Interesting Results

Earning Luxury Rewards

A 2002 investigation of reward (loyalty) programmes¹ found that as the difficultly of earning a reward increases, consumer preferences move away from necessity rewards towards luxury rewards. With higher programme requirements, consumers are more likely to prefer luxury rewards and are more likely to join a loyalty programme that offers a luxury reward. They also found that when programme requirements are held constant but the individual consumer’s effort is greater, the shift in preference towards luxuries is still observed. This effect was stronger among consumers who tend to feel guilty about buying luxuries and among those who earned rewards through their work activities.

¹ Kivetz, Ran and Itamar Simonson (2002), “Earning the Right to Indulge: Effort as a Determinant of Customer Preferences Toward Frequency Program Rewards”, Journal of Marketing Research, 39(2), 155-170.