Communication concepts and applications

Kivetz, Ran & Itamar Simonson. (2002). Earning the right to indulge: Effort as a determinant of customer preferences toward frequency program rewards. JMR, Journal of Marketing

Research, 39(2), 155-170. Retrieved November 6, 2009, from ABI/INFORM Global.

(Document ID: 119271562).

Almost everyone is familiar with customer rewards programs. The extent to which they influence consumer behavior has not been sufficiently research, however, and the authors Ran Kivetz and Itamar Simonson of the 2002 article "Earning the right to indulge: Effort as a determinant of customer preferences toward frequency program rewards" from Journal of Marketing Research attempted to understand how the level of effort that participants in such programs are willing to invest affects their behavior for certain types of rewards over other types of rewards. They authors found that the higher the level of difficulty to obtain a reward, the greater the tendency to choose luxury rewards, and the lower the level of 'guilt' in choosing such options. Luxury purchases tend to provoke guilt but getting luxuries for 'free' can mitigate this anxiety.

This hypothesis was born out in one study that discovered when program requirements were low, the percentage of individuals choosing the luxury reward was 26% but when program requirements were high the choice of the participants for the luxury reward escalated 41%. (Preliminary research was used to classify rewards as luxuries or necessities). The impact of program requirements on preferred rewards was significantly stronger among respondents who tend to feel guilt when spending money on luxuries and regardless of their income, and stronger for work-related efforts than pleasure-related efforts across all demographic groups. But in contrast to greater consumption efforts required of participants, a higher monetary cost of obtaining rewards (membership fees) shifted preference away from luxury rewards and toward necessity-type rewards.