What recovery options to offer for loyalty reward program members: Dollars vs. Miles?

Yoo Hee Hwang, Lisa Gao, Anna S. Mattila

Research output: Journal article publicationJournal articleAcademic researchpeer-review

2 Citations (Scopus)

Abstract

Research shows that offering monetary compensation is effective in restoring customers’ equity perceptions following a service failure. However, little is known about loyalty reward program members’ responses to various types of recovery options. This study fills this important void by investigating two types of compensation: a discount coupon (in dollars) and bonus reward points (in miles) in the airline context. This study further investigates the boundary effect of controllability of a service failure. Our findings show that, when the flight delay is perceived as highly controllable by the airline company (i.e., scheduling error by flight crews, repatronage intention was higher in the 50-dollar discount vs. 2500 bonus miles condition. Conversely, repatronage intention did not differ between the two compensation options when the flight delay was perceived as uncontrollable i.e., inclement weather. Our findings help hospitality and tourism firms leverage service recovery initiatives for loyalty reward program members.

Original languageEnglish
Article number102496
JournalInternational Journal of Hospitality Management
Volume87
DOIs
Publication statusPublished - May 2020

Keywords

  • Construal level
  • Loyalty program
  • Recovery compensation
  • Service failure
  • Service recovery

ASJC Scopus subject areas

  • Tourism, Leisure and Hospitality Management
  • Strategy and Management

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