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The effect of loyalty program fees on program perceptions and engagement

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  • Ashley, Christy
  • Gillespie, Erin A.
  • Noble, Stephanie M.

Abstract

Retailers may introduce loyalty program enrollment fees for several reasons, including to offset the costs of the program. The principle of commitment-consistency and sunk cost effects, which suggest consumers who pay a fee-paying consumers have a higher value to the firm and exhibit behavioral loyalty, while the zero-price effect predicts the opposite. Three studies show: consumers who pay to participate in a loyalty program have more favorable attitudes, more positive evaluations of value for the money and benefits than non-paying members (Study 1); and altering the wording of denominations of accrual can affect willingness to join fee-based programs (Studies 2 and 3). The results suggest a boundary effect to the numerosity heuristic. Presenting reward credit accumulations in higher numbers may be advantageous when program fees are high, since it shifts the focus of processing from the fee to the rewards. However, standard units may be more favorable when program fees are low.

Suggested Citation

  • Ashley, Christy & Gillespie, Erin A. & Noble, Stephanie M., 2016. "The effect of loyalty program fees on program perceptions and engagement," Journal of Business Research, Elsevier, vol. 69(2), pages 964-973.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:2:p:964-973
    DOI: 10.1016/j.jbusres.2015.09.001
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    References listed on IDEAS

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    3. Eigenraam, Anniek W. & Eelen, Jiska & van Lin, Arjen & Verlegh, Peeter W.J., 2018. "A Consumer-based Taxonomy of Digital Customer Engagement Practices," Journal of Interactive Marketing, Elsevier, vol. 44(C), pages 102-121.
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    6. Lina Xu & Zhiqing Meng, 2024. "Optimizing Retailer Ordering Strategies: a Comparative Analysis of Membership and Non-Membership Systems," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 13027-13048, September.
    7. Krämer, Andreas, 2018. "Customer Centricity und deren Monetarisierung - am Beispiel Amazon Prime," Marketing Review St.Gallen, Universität St.Gallen, Institut für Marketing und Customer Insight, vol. 35(4), pages 12-20.
    8. Alex Belli & Anne-Maree O’Rourke & François A. Carrillat & Ljubomir Pupovac & Valentyna Melnyk & Ekaterina Napolova, 2022. "40 years of loyalty programs: how effective are they? Generalizations from a meta-analysis," Journal of the Academy of Marketing Science, Springer, vol. 50(1), pages 147-173, January.
    9. Zhu, Tengteng & Zhang, Lu & Zeng, Chuhong & Liu, Xin, 2022. "Rethinking value co-creation and loyalty in virtual travel communities: How and when they develop," Journal of Retailing and Consumer Services, Elsevier, vol. 69(C).

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