When Rewards Buffer Service Failures: the Role of Residual Value in Loyalty Programs

While travel and hospitality service failures often prompt brand switching, dissatisfied customers may still engage when unredeemed rewards make them feel they are progressing toward an important goal. Across four experiments in online travel and hospitality contexts, we examine when and how residual rewards sustain post-failure persistence and how their motivational influence shifts over time. In Studies 1–3, conducted in online travel agencies, we find that residual rewards and closer goal proximity increase consumers' resistance to switching after a service failure, that this goal-gradient effect weakens under severe failures, and that a brief cooling-off period paired with preservation framing helps restore loyalty-related motivation. In Study 4, we use a hotel reward program to examine whether reward-framing effects persist after customers redeem their rewards. Specifically, we compare the effects of reactivation messages emphasizing goal continuity ("continue where you left off") with those emphasizing new reward accumulation ("earn new rewards"). Although continuity-focused reactivation messages increase post-failure persistence before reward redemption, this advantage diminishes once customers redeem their rewards, suggesting a temporal limit to reward-driven persistence.