The Paradox of Points: Theoretical Foundation and Empirical Evidence of Medium Magnitude Effects in Loyalty Programs

In his research, Sören Köcher provides valuable insights on the paradoxical effects of the magnitude of a loyalty program medium—i.e. the sheer number of points, miles, or stamps credited for every purchase and required for reward redemption—on the central consumer decisions in loyalty program memberships. In sum, the results of twelve empirical studies reveal that high magnitude currencies improve the attractiveness of medium collection but entail reluctant medium spending behavior. These ...