Loyalty program structure and consumers' perceptions of status: Feeling special in a grocery store?

Abstract

Loyalty programs are business practices increasingly pursued by companies in order to achieve customer loyalty. Recent studies have focused on the relationship between loyalty program structures (i.e., number and size of hierarchical tiers) and status levels (i.e., exclusivity) perceived by members. The current study examines two potential moderators of this relationship between program structure and perceived status. Specifically, the aim of our research was to test whether loyalty program structure affects status perceptions in more and less exclusive industries, and among consumers with more and less positive attitudes toward loyalty programs.An experimental design based on different scenarios was used. Two industries and three loyalty program structures were examined. In the airline industry, which is higher in perceived exclusivity, perceived status in the top tier of the loyalty program increased as the number of customers in the top tier decreased and as the number of tiers increased. Notably, however, loyalty program structure had no effect on perceived status in the supermarket industry, which is lower in perceived exclusivity. Moreover, even in the airline industry, status effects were only observed among respondents with a positive attitude toward loyalty programs. Those with neutral or negative attitudes toward loyalty programs were unaffected by the structure of the loyalty program. Thus, the effect of loyalty program structure on consumers' perceived status varied systematically across industries and across individuals.