The effect of tokenized rewards on customer loyalty programs

This work investigates customer responses to the tokenization of hotel loyalty programs. Drawing on self-enhancement theory, Study 1 investigates the effect of reward type (i.e. control vs tokenized reward) on customers' perceptions of the reward (i.e. economic value, program attractiveness) and their behavioral intentions towards the hotel (i.e. switching intentions, recommendation intentions). Findings highlight reward novelty and psychological ownership as two mediators of the above relationships. Study 2 replicates these effects in a cryptocurrency owner context. Study 3 examines the effect of the hotel's type (i.e. luxury vs budget) on the reward type-customer responses relationship. We showcase that tokenized rewards generate a more favourable attitude towards loyalty programs and that they remain an effective customer acquisition strategy for high-end hotels. • Tokenized rewards enable hotels to upgrade their loyalty programs. • Offering tokenized rewards increases booking intentions to the hotel. • Tokenized rewards increase the perceived economic value of a discount. • Tokenized rewards enhance the attractiveness of reward schemes for customers. • We advise budget hotels against introducing tokenized rewards.