Erin Gillespie publishes article in Journal of Business Research
The assistant professor of marketing’s research explores the effects of loyalty program fees on program perceptions and engagement.
Erin Gillespie, assistant professor of marketing in the Martha and Spencer Love School of Business, co-authored the article "The effect of loyalty program fees on program perceptions and engagement”, which appears in the Journal of Business Research.
Gillespie and her co-authors, Stephanie Noble from the University of Tennessee, and Christy Ashley from University of Rhode Island, examined how to best structure fee-based loyalty programs, as well as the differences between fee-paying and non-paying customers.
The research illustrates that managers should pay careful consideration to how their loyalty programs are worded, especially the wording of denominations of accrual (e.g., points versus dollars).
The article’s abstract reads:
“Retailers may introduce loyalty program enrollment fees for several reasons, including to offset the costs of the program. The principle of commitment-consistency and sunk cost effects, which suggest consumers who pay a fee-paying consumers have a higher value to the firm and exhibit behavioral loyalty, while the zero-price effect predicts the opposite. Three studies show: consumers who pay to participate in a loyalty program have more favorable attitudes, more positive evaluations of value for the money and benefits than non-paying members (Study 1); and altering the wording of denominations of accrual can affect willingness to join fee-based programs (Studies 2 and 3). The results suggest a boundary effect to the numerosity heuristic. Presenting reward credit accumulations in higher numbers may be advantageous when program fees are high, since it shifts the focus of processing from the fee to the rewards. However, standard units may be more favorable when program fees are low.”