Effect of program type and reward timing on customer loyalty: The role of the sunk cost effect

2019 ◽  
Vol 47 (11) ◽  
pp. 1-10
Author(s):  
Seung Min Lee ◽  
Sang Yong Kim ◽  
Dong Young Kim
Keyword(s):  
Customer Loyalty ◽  
Loyalty Programs ◽  
Sunk Cost ◽  
Loyalty Program ◽  
Sunk Cost Effect ◽  
Randomized Experimental Design ◽  
Korean College Students ◽  
Full Factorial ◽  
Cost Effect

We examined the effect on customer loyalty of the type of loyalty program (paid vs. free) and timing of rewards (immediate vs. delayed). To test the research objectives we recruited 142 Korean college students and used a 2 × 2 full-factorial, randomized experimental design. Results suggested that the membership fee in paid loyalty programs acted as a sunk cost, which, compared to free loyalty programs, led to greater loyalty to the provider. An immediate (vs. delayed) reward was generally preferred; however, owing to the sunk cost effect, this depended to some extent on the type of loyalty program. In a paid loyalty program, immediate rewards were effective in increasing customer loyalty, whereas customers in free loyalty programs focused more on receiving the reward regardless of its timing. Our findings contribute to the literature by providing useful information for the design of an effective loyalty program scheme.

The role of the attractiveness of the stimuli in the sunk cost effect in children

2007 ◽  
Author(s):  
Valentina Sala ◽  
Gabriella Passerini ◽  
Laura Macchi ◽  
Maria Bagassi ◽  
Marco D'Addario
Keyword(s):  
Sunk Cost ◽  
Sunk Cost Effect ◽  
Cost Effect

EXPRESS: Effects of Payment on User Engagement in Online Courses

2021 ◽  
pp. 002224372110163
Author(s):  
Ali Goli ◽  
Pradeep K. Chintagunta ◽  
S. Sriram
Keyword(s):  
Online Courses ◽  
Massive Open Online Courses ◽  
Full Potential ◽  
User Engagement ◽  
Sunk Cost ◽  
Course Content ◽  
Sunk Cost Effect ◽  
To Receive ◽  
Cost Effect

Massive Open Online Courses (MOOCs) have the potential to democratize education by improving access. Although retention and completion rates for non-paying users have not been promising, these statistics are much brighter for users who pay to receive a certificate upon completing the course. We investigate whether paying for the certificate option can increase engagement with course content. In particular, we consider two such effects: (a) the certificate effect, which is the boost in motivation to stay engaged in order to receive the certificate; and (b) the sunk-cost effect, which arises solely because the user paid for the course. We use data from over 70 courses offered on the Coursera platform and study the engagement of individual participants at different milestones within each course. The panel nature of the data enables us to include controls for intrinsic differences between non-paying and paying users in terms of their desire to stay engaged. We find evidence that the certificate and sunk-cost effects increase user engagement by approximately 8%-9%, and 17%-20%, respectively. However, whereas the sunk-cost effect is transient and lasts only for a few weeks after payment, the certificate effect lasts until the participant reaches the grade required to be eligible to receive the certificate. We discuss the implications of our findings for how platforms and content creators may want to design course milestones and schedule the payment of course fees. Given that greater engagement tends to improve learning outcomes, our study serves as an important first step in understanding the role of prices and payment in enabling MOOCs to realize their full potential.

Fee-Based Loyalty Programs: An Empirical Investigation of Benefit Redemption Behavior and Its Effects on Loyalty

2020 ◽  
Vol 12 (2-3) ◽  
pp. 100-118
Author(s):  
Matthew C. Walsman ◽  
Michael J. Dixon
Keyword(s):  
Empirical Investigation ◽  
Value Theory ◽  
Loyalty Programs ◽  
Loyalty Program ◽  
Expectancy Value Theory ◽  
Expectancy Value ◽  
The Past ◽  
Sunk Cost Effect ◽  
Service Loyalty ◽  
Cost Effect

Loyalty program (LP) membership gives customers access to benefits such as free, discounted, or upgraded products or services; however, firms are increasingly charging customers enrollment fees for access to benefits instead of allowing them to earn benefits through repeat patronage. We sketch the evolution and design of LPs over the past 200 years and distinguish between several types of programs (free rewards-based programs and paid membership programs) and the types of benefits they offer (discounts and giveaways). We propose a theoretical model that hypothesizes that members who pay directly for LPs will use different benefits than customer who receive LP membership as a bundled package. Furthermore, we hypothesis that different benefit use moderates loyalty behavior. We test the hypotheses using a database of restaurant LP customers and find partial support for our hypotheses; in response to the sunk-cost effect and expectancy-value theory, a paid LP enrollment brings with it a need to self-justify and find the easiest path to investment payoff. Bundled members are more inclined to use lesser-used benefits. Our results suggest that proliferation of benefits may not translate into improved service, loyalty, or satisfaction.

scholarly journals THE ROLE OF DIGITAL INNOVATION, PERCEIVED VALUE, AND LOYALTY PROGRAM ON CUSTOMER LOYALTY AT GARUDA INDONESIA

2020 ◽  
Vol 4 (2) ◽  
pp. 33-38
Author(s):  
Bayuaji Prasetyo ◽  
Triyono Arief Wahyudi
Keyword(s):  
Customer Satisfaction ◽  
Customer Loyalty ◽  
Low Cost ◽  
Perceived Value ◽  
Loyalty Programs ◽  
Loyalty Program ◽  
Digital Innovation ◽  
Low Cost Carrier ◽  
Airline Company

Airlines business is a competitive industry, which pushes the airline company to make changes in its strategy to retain current customers or to get more customers. Garuda Indonesia as the flag carrier is also a Full-Service Carrier that operates among other Low-Cost Carrier in Indonesia. To win the competition with these Low-Cost Carriers, Garuda Indonesia has to make strategies in Digital Innovation, Perceived Value, and Loyalty Program. This study aims to analyze the effect of Digital Innovation, Perceived Value, and Loyalty Programs on customer satisfaction and trust that will impact on customer loyalty at PT Garuda Indonesia. Data is taken from the questionnaire answers of the respondents. The respondents are Garuda Indonesia passengers who fly international and domestic route and also a member of GarudaMiles (Loyalty Program of Garuda Indonesia). The results show Digital Innovation and Perceived Value have a significant impact on customer satisfaction and trust. While Loyalty Program has no significant impact on customer satisfaction and trust. The results of the study also show that customer satisfaction and trust had a significant impact on customer loyalty.

scholarly journals Being psychologically abused is not enough into ending a relationship

2020 ◽  
Vol 53 (3) ◽  
pp. 445-459
Author(s):  
Rui Nunes-Costa ◽  
Mafalda Serra ◽  
Tânia Sousa ◽  
Ângela Leite
Keyword(s):  
Physical Violence ◽  
Relationship Status ◽  
Abusive Relationships ◽  
Psychological Violence ◽  
Sunk Cost ◽  
Sunk Cost Effect ◽  
Cost Effect ◽  
A Current

Our aim is to understand the role of the sunk cost effect in intimate abusive relationships. Results of a questionnaire, based on likely scenarios applied to 267 women, show that women in a relationship invest more time/days in a relationship than those who are not in a relationship. Also,  an effect of scenario and of relationship status on sunk cost effect were found. Women spend more time in a non-violent scenario; also, they spend more time in a scenario of psychological violence than in one of sexual or physical violence. These results suggest that being in a relationship enhance the likelihood of committing sunk cost effect; prior investments in a relationship acquire more value for individuals in a current relationship where those efforts exist naturally.

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