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Status demotion in hierarchical loyalty programs (HLPs) has received considerable academic attention. However, little is known about whether status demotion engenders two widely recognised behavioural intentions: revenge and avoidance. This study aims to make up this gap by examining the effects of status demotion on customers’ revenge and avoidance intentions. The underlying mechanism and boundary conditions of these effects are also explored.

Two studies were conducted to test the hypotheses. Study 1 was conducted using a structured survey from 347 active HLP members/customers of Chinese airlines. Study 2 used an online experiment amongst 268 active HLP airline customers in Australia. Partial least squares-based structural equation modelling and Hayes’ (2013) PROCESS macro were used for data analysis.

The results of Study 1 show that status demotion increases customers’ revenge and avoidance intentions simultaneously. Meanwhile, these effects are more significant for demoted customers with an external locus of causality than those with an internal locus of causality and demoted customers with higher entitlement tend to possess more revenge intentions than avoidance intentions. Study 2 further identified perceived inequity as a mechanism, which links status demotion to revenge and avoidance intentions of demoted customers.

This study examines demoted customers’ revenge and avoidance intentions amongst Chinese and Australian airline travellers. Future research may focus on actual behaviour and test the current study’s model in cross-cultural and cross-industry settings.

Managers should deal with demotion decisions carefully as the failure to manage outraged customers may weaken customer-company relationships.

This study extends the existing literature on relationship marketing and HLPs by offering a better understanding of how and under what conditions status demotion elicits customers’ intentions for revenge and avoidance.

The purpose of this paper is to offer a better understanding of managing engagement in an emerging economy service. It explores the role of organisational climates for initiative and psychological safety as the key drivers of employee engagement (EE). It also examines the effects of EE on customer engagement (CE) and, in turn, on relationship commitment and switching intention.

Data were collected through a structured survey of service employees and customers of 69 bank branches in Bangladesh using two survey instruments. Responses were collected from 156 employees and 316 customers. A dyadic data set was created by matching customer data with the corresponding employee data collected from each bank branch. Structural equation modelling using AMOS (version 22.0) was employed for data analysis.

Organisational climates for initiative and psychological safety positively influence EE. In turn, EE significantly influences CE which has a significant impact on customer relationship commitment and switching intention.

Future research could consider actual customer behaviour, such as repeat purchase, as the key outcome variable.

The findings emphasise that investment by service managers in organisational resources to facilitate favourable climates for initiative and psychological safety would engage employees at work, which would ultimately help to attain CE and commitment, and reduce switching intention.

This research extends the existing engagement literature with empirical evidence supporting two new EE drivers and two new CE outcomes. It offers a better understanding of managing engagement in the financial services industry of an emerging economy, focussing on the relationship chain from organisational climate to EE, CE and customer-based outcomes.