Illusionary Progress in Loyalty Programs: Magnitudes, Reward Distances, and Step-Size Ambiguity

Abstract

Abstract Loyalty programs offer rewards via mediums of different magnitudes (e.g., “$6 off when you accumulate 1,000 [100] points. Earn 10 [1] points/dollar”). The program medium presents two key pieces of information: reward distance (points required to redeem reward) and step size (points earned per dollar). In higher-magnitude (vs. lower-magnitude) programs, both reward distances (1,000 vs. 100) and step sizes (10 vs. 1 point[s]/dollar) are larger. How do these two pieces of information affect consumers' postenrollment inferences of progress, store loyalty, and recommendation likelihood? Do consumers always integrate both pieces? We identify a moderator, step-size ambiguity, and show that when ambiguity is high, only reward distance affects inferences. When ambiguity is lower, consumers integrate step size with reward distance, but in a biased manner. Implications arise in goal following and in physical and psychological distance estimation contexts (e.g., weight loss, savings) where distances and step sizes can vary (e.g., as a function of units: kilograms vs. pounds), but especially in loyalty rewards contexts.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 112 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.