Framing as status or benefits? Consumers’ reactions to hierarchical loyalty program communication

Abstract

Purpose

A fundamental aspect of hierarchical loyalty programs is that some consumers get rewards that others do not. Despite the widespread use of such programs, academics have long debated whether these benefits are outweighed by the potential negative impact of the differential treatment of customers. This study aims to extend our understanding, examining the impact of message framing on consumers’ reactions to hierarchical loyalty structures.

Design/methodology/approach

Three online studies were conducted. Study 1 uses advertisements to manipulate the message frame’s emphasis (benefits vs status). Study 2 manipulates consumers’ frame of thought by directing their attention to either changes in benefits or status. Finally, Study 3 uses the proposed framework to reconcile contradictory findings from past research.

Findings

Low-frequency customers who do not expect to qualify for a superior customer tier tend to reject hierarchical programs when thinking about status. In contrast, when these customers think about concrete rewards, loyalty program messages produce no negative reactions. High-frequency customers are positively affected by communication regardless of the type of benefits framed.

Research limitations/implications

All studies were done online, potentially limiting the external validity of the results. Nevertheless, the impact of message framing on perceptions about the loyalty program seems to be quite robust across different studies and manipulations.

Practical implications

When communicating with low-frequency customers, managers should avoid promising status; customers should instead be motivated based on concrete rewards. High-frequency customers are indifferent to alternative emphasis of communication frames.

Originality/value

Marketing academics have acknowledged the importance of being able to reward top customers without demotivating light and moderate users. This research is the first to provide a solution to this issue.

Citation

Palmeira, M., Pontes, N., Thomas, D. and Krishnan, S. (2016), "Framing as status or benefits? Consumers’ reactions to hierarchical loyalty program communication", European Journal of Marketing, Vol. 50 No. 3/4, pp. 488-508. https://doi.org/10.1108/EJM-02-2014-0116