Sage Journals: Discover world-class research

Abstract

Reward programs offer rewards, and with further progression toward these rewards, customers become more motivated. This acceleration is called a reward gradient. This study proposes prospect theory as the underlying mechanism of the reward gradient and suggests a nonlinear relationship between motivation and progress level (low vs. middle vs. high). A numerical simulation based on the mathematical model and experiments were conducted to see how the expected values of rewards can change as progress is made, and how this further affects motivation. The results identified a stronger acceleration in the expected value after reaching a middle point of the reward achievement, which is due to a larger deviation in the loss value than the gain value. These findings can help restaurants and tourism companies implement a dynamic perspective in reward programs for enhancing customers’ reward gradient behaviors.

Keywords

hospitality reward program customer loyalty nonlinear reward gradient behavior prospect theory motivation

Get full access to this article

View all access options for this article.

References

Abdellaoui

(2000). Parameter-free elicitation of utility and probability weighting functions. Management Science, 46(11), 1497–1512. https://doi.org/10.1287/mnsc.46.11.1497.12080

Adams

S. J.

(1965). Inequity in social exchange. Advances in Experimental Social Psychology, 2, 267–299. https://doi.org/10.1016/S0065-2601(08)60108-2

Bagchi

(2011). Illusionary progress in loyalty programs: Magnitudes, reward distances, and step-size ambiguity. Journal of Consumer Research, 37(5), 888–901. https://doi.org/10.1086/656392

Baloglu

Zhong

Y. Y.

Tanford

(2017). Casino loyalty: The influence of loyalty program, switching costs, and trust. Journal of Hospitality & Tourism Research, 41(7), 846–868. https://doi.org/10.1177/1096348014550922

Bonezzi

Brendl

C. M.

De Angelis

(2011). Stuck in the middle: The psychophysics of goal pursuit. Psychological Science, 22(5), 607–612. https://doi.org/10.1177/0956797611404899

Bleichrodt

Pinto

J. L.

(2000). A parameter-free elicitation of the probability weighting function in medical decision analysis. Management Science, 46(11), 1485–1496. https://doi.org/10.1287/mnsc.46.11.1485.12086

Chaabane

A. M.

Pez

(2017). “Make me feel special”: Are hierarchical loyalty programs a panacea for all brands? The role of brand concept. Journal of Retailing and Consumer Services, 38, 108–117. https://doi.org/10.1016/j.jretconser.2017.05.007

Chang

(2020). Different status reevaluation period and communication styles for top-tier and bottom-tier customers in multi-tier loyalty programs. European Journal of Marketing, 54(12), 1–25. https://doi.org/10.1108/EJM-10-2018-0713

Chen

H. S.

Liang

C. H.

Liao

S. Y.

Kuo

H. Y.

(2020). Consumer attitudes and purchase intentions toward food delivery platform services. Sustainability, 12(23), Article 10177. https://doi.org/10.3390/su122310177

10.

Choi

Kim

(2013). Effects of a reward program on inducing desirable customer behaviors: The role of purchase purpose, reward type and reward redemption timing. International Journal of Hospitality Management, 32, 237–244. https://doi.org/10.1016/j.ijhm.2012.06.003

11.

Danaher

P. J.

Sajtos

Danaher

T. S.

(2020). Tactical use of rewards to enhance loyalty program effectiveness. International Journal of Research in Marketing, 37(3), 505–520. https://doi.org/10.1016/j.ijresmar.2020.02.005

12.

Drèze

Nunes

J. C.

(2011). Recurring goals and learning: The impact of successful reward attainment on purchase behavior. Journal of Marketing Research, 48(2), 268–281. https://doi.org/10.1509/jmkr.48.2.268

13.

Graham

(2023, February 9). The best Qantas Frequent Flyer status runs in 2023. Australian Frequent Flyer. https://www.australianfrequentflyer.com.au/qantas-status-runs/

14.

Gutt

von Rechenberg

Kundisch

(2020). Goal achievement, subsequent user effort and the moderating role of goal difficulty. Journal of Business Research, 106, 277–287. https://doi.org/10.1016/j.jbusres.2018.06.019

15.

Hull

C. L.

(1932). The goal-gradient hypothesis and maze learning. Psychological Review, 39(1), 25–43. https://psycnet.apa.org/doi/10.1037/h0072640

16.

Hwang

Mattila

A. S.

(2018). Is it my luck of loyalty? The role of culture on customer preferences for loyalty program reward. Journal of Travel Research, 57(6), 769–778. https://doi.org/10.1177/0047287517718353

17.

Kahneman

Tversky

(1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–292. https://doi.org/10.2307/1914185

18.

Kahneman

Tversky

(1984). Choices, values, and frames. American Psychologist, 39(4), 341–350. https://psycnet.apa.org/doi/10.1037/0003-066X.39.4.341

19.

Kivetz

(2003). The effects of effort and intrinsic motivation on risky choice. Marketing Science, 22(4), 477–502. https://doi.org/10.1287/mksc.22.4.477.24911

20.

Kivetz

Urminsky

Zheng

(2006). The goal-gradient hypothesis resurrected: Purchase acceleration, illusionary goal progress, and customer retention. Journal of Marketing Research, 43(1), 39–58. https://doi.org/10.1509/jmkr.43.1.39

21.

Koo

Fishbach

(2008). Dynamics of self-regulation: How (un)accomplished goal actions affect motivation. Journal of Personality and Social Psychology, 94(2), 183–195. https://psycnet.apa.org/doi/10.1037/0022-3514.94.2.183

22.

Koo

Fishbach

(2012). The small-area hypothesis: Effects of progress monitoring on goal adherence. Journal of Consumer Research, 39(3), 493–509. https://doi.org/10.1086/663827

23.

Liu

(2007). The long-term impact of loyalty programs on consumer purchase behavior and loyalty. Journal of Marketing, 71(4), 19–35. https://doi.org/10.1509/jmkg.71.4.019

24.

Park

J. Y.

Jang

S. S.

(2014). Sunk costs and travel cancellation: Focusing on temporal cost. Tourism Management, 40, 425–435. https://doi.org/10.1016/j.tourman.2013.08.005

25.

Phuah

K. T.

M. W.

Sandhu

S. K.

Kassim

U. K.

(2018). Green attitude and purchase intention towards environmental friendly product. Journal of Emerging Economies and Islamic Research, 6(1), 17–25. https://doi.org/10.24191/jeeir.v6i1.8770

26.

Prelec

(1998). The probability weighting function. Econometrica, 66(3), 497–527. https://doi.org/10.2307/2998573

27.

Nunes

J. C.

Drèze

(2006). The endowed progress effect: How artificial advancement increases effort. Journal of Consumer Research, 32(4), 504–512. https://doi.org/10.1086/500480

28.

Resonen

Komppula

Murphy

(2019). Plastic loyalty- Investing loyalty card programs for a Finnish hotel chain. Tourism Management, 73, 115–122. https://doi.org/10.1016/j.tourman.2019.01.023

29.

Song

T. H.

Kim

S. Y.

W. L.

(2017). Developing an effective loyalty program using goal-gradient behavior in tourism industry. Journal of Travel & Tourism Marketing, 34(1), 70–81. https://doi.org/10.1080/10548408.2015.1130110

30.

Song

T. H.

(2014). The application of the goal-gradient hypothesis and the temporal construal theory to customer loyalty programs. Asia Marketing Journal, 16(1), 1–12. https://doi.org/10.53728/2765-6500.1524

31.

Stourm

Bradlow

E. T.

Fader

P. S.

(2015). Stockpiling points in linear loyalty programs. Journal of Marketing Research, 52(2), 253–267. https://doi.org/10.1509/jmr.12.0354

32.

Tanford

(2013). The impact of tier level on attitudinal and behavioral loyalty of hotel reward program members. International Journal of Hospitality Management, 34, 285–294. https://doi.org/10.1016/j.ijhm.2013.04.006

33.

Touré-Tillery

Fishbach

(2011). The course of motivation. Journal of Consumer Psychology, 21(4), 414–423. https://doi.org/10.1016/j.jcps.2011.04.004

34.

Touré-Tillery

Fishbach

(2017). Too far to help: The effect of perceived distance on the expected impact and likelihood of charitable action. Journal of Personality and Social Psychology, 112(6), 860–876. https://psycnet.apa.org/doi/10.1037/pspi0000089

35.

Tversky

Fox

C. R.

(1995). Weighing risk and uncertainty. Psychological Review, 102(2), Article 269. https://psycnet.apa.org/doi/10.1037/0033-295X.102.2.269

36.

Tversky

Kahneman

(1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty, 5, 297–323. https://doi.org/10.1007/BF00122574

37.

Walster

William

Walster

W. G.

Berscheid

(1978). Equity: Theory and research. Allyn & Bacon.

38.

Wang

Lewis

Cryder

Sprigg

(2016). Enduring effects of goal achievement and failure within customer loyalty programs: A large-scale field experiment. Marketing Science, 35(4), 565–575. https://doi.org/10.1287/mksc.2015.0966

39.

Gonzalez

(1996). Curvature of the probability weighting function. Management Science, 42(12), 1676–1690. https://doi.org/10.1287/mnsc.42.12.1676

40.

Yang

M. X.

Irina

Y. Y.

Chan

Zeng

K. J.

(2020). Retain or upgrade: The progress-framing effect in hierarchical loyalty programs. International Journal of Hospitality Management, 89, Article 102562. https://doi.org/10.1016/j.ijhm.2020.102562

41.

Zeng

K. J.

Irina

Y. Y.

Yang

M. X.

Chan

(2022). Communication strategies for multi-tier loyalty programs: The role of progress framing. Tourism Management, 91, Article 104460. https://doi.org/10.1016/j.tourman.2021.104460

42.

Zhang

Gao

(2016). Wanting ever more: Acquisition procedure motivates continued reward acquisition. Journal of Consumer Research, 43(2), 230–245. https://doi.org/10.1093/jcr/ucw017

Supplementary Material

Please find the following supplemental material available below.

For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.

For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.

0.00 MB

0.14 MB

Nonlinear Reward Gradient Behavior in Customer Reward and Loyalty Programs: Evidence From the Restaurant Industry

Abstract

Keywords

Get full access to this article

References

Supplementary Material