Casino Customers’ Intention to Join a Loyalty Rewards Program

Abstract

Companies have long sought to use a loyalty rewards program as a way to maintain loyal customers, encourage purchasing, and attract new customers by providing certain incentives. Despite the fruitful research on the impact of such programs on customers’ purchasing behavior and loyalty, there is limited research on factors influencing customers’ likelihood to join a program in the casino industry. To bridge the gap, the present research aims to examine the combined effect of number of tiers and gender on customers’ attitudes and intention to join a loyalty rewards program. The results indicate that male customers exhibited more positive attitudes and higher level of intention to join a program that has four tiers (vs. two tiers). Conversely, female customers’ attitudes and joining intentions are stronger when facing a loyalty rewards program containing two tiers (vs. four tiers). The underlying psychological mechanism is individuals’ need for status (NFS).

Keywords

loyalty rewards program tiers gender need for status casino

The rapid expansion of the casino industry and other gaming opportunities has increased competition among firms. When the market begins to saturate and competition intensifies, customer retention becomes an important approach to marketing (Prentice & Wong, 2015). One of the popular retention strategies used by casinos is the loyalty rewards program. Almost every casino is using loyalty programs and elite membership status as key components of their marketing strategies (Barsky & Tzolov, 2010). Loyalty rewards programs have certain benefits such as enhancing brand loyalty by creating switching costs, increasing operational profit by avoiding price competition, and solving oversupply problems due to seasonality of demand (Yi & Jeon, 2003). In the casino industry, loyalty rewards programs typically involve providing a membership card that is swiped at all transactions; this transactional data plus demographics will then be used to structure offers and rewards (Barsky & Tzolov, 2010). Common rewards include, but are not limited to, having hosts provide tailored services, complimentary meals, free hotel stays, and private jets (Hendler & LaTour, 2008).

One particularly important aspect of a loyalty rewards program is its structure—the number and size of tiers—and its impact on customers’ perceptions of exclusivity and status (Arbore & Estes, 2013). By establishing well-defined hierarchies (“tiers”) with distinct benefits associated with spending levels, loyalty rewards programs differentiate high-end from low-end customers, which leads to “a whole new stratification of consumer society” (Brady, 2000). Some loyalty rewards programs divide customers into two groups while others feature more than two tiers (e.g., gold, silver, and bronze; Arbore & Estes, 2013). Research has shown that the tiered structure influences individuals’ sense of status such that more tiers and smaller members within a tier increase perceived status and further influence consumers’ decision making (Drèze & Nunes, 2009).

Although the desire for status has been widely acknowledged as a powerful behavior driver (Martineau, 1957; Veblen, 1967), research has shown that there is a gender difference in terms of needs for status (Conway, Pizzamiglio, & Mount, 1996). Such a gender difference originated from the social role theory. As men occupy more demanding positions in the workplace, these positions call for an agentic orientation; however, as women frequently occupy roles such as homemaker or secretary, these positions require her to be attentive to others’ needs and to be communal (Eagly, 1987). Thus, men more than women are seeking social status, prestige, dominance, and achievement (Schwartz & Rubel, 2005).

The current study aims to examine the joint effect of the tiered structure and gender on consumers’ attitudes and intention to join a casino’s loyalty rewards program. In the next section, we review the literature in the following areas: loyalty rewards program, tiered structure, gender, and need for status (NFS).

Literature Review

All loyalty rewards programs are created to increase profitability. The means of achieving this goal includes two major strategies: increasing customer purchasing behavior and increasing customer loyalty through developing closer bonds with customers (Meyer-Waarden, 2013). A loyalty program rewards its members on the basis of their past, current, or future value to the firm, which is usually achieved through the accumulation of some form of loyalty program “points” based on spending behavior. Thus, rewards help to create perceived value and satisfaction, and to improve economic decision making and motivation for purchasing. One study found that consumers often view rewards as a form of extra currency that can be used for luxury purchases and self-gifts (Smith & Sparks, 2009). This holds especially true within the casino environment, as casino loyalty programs often let customers use points earned to purchase goods. Loyalty rewards programs are typically structured in tiers to allow companies the flexibility to segment members within the program. Reward tiers are considered effective because they build a sense of identity within each tier that can lead to commitment to the brand (McCall & Voorhees, 2010). A number of studies have examined the relationship between tier and status (Arbore & Estes, 2013; Drèze & Nunes, 2009; Kopalle, Neslin, Sun, & Swaminathan, 2012; Tanford, 2013). For instance, Drèze and Nunes (2009) found that tiers provide a feeling of status as members compare themselves to other levels. Different hierarchical structures of the loyalty rewards program influence customers’ self-evaluation (perceptions of how high they rank) and the degree of self-enhancement (what it means to be at the top). Arbore and Estes (2013) also examined the relationship between structure and status levels (i.e., exclusivity) perceived by members. The results of their study suggest that the effect of structure on status perceptions depends on the exclusivity of the industry. For the more exclusive industries such as airlines and hotels, perceived status in the top tier of the loyalty program increased as the number of tiers increased. However, loyalty program structure had no effect on perceived status in the supermarket industry, which is low in perceived exclusivity. Based on the literature review, we conclude that loyalty rewards programs with more tiers would be more attractive to customers high in NFS.

Consumers’ NFS is defined as “the motivational process by which individuals strive to improve their social standing through conspicuous consumption of consumer products that confer and symbolize status both for the individual and surrounding significant others” (Eastman, Goldsmith, & Flynn, 1999, p. 42). Previous research dictates that in general, men and women differ in their NFS. That is, men care (more than women) about relationships with larger groups whereas women care (more than men) about individual, personal relationships (Patterson, 2007). Success in groups for men depends highly on group status (more than in personal relationships). They are motivated to perceive themselves “as not merely good and worthy” but “as better than others” (Henderson, Beck, & Palmatier, 2011). According to Baumeister and Sommer (1997), “the achievement of dominant status has long been a way for men (but not for women outside of the domestic circle) to achieve power over others” (p.39). In contrast to men, high status has been a relatively less desirable characteristic for a woman to be socially accepted (Baumeister & Sommer, 1997; Baumeister & Vohs, 2004; Buss & Schmitt, 1993). Instead of group status, women focus more on individual, personal relationships (Baumeister & Sommer, 1997) and are more concerned with group harmony and advancing the group; therefore, showing off to the others about their social status is not as important as it is to men (Barone & Roy, 2010). In fact, due to their communal orientation, women may actually avoid things that elevate them through “red carpet treatment” because they feel uncomfortable when given status enhancements (Henderson et al., 2011).

Based on the literature review, we hypothesize the following:

Hypothesis 1 (H1): Female customers will have a more positive attitude and a higher level of joining intention toward a program if it has two tiers.

Hypothesis 2 (H2): Male customers will have a more positive attitude and a higher level of intention to join a program if contains four tiers.

Method

A 2 (Tiers: two vs. four) × 2 (Gender: male vs. female) quasi experimental design was used with tiers being manipulated and gender being measured. A total of 164 participants recruited from Amazon Mechanical Turk completed the survey. A random sample approach was used, and customers who have no purchasing experiences in casinos were screened out. Participants were asked to indicate their gender at the beginning of the survey and then randomly assigned into one of the tier conditions (two vs. four). Participants were 83 male, with an average age of 32 and a median income level of US$40,000 to US$59,999. In terms of education level, 68% of the participants held a college degree. The majority of the participants were Caucasian (75%). Participants were first told to imagine that the casino they usually go to offers a loyalty program. Then they were given a description of the loyalty program, which was either a two-tier condition or a four-tier scenario. The selection of two versus four tiers was based on the results of our pretest.

Two Tiers

Imagine that the casino you usually go to offers a loyalty program. This particular casino offers two different tiers of cards. Upon signing up, every member receives red-level status. You earn points for virtually every dollar you spend—including gaming. For every dollar you spend on your hotel stay, dining, entertainment, or spa, you earn 25 points. For slot play, you receive two points for every dollar you spend. For table games, you earn points based on length of play, average bet, and game type. After you accumulate 200,000 points within a calendar year, you become a gold-level member of the loyalty program. The gold-level member is the casinos highest achievable status. As a gold-member, you are entitled to exclusive access to the gold lounge restaurant, priority parking, front of the line promotional pickup, exclusive prize drawings, guaranteed hotel reservations, and 25% off at all gift shops.

Four Tiers

Imagine that the casino you usually go to offers a loyalty program. This particular casino offers four different tiers of cards. Upon signing up, every member receives sapphire-level status. You earn points for virtually every dollar you spend—including gaming. For every dollar you spend on your hotel stay, dining, entertainment, or spa, you earn 25 points. For slot play, you receive two points for every dollar you spend. For table games, you earn points based on length of play, average bet, and game type. The points needed to achieve each level status are as follows:

Sapphire: entry level.

Pearl: 25,000 points.

Emerald: 75,000 points.

Platinum: 200,000 points.

The Platinum-level member is the casino’s highest achievable status. As a Platinum-member, you are entitled to exclusive access to the platinum lounge restaurant, priority parking, front of the line promotional pickup, exclusive prize drawings, guaranteed hotel reservations, and 25% off at all gift shops.

You earn points for virtually every dollar you spend—including gaming. For every dollar you spend on your hotel stay, dining, entertainment, or spa, you earn 25 points. For slot play, you receive two points for every dollar you spend. For table games, you earn points based on length of play, average bet, and game type.

Customers’ attitude (negative/positive, bad/good, and unfavorable/favorable; Cronbach’s α = .90) and intention to join the rewards program (“Please indicate how much you think you would like joining this loyalty rewards program” and “Please indicate how interested you would be in joining this program”; r = .66, p < .001), which was adapted from Karmarkar and Tormala (2010), were measured next. In addition, individuals’ NFS was measured using Eastman et al.’s (1999) five-item scale (e.g., “I would buy a product just because it has status”; Cronbach’s α = .88).

Results

MANOVA was performed with customers’ attitudes and intention to join the rewards program as dependent variables (DVs). The results show a significant interaction effect of number of tiers and gender on the DVs—attitude: F(1, 160) = 8.97, p < .01; behavioral intention: F(1, 160) = 8.90, p < .01. To further explore the interaction effects, planned contrasts were performed on each DV. The results indicate that male customers exhibited more positive attitudes, M_2tier = 5.75, M_4tier = 6.21, t(81) = −2.18, p < .05, and higher level of intention to join the program, M_2tier = 5.35, M_4tier = 5.88, t(81) = −2.21, p < .05, if it has four tiers (vs. two tiers). However, female customers’ attitudes, M_2tier = 6.09, M_4tier = 5.53, t(79) = 2.08, p < .05, and intention to join, M_2tier = 5.80, M_4tier = 5.25, t(79) = 2.02, p < .05, were stronger when a loyal rewards program offered only two tiers (vs. four tiers). Thus, H1 and H2 were supported.

To test the NFS × Tier as the mediator of the Gender × Tier effects, we followed Hayes’s (2013) process procedure (Model 15) with the recommended bias-corrected bootstrapping technique. First, we tested the effect of gender on the NFS. The results indicated that gender predicted the NFS and that males rated higher on the NFS than females, B = −0.70, t = −4.14, p < .01; NFS: M_male = 5.96, M_female = 4.90, t(162) = 5.04, p < .001. Second, we examined the effect of the NFS × Tier on the DVs. Results showed that the interaction between the NFS and the tier predicted attitude, B = 1.04, t(160) = 6.40, p < .001, and joining intention, B = 0.83, t(160) = 4.01, p < .001. The NFS positively predicted attitude, B = 0.61, t(78) = 8.63, p < .001, and joining intention, B = 0.36, t(78) = 2.90, p < .01, when it was four tiers. For the two tiers condition, the NFS negatively predicted the DVs—Attitude: B = −0.43, t(82) = −2.71, p < .01; Joining intention: B = −0.46, t(82) = −3.12, p < .01. Last, we entered the NFS, gender, tier, NFS × Tier, and Gender × Tier to the regression model. The results indicated that the Gender × Tier interaction became insignificant on attitude, B = −0.17, t(158) = −0.96, p = .33, and joining intention, B = −0.37, t(158) = −1.31, p = .19. More importantly, the mediation effect was significant—Attitude: 95%, B = −0.56, confidence interval (CI) = [−0.89, −0.33]; Joining intention: 95%, B = −0.19, CI = [−0.52, −0.01]. Taken together, the results suggested that the NFS × Tier fully mediated the interaction effects of gender and tier on attitude and joining intention.

Discussion

Casinos use their loyalty rewards program to reward and motivate their customers and have done this successfully, despite the fact that they have little insight about the differences in gender. This study investigated casino customers’ intention to join a loyalty rewards program based on two things: gender and number of tiers, with the use of “need for status” as the underlining psychological mechanism. Our findings make several contributions. First, we tested the joint effect of the number of tiers and gender on customers’ intention to join a loyalty rewards program. This contributes to the existing literature on tiers (Drèze & Nunes, 2009) and gender (Baumeister & Sommer, 1997) by showing empirically that male and female customers differ in their responses toward loyalty rewards programs. Second, we proposed individuals’ NFS as the underlying psychological mechanism for choosing a loyalty rewards program. These results contribute to the growing interest of gender identity (Baumeister & Sommer, 1997). We agree that the differences between genders are not only revealed in big domains such as a focus of social life on close individual relationships versus on groups but also exhibit themselves in response to differences in preference (e.g., simply framing a loyalty rewards program with more or less tiers).

Our findings have clear and direct implications for the design of loyalty rewards programs. Managerially, casino managers should attempt to structure their loyalty rewards program toward their target market. That is, casinos should evaluate its customer base to see whether it favors women over men, or vice versa. When designing a loyalty program, which is largely women, the loyalty rewards program design elements should focus on one with less tiers and more individualized. Conversely, when designing a loyalty program with a male centric customer base, managers should offer more tiers that incorporate status and visibility within large groups. Creating these mindful loyalty programs may help generate more revenues but will ultimately contribute to a more satisfied customer base. Of course, these recommendations should only be applied if the company’s target market heavily favors one gender over the other. For companies that target or have a large share of both genders, the advantages of different loyalty rewards programs for male versus female customers found in this study should be a trade-off against the drawbacks of such customized treatment.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, or publication of this article.

Author Biographies

Justin Quigno is a Masters student at Michigan State University. He also works at Four Winds Casinos as the director of slot services.

Lu Zhang is an Assistant professor at Michigan State University. Her research mainly focuses on consumer information processing.

References

Arbore

Estes

(2013). Loyalty program structure and consumers’ perceptions of status: Feeling special in a grocery store? Journal of Retailing and Consumer Services, 20, 439-444.

Barone

M. J.

Roy

(2010). Does exclusivity always pay off? Exclusive price promotions and consumer response. Journal of Marketing, 74, 121-132.

Barsky

Tzolov

(2010). The effectiveness of casino loyalty programs—Their influence on satisfaction, emotional connections, loyalty and price sensitivity (Marketing and Law, Paper 1). Retrieved from http://repository.usfca.edu/ml/1 November.

Baumeister

R. F.

Sommer

K. L.

(1997). What do men want? Gender differences and two spheres of belongingness: Comment on Cross and Madson. Psychological Bulletin, 122, 38-44.

Baumeister

R. F.

Vohs

K. D.

(2004). Sexual economics: Sex as female resource for social exchange in heterosexual interactions. Personality and Social Psychology Review, 8, 339-363.

Brady

(2000, October 23). Why service stinks. Business Week, pp. 72-74.

Buss

D. M.

Schmitt

D. P.

(1993). Sexual strategies theory: A contextual evolutionary analysis of human mating. Psychological Review, 100, 204-232.

Conway

Pizzamiglio

M. T.

Mount

(1996). Status, communality, and agency: Implications for stereotypes of gender and other groups. Journal of Personality and Social Psychology, 71, 25-38.

Drèze

Nunes

J. C.

(2009). Feeling superior: The impact of loyalty program structure on consumers’ perceptions of status. Journal of Consumer Research, 35, 890-905.

10.

Eagly

A. H.

(1987). Sex differences in social behavior: A social-role interpretation. Hillsdale, NJ: Lawrence Erlbaum.

11.

Eastman

J. K.

Goldsmith

R. E.

Flynn

L. R.

(1999). Status consumption in consumer behavior: Scale development and validation. Journal of Marketing Theory and Practice, 7(3), 41-52.

12.

Hayes

A. F.

(2013). Introduction to mediation, moderation, and conditional process analysis: A regression-based approach. New York, NY: Guilford Press.

13.

Henderson

C. M.

Beck

J. T.

Palmatier

R. W.

(2011). Review of the theoretical underpinnings of loyalty programs. Journal of Consumer Psychology, 21, 256-276.

14.

Hendler

LaTour

K. A.

(2008). A qualitative analysis of slot clubs as drivers of casino loyalty. Cornell Hospitality Quarterly, 49, 105-121.

15.

Karmarkar

U. R.

Tormala

Z. L.

(2010). Believe me, I have no idea what I’m talking about: The effects of source certainty on consumer involvement and persuasion. Journal of Consumer Research, 36, 1033-1049.

16.

Kopalle

P. K.

Neslin

S. A.

Sun

Swaminathan

(2012). The join sales impact of frequency reward and customer tier components of loyalty programs. Marketing Science, 31, 216-235.

17.

Martineau

(1957). Motivation in advertising: Motives that make people buy. New York, NY: McGraw-Hill.

18.

McCall

Voorhees

(2010). The drivers of loyalty program success: An organizing framework and research agenda. Cornell Hospitality Quarterly, 51, 35-52.

19.

Meyer-Waarden

(2013). The impact of reward personalisation on frequent flyer programmers’ perceived value and loyalty. Journal of Services Marketing, 27, 183-194.

20.

Patterson

P. G.

(2007). Demographic correlates of loyalty in a service context. Journal of Services Marketing, 21, 112-121.

21.

Prentice

Wong

(2015). Casino marketing, problem gamblers or loyal customers? Journal of Business Research, 68, 2084-2092.

22.

Schwartz

S. H.

Rubel

(2005). Sex differences in value priorities: Cross-cultural and multimethod studies. Journal of Personality and Social Psychology, 89, 1010-1028.

23.

Smith

Sparks

(2009). “It’s nice to get a wee treat if you’ve had a bad week”: Consumer motivations in retail loyalty scheme points redemption. Journal of Business Research, 62, 542-547.

24.

Tanford

(2013). The impact of tier level on attitudinal and behavioral loyalty of hotel reward program members. International Journal of Hospitality Management, 34, 285-294.

25.

Veblen

(1967). The theory of leisure class. New York, NY: Penguin.

26.

Jeon

(2003). Effects of loyalty programs on value perception, program loyalty and brand loyalty. Journal of the Academy of Marketing Science, 31, 229-240.