThe exact differentiation of frustration from related constructs should be the topic of further research. The findings of the empirical study are of limited generalizability because the object of investigation was a single company's loyalty program in a special industry sector. Hence, the introduced propositions should be further specified and tested in a large‐scale quantitative study in different sectors and with a number of companies and programs. Further work is necessary to allow deeper insights into the relationships between the elements in the customer frustration model.Practical implicationsSeveral implications for planning and implication arise from the results of the study. Management has to make sure that program‐related and relationship‐related negative effects are avoided. That calls for offering only those benefits that represent genuine additional value to customers and for ensuring that the benefits can be claimed at any time and without any additional effort by the customer. Furthermore, the perceived quality of the program should be monitored to obtain prompt information about possible customer frustration and indications of protest (i.e. customer complaints) should be viewed with particular attention.Originality/valueThis paper provides new insights into the so far highly neglected negative side effects of loyalty programs. Also, innovative is the first‐time application of the frustration construct to the analysis of customer behavior in the context of loyalty programs. The contribution is of high value for all who research in the field of customer relationship management and customer loyalty.