Although loyalty programs (LPs) with different redemption levels offering different reward options have frequently been used, our understanding of customer redemption behavior is rather limited. The current research suggests that a consumer’s decision to redeem a reward may depend on the number of options offered at different redemption levels. Four studies show that redemption levels with a higher number of options are perceived as relatively more attractive than levels with a lower number of options, which increases the likelihood that a consumer will redeem a reward. However, this effect weakens when the redemption level with fewer options offers familiar brands. Our findings provide novel theoretical insights into how consumers react to LPs with different redemption levels. From a managerial perspective, this research suggests strategies that retailers can use to restructure their LPs and increase the likelihood of retaining consumers over the long term.
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