Do status levels in loyalty programmes change customers’ willingness to pay?

Abstract

This article examines the effects of loyalty programme membership, promotion and demotion across different status levels on customer brand preferences and willingness to pay (WTP). The results of a study in the travel industry show that loyalty programme members express significantly higher brand preferences for their respective airline or hotel group than do non-members. Furthermore, consumers close to experiencing a change in their status level exhibit even stronger brand preferences, which extends to a greater WTP. The empirical findings illustrate how frequent traveller programmes affect purchase choices, especially if customers anticipate that they are about to lose or gain a higher status level.