Attracting new customers to loyalty programs: The effectiveness of monetary versus non-monetary loyalty programs

What type of reward attracts customers to loyalty programs? Given the increasing importance of loyalty programs, this question matters. Six sequential studies investigated whether monetary rewards universally attract people more than nonmonetary rewards. Results suggest that monetary rewards elicit a very robust attractiveness premium both on the level of individual rewards as well as on the level of entire reward programs. Across different industries, the more monetary loyalty program was consistently perceived as more attractive, and it was more likely to inspire intentions to join the program. Even in light of variations in consumption goals (hedonic vs. utilitarian), the effect persisted. The effect is not only consistent; it is also nonnegligible with medium effect sizes emerging in most settings. We discuss ensuing variations in effect sizes and conclude that monetarism holds a pervasive temptation for consumers that managers cannot ignore.