Is It My Luck or Loyalty? The Role of Culture on Customer Preferences for Loyalty Reward Types

Abstract

Travel companies execute loyalty reward programs to enhance customer retention and loyalty. However, research examining customer loyalty in a cross-cultural setting is scant. To bridge that gap, this study examines the joint effects of reward type (luck-based vs. loyalty-based) and culture (Western vs. East Asian) on behavioral loyalty in the airline context. In this study, South Koreans showed significantly higher levels of behavioral loyalty when the reward was framed as a “lucky draw.” On the other hand, Americans did not differ in their behavioral loyalty across the two types of rewards. Moreover, self-construal accounts for the relationship between culture and behavioral loyalty. The findings of this study indicate that practitioners in the travel industry can leverage their target customers’ cultural orientation when designing their loyalty reward program.