Do Loyalty Program Membership and Status Levels affect Service Customers' Choices?

Otago University
Publication Type:
Conference Proceeding
Proceedings of the 2007 ANZMAC Conference 3Rs: Reputation, Responsibility and Relevance, 2007, pp. 2573 - 2579
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This paper examines the effects of loyalty program membership as such, and impending upgrade or downgrade to a different status level, on customer brand preferences for flights and hotels. The results show that members have a significantly higher brand preference for their respective airline or hotel group than non-members, and those close to a change in status level have an even stronger brand preference compared to those who are not, which is also reflected in their willingness to pay. The empirical findings illustrates the ability of frequent traveller programs to affect purchase choices if the customer fears that earned status benefits are about to be lost.
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