Impacts of Reward Accrual Effort on Redemption Speed, Unit Size and Hedonic Preference in a Multi-Vendor Loyalty Program

Abstract

This research explores two key behaviors (reward point accrual and redemption) that consist of a loyalty program. The authors focus on assessing the impact of accrual effort level on three types of redemption behavior: speed, unit size, and hedonic preference at the individual level by using large scale transaction data from a multi-vendor loyalty program providing flexible point accrual and redemption opportunities. Our findings show that customers tend 1) to speed up point redemption, 2) to enlarge the size of redeemed points, and 3) to prefer utilitarian rewards as the level of effort during the accrual stage of reward point increases.