Research on the Impact of Loyalty Program Information Transparency on Customer Participation Intention with Digital Information: The Moderating Role of Reward Redemption Channels

Research on the Impact of Loyalty Program Information Transparency on Customer Participation Intention with Digital Information: The Moderating Role of Reward Redemption Channels

Biyan Xiao, Yitong Liu, Guofeng Piao, Qingli Liu
Copyright: © 2023 |Pages: 27
DOI: 10.4018/JOEUC.318403
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As market competition intensifies, companies recognize the value of attracting customers to participate in activities and loyalty programs (LPs) that encourage repeat purchases and maintain customer loyalty. Literature on LP design explores the positive impact of program structure and rewards on the acquisition of customers. However, research is lacking on the role of LP information transparency on customer participation intention. This study uses 280 college students in China as the survey object to explore the influence of LP information transparency on willingness to participate in such programs. Using experimental design methods, the authors verify whether the type of merchant and channel customers select affect willingness to participate when customers redeem rewards. This study also explains the internal psychological mechanism of information transparency, merchant and channel types, and customer participation intention from the perspective of perceptual psychological distance in construal level theory (CLT) and the elaboration likelihood model (ELM). Both information visibility and accessibility have a positive impact on customer intention to participate in LPs. When a customer redeems a reward from a LP operator, information visibility has a more positive impact on willingness to participate than redeeming a reward from an alliance partner. Moreover, when a customer redeems a reward from online channels, the positive impact of information accessibility on willingness to participate is greater than redeeming from offline channels. Under the influence of multiple psychological distance effects, the synergistic effect of merchant type and channel type is not significant in the relationship between information transparency and willingness to participate in LPs. This article will provide design strategies and management suggestions for retail managers to attract customers to participate in LPs.
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Offline companies use loyalty programs (LPs) to promote repeat purchases. With the rapid development of e-commerce, many businesses have also begun to implement online LPs. The rapid development of omnichannel customer service (with cross channels and touchpoints) allows customers to experience a consistent, seamless shopping experience (Melero et al., 2016). However, the omnichannel context complicates the assimilation and coordination of LPs across online and offline channels.

Organizations often introduce and implement LPs to provide customers with interactive rewards to increase customer participation intention. The benefits of these rewards are especially important when acquiring customers (Bruneau et al., 2018). New customers tend to measure the value of a LP by evaluating its contents and rewards strength before participating in the program (Kim et al., 2021). Customers often base their value assessment on information received, which is simplified through the transparency of information (Mol, 2015). Information transparency has already become the most important business rule in markets where information flows freely (Halter et al., 2009). Today, customers have real-time access to online information through mobile devices. They expect accurate information. Organizations should, therefore, develop their marketing strategies around providing more transparent information (Tapscott & Ticoll, 2003).

Information transparency is a prominent customer demand (Kim et al., 2020). Finance and accounting also link customer and business transparency in marketing. From the customer's perspective, information transparency is the subjective perception of the information provided by an enterprise (Eggert & Helm, 2003). It also includes the subjective assessment of the availability and comprehensibility of company information (Peschel & Aschemann-Witzel, 2020). When customers decide to purchase a product or service, they search many sources for information. Typically, the customer information inquiry process is made up of an internal query and an external search. To a certain extent, information transparency will consolidate internal search information, which will reduce the customer’s external search costs. This can eliminate the customer’s uncertainty and enhance their confidence. Transparent information reduces perceived risk (Liu et al., 2015). In turn, the customer will be more willing to respond in a positive manner to a company’s marketing activities. Insufficient information about LP rewards will complicate an organization’s ability to meet the customer’s value expectations, hindering their decision to participate. Therefore, organizations should focus on enhancing the customer participation intention of LPs through effective design and information transparency. These efforts will optimize and promote customer perception and recognition of value.

Four stages within a LP help to build customer relationships: (1) acquiring customers; (2) onboarding new customers; (3) expanding customer involvement; and (4) retaining high-value customers (Kim et al., 2021). The literature on each phase focuses on customer psychological mechanisms triggered by LP design and operation (Arbore & Estes, 2013; Bagchi & Li, 2011; Bolton et al., 2000; Dorotic et al., 2012). Existing LP-related studies explore the customer acquisition stage by focusing on factors within the program design’s structure like partnerships, customer status, alliance, and points or reward factors like redemptions, value, fitness, and customer behavior (Breugelmans & Liu-Thompkins, 2017; Bruneau et al., 2018; Danaher et al., 2016; Gómez et al., 2012). These studies indicate that greater customer expectations and perceived value of LPs impact the likelihood to join or participate (Kim et al., 2021). In general, when organizations design LPs, they focus on participation requirements, program structure, and the point and reward structure (Breugelmans et al., 2015). However, information is lacking on the influence of information transparency on customers’ willingness to participate in LPs. Customer expectations and perceived value require information as their reference and support. Therefore, companies should provide customers with transparent information about LPs through relevant media channels (online or offline), simplifying customers’ ability to identify the organization’s intention to implement the LP (Turilli & Floridi, 2009). In turn, customers can use the information to make their decision to participate.

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