Hedonic adaptation to preferential treatment: the moderating effect of the structural characteristics of loyalty programs

Purpose - As internet dividends are gradually disappearing, loyalty programs have become the panacea for monetizing traffic, attracting new customers and retaining existing customers. Improving their effectiveness has thus become key to enterprises’ market competitiveness. However, member customers’ hedonic adaptation to this relationship strategy undermines its effectiveness. Based on the hedonic adaptation theory, this study aims to analyze the process of member customers' hedonic adaptation to preferential treatment in loyalty programs and explore the boundary conditions of alleviating this effect. Design/methodology/approach - This study surveyed 271 member customers in China and tested the hypothesized relationships using structural equation modeling and multigroup analysis. Findings - Preferential treatment suffers from hedonic adaptation to member customer engagement and customer gratitude, and customer tenure is a key condition for these effects. Customer gratitude is an intermediary mechanism that explains the hedonic adaptation effect of preferential treatment to member customers engagement. In addition, the structural characteristics of loyalty programs form the boundary condition that alleviates hedonic adaptation. The authors found that high-tier and -payment strategies are more likely to mitigate hedonic adaptation of preferential treatment to customer gratitude. Originality/value - This study elucidates the factors that influence the effectiveness of preferential treatment and provides constructive insights into customer relationship management and for improving enterprise performance.