Effects of a reward program on inducing desirable customer behaviors: The role of purchase purpose, reward type and reward redemption timing

For capacity-constrained service firms, efforts to balance supply and demand have been centered on the management of demand, service processes and service employees. Despite the significant role customers play in the service process, few attempts have been made to manage customer roles toward that end. Meanwhile, concerns have been expressed about the potential negative impact on customer satisfaction by the firm's effort to steer customer behaviors for the firm's benefit. Thus, it is crucial to minimize these undesirable customer effects in such an attempt. In this study, we propose a customer reward program as a possible customer approach and empirically test its effectiveness. Further, we test the impact of customer understanding of the firm's entitlement to profit upon the degree of the customer's voluntary behavior for the firm's benefit. The effect of justice evaluations of the reward program on customer adoption of the program is also examined. Finally, effects of customer characteristic (purchase purpose) and reward attributes (type and redemption timing) on the reward program's effectiveness are evaluated. Findings of this study contribute to the extension of the service capacity management literature, and offer service managers valuable insights about using a customer program as a means to better match supply and demand.