Casino Customers’ Intention to Join a Loyalty Rewards Program

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:

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.

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.