Framing as status or benefits? Consumers' reactions to hierarchical loyalty program communication
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 extends 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. Our research is the first to provide a solution to this issue.