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Customer demotion in hierarchical loyalty programmes

Author

Listed:
  • Geert van Berlo
  • Josée Bloemer
  • Vera Blazevic

Abstract

Hierarchical loyalty programmes are popular in many service industries, as a means to tie customers to the company and improve customer relationships. In these programmes, customers obtain more benefits if they spent more but are demoted if they spent less. This study focuses on demotion and suggests that customer demotion can have an asymmetrical negative effect on customers' trust, commitment, and loyalty. The effect appears strongest for demoted customers with an external locus of causality. An experimental study also shows that customer loyalty is lower for demoted customers than for customers who were never elevated.

Suggested Citation

  • Geert van Berlo & Josée Bloemer & Vera Blazevic, 2014. "Customer demotion in hierarchical loyalty programmes," The Service Industries Journal, Taylor & Francis Journals, vol. 34(11), pages 922-937, August.
    • Handle: RePEc:taf:servic:v:34:y:2014:i:11:p:922-937
    DOI: 10.1080/02642069.2014.915950
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    Cited by:

    1. Banik, Shanta & Gao, Yongqiang & Rabbanee, Fazlul K., 2019. "Status demotion in hierarchical loyalty programs and its effects on switching: Identifying mediators and moderators in the Chinese context," Journal of Business Research, Elsevier, vol. 96(C), pages 125-134.
    2. Huachao Gao & Yinlong Zhang, 2022. "How does power distance belief impact consumers’ responses to demotion in hierarchical loyalty programs? The dual processes of monetary and psychological losses," Journal of the Academy of Marketing Science, Springer, vol. 50(4), pages 822-840, July.

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