Perceived investment, effort, and reward type on intention to join loyalty programs membership

Abstract

Over the recent years, loyalty programs have become quite common. However, the factors that influence consumers’ motivation to join and actively participate in such programs require further investigation. Most of these programs vary in terms of reward and effort. Rewards can be hedonic or utilitarian. The reward distance requires high (vs. low) level of effort by the consumer. How these two variables interact to explain consumers’ intention to join loyalty programs is the main goal of this study. In the conducted experiment, this paper demonstrates that high (vs. low) effort required to achieve the reward increases the preference for hedonic (vs. utilitarian) rewards. However, this behavior is moderated by the consumers’ perception about the investment of the company in the relationship. The hedonic reward at higher efforts will influence participation intention if consumers perceive that companies are also investing in the relationship. Otherwise, this effect becomes negative.

Keywords: loyalty programs, reward, effort, companies’ investment, fairness.