Earning the Right to Indulge [Archive.org URL]

Ran Kivetz and Itamar Simonson have embarked on a broad research effort to understand why customers join loyalty programs and how they use them. They recently completed a paper that examined how the amount of effort consumers must expend to get a reward-how many miles, points, or purchases they must accumulate-affects the types of rewards they prefer. Kivetz and Simonson found that the more effort required, the more consumer preferences shifted from necessity rewards, such as a grocery or gasoline voucher, to luxury items, such as spa certificates, gourmet dinners, or cruises.

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