When rewards connect to the self: Unlocking customer engagement through experiential rewards

Abstract

One of the pressing challenges companies face is designing loyalty rewards programs that enhance customer engagement while considering individual differences in reward preferences. Results from four lab studies and two field studies show that experiential (vs. material) rewards significantly boost customer engagement in the form of greater word of mouth, stronger loyalty, more redemptions, and more spending both when pursuing a reward and after redemption. These effects are driven by greater consumer self-connection with experiential versus material rewards. Importantly, even small experiential rewards produce effects comparable to large material ones, offering cost-effective program design strategies. These findings offer actionable insights for firms seeking to improve the impact of their rewards programs by offering customers meaningful and identity-affirming experiential rewards.