Different status reevaluation period and communication styles for top-tier and bottom-tier customers in multi-tier loyalty programs

Purpose: This paper aims to investigate how to design a firm’s customer demotion policy and communication styles differently for customers demoted from top-tier and bottom-tier to promote their willingness to restore lost status and loyalty intentions. Design/methodology/approach: Four scenario-based experiments were conducted in the customer demotion context of an airline’s hierarchical loyalty program. A total of 796 customers recruited from a survey panel participated in the study. Findings: The results reveal that customers in top-tier demotion significantly increase their willingness to restore lost status and loyalty intentions when a short evaluation period (vs a long evaluation period) is given. Further, customers in bottom-tier demotion improve their willingness to restore and, in turn, their loyalty intentions more with a gain-focused communication style than with a loss-focused communication style. Willingness to restore lost status plays a mediating role in the process by which an appropriate match between demotion type and evaluation period type/communication styles leads to higher loyalty intentions. Research limitations/implications: This study extends the research stream on customer demotion by examining how to execute customer demotion to mitigate its detrimental effects and facilitate demoted customers’ approach motivation and behavioral intentions, a critical but understudied topic that has been ignored by researchers. Practical implications: Managers are advised to offer customized customer status evaluation periods and communication styles for top-tier and bottom-tier demoted customers to effectively promote their willingness to restore lost status and loyalty intentions. Originality/value: This study is among the first to explore the possible varying effects of differential demotion policy and communication style on different tiers of customers.