Rewards that undermine customer loyalty? A motivational approach to loyalty programs

Guided by the framework of self-determination theory (SDT), this study examined the effects of external rewards on undermining customers' intrinsic motivation to engage in a retail loyalty program. Two experiments revealed that participants who received a salient, controlling reward (i.e., a promise of reward with an explicit requirement and deadline, without options of choice) reported lower intrinsic motivation to use the loyalty program than participants who received a nonsalient, autonomy-supportive reward (i.e., a promise of reward with a less explicit requirement and no deadline, with options of choice). However, the undermined intrinsic motivation of those who received the salient, controlling reward was enhanced when they were given verbal feedback acknowledging their potential negative feelings associated with using the loyalty program. These findings provide important practical implications for designing a more effective loyalty program.