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Reward me, charity, or both? The impact of fees and benefits in loyalty programs

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  • Eason, C. Clifton
  • Bing, Mark N.
  • Smothers, Jack

Abstract

This research examines the effects of loyalty program annual fees (no fee vs. $10 fee in Study 1, and no fee vs. $10 vs. $25 fee in Study 2) and benefit structures (self benefit, altruistic benefit, and combination self/altruistic benefit in both Studies 1 and 2) on intentions to join a loyalty program (LP) and future spending if one is willing to join the LP. Using random assignment in a between-subjects research designs and general linear modeling analyses in two different studies, this research finds that an annual fee does decrease consumers’ intentions to join an LP but may also increase the future spending intentions of customers who join a fee-based LP. Furthermore, a benefit structure that shares the reward with both the customer and a charity of his or her choice is found to be an appealing option. Thus, offering a fee-based LP that provides benefits to both the user and a charity could increase a retailer’s profitability and competitiveness through additional revenues, differentiation, and image enhancement.

Suggested Citation

  • Eason, C. Clifton & Bing, Mark N. & Smothers, Jack, 2015. "Reward me, charity, or both? The impact of fees and benefits in loyalty programs," Journal of Retailing and Consumer Services, Elsevier, vol. 25(C), pages 71-80.
    • Handle: RePEc:eee:joreco:v:25:y:2015:i:c:p:71-80
    DOI: 10.1016/j.jretconser.2015.04.001
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    References listed on IDEAS

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    Cited by:

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    6. Mantovani, Danielle & de Andrade, Lucas Magalhães & Negrão, Angela, 2017. "How motivations for CSR and consumer-brand social distance influence consumers to adopt pro-social behavior," Journal of Retailing and Consumer Services, Elsevier, vol. 36(C), pages 156-163.
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