Loyalty Programs. Role, Structure and Potential Benefits

Uncertain Supply Chain Management

Loyalty programs are widely used by organizations as a structured customer relationship management (CRM) tool to build and extend customer-supplier relationship. Although a large number of benefits are offered through them to both companies and consumers, loyalty programs face a set of planning and implementation pitfalls. Scholars or practitioners rarely discuss such pitfalls. Thus, this paper intends to add further values to the current literature by exploring/investigating the main loyalty scheme pitfalls, both theoretically and practically. The study explores a set of loyalty program planning problems and some of the execution's drawbacks, including clear aim need, loyalty program design, budgeting and experienced employee involvement. In addition to loyalty programs benefits and rewards offered, loyalty programs target customer selection problems using loyalty program promotional tools. For the study, 161 managers and employees who were involved in loyalty program planning and execution were surveyed. Smart-PLS was used to test the developed model and hypotheses. The study found that all studied loyalty program elements identified affected their planning and implementation. However, some of these elements where seen important to be considered when planning loyalty schemes, such schemes' benefits and rewards offered were still not planned properly and did not meet customer needs or even expectations and, in most cases, the loyalty programs' aims were not clear to all their stakeholders. The paper also provides additional discussion about additional issues of loyalty schemes planning and execution problems and proposes a set of solutions and recommendations, which might highlight some of the future venues with this regard. .

DYNA

The present study structures a new modality for loyalty programs and compares it with traditional approaches. Initially, described here are two modalities of loyalty programs - individual and coalition, often used, being analyzed are their main characteristics, advantages and restrictions, market ranges in which they operate and the managerial implications of each modality. Subsequently, the study proposes a new program modality (cluster) and provides practical aspects for its use. The types of loyalty (loyalty to the brand, loyalty to the store or loyalty to the program) that are intended to be achieved in each program modality were also identified. Participation of partners, accumulation of benefits, options for recovery of benefits, market ranges, program management and program focus were the analyzed variables for comparison of the programs. This analysis revealed which approaches are most appropriate for each type of program.

Foundations and Trends® in Marketing, 2010

Loyalty programs (LPs) have increased in popularity, and have been studied extensively in the academic literature with mixed findings. Therefore, we offer an overview of extant research on LPs. We derive generalizations on the effectiveness and best design of LPs, discuss conditions that mediate and moderate the effects of LPs on customer behavior and attitudes, and highlight avenues for further research. Overall, we conclude that LPs are effective in increasing consumer purchase behaviors over time, but their impact differs across consumer segments and markets. Numerous practical examples illustrate the points discussed. Overall, this monograph provides insights to researchers and practitioners through a comprehensive, research-based synthesis of current knowledge. As a consequence, LP managers may better understand the implications of LP adoption, and ultimately improve the effectiveness of their LPs. 7 Points-Pressure and Rewarded Behavior Mechanisms 7.1 Reward-based Mechanisms 7.2 The Points-Pressure Mechanism 7.3 The Rewarded Behavior Mechanism 7.4 Further Research Directions 8 Personalized Marketing 8.1 Benefits of Personalized Marketing 8.2 Costs of Personalized Marketing 8.3 Relation between LP and other Marketing Instruments 8.4 Further Research Directions 9 Role of LP Design 9.1 LP Design 9.2 LP Structure 9.3 Further Research Directions 10 Conclusion and Discussion 10.1 Discussion of LPs from Different Perspectives 10.2 Conclusion References

For this study, marketers responsible for loyalty programs from many companies shared their views on the successful elements of a brand loyalty program. This information was used to produce a comprehensive summary of the best practices of loyalty programs. A survey was also conducted using a panel of over 100 consumers in order to answer the following key questions: How can the cost effectiveness of a loyalty programs be calculated? What level of loyalty program is appropriate? How does a loyalty program influence light and heavy users of a product? How do different product categories respond to loyalty programs? In general, loyalty programs work best for products and services that have high margins, are heavily invested in over a consumer's lifetime, and are difficult to differentiate. The best programs not only retain members as customers, but also increase their purchases. Purchase increases can be obtained by obtaining a wealth of information from customers and tailoring products and services to meet specific needs. The best programs offer relevant benefits to the consumer, ad avoid self-serving behavior. In addition, the best programs offer rewards that directly support the proposition of the brand. Programs offering benefits with minimal value and average value can motivate light and heavy users, respectively, to increase purchases. Programs offering more would be gaining a small benefit for the extra effort. Average programs appeal to nonusers since they have to right amount of enticement, but do not require as much involvement. As for product categories, sales of convenience foods like cereals respond best to programs with very valuable benefits, while sales of perishable foods like cheese respond better to programs with average benefits.

8th International Conference on Advances in Computing, Electronics and Communication - ACEC, 2019

The customer loyalty programs are becoming popular as a powerful tool of relationship marketing. Customer loyalty is helpful for the success of any retail organization. This concept has been limited among the large-scale companies. Although large-scale companies have the ability to maintain a customer loyalty program, mid-scale and low-scale companies are unable to handle such customer loyalty program with an IT section. In order to address the said problem, we developed a generic customer loyalty program which can be handled by any merchant who owns different types of companies, without an IT section. This paper comprises an attempt to introduce a full generic loyalty system for any scale of company.

International Journal for Research in Applied Science & Engineering Technology (IJRASET), 2024

Customer loyalty programs are strategic initiatives designed to cultivate and maintain strong relationships between businesses and their customers. These programs offer incentives and rewards to encourage repeat purchases and foster brand allegiance. By leveraging various techniques such as points systems, tiered memberships, or exclusive perks, companies aim to enhance customer satisfaction and retention. Effective loyalty programs not only drive revenue but also provide valuable data insights into consumer behaviour and preferences. In today's competitive landscape, cultivating customer loyalty is paramount for sustained success, and loyalty programs serve as powerful tools in building enduring connections with clients.

ADVANCES IN BUSINESS RESEARCH INTERNATIONAL JOURNAL

In the business field it is very important to win the customer heart and the success of the loyalty program offered to the customers depends on particular rewards given by the service provider. Loyalty and customer loyalty in previous research has shown a significant relationship. There are problems occurs in loyalty program where the customers has a low awareness about the loyalty program, and the delayed in receiving the rewards. Loyalty program are divided into two parts. The first part is soft attribute loyalty program and second part is hard attribute loyalty program. Soft attributes loyalty program are ways of doing things or code of conduct that are intangible and was meant to give customer sense of recognition. Hard attributes loyalty program are basically tangible elements such as discounts card and free gift. A total of 100 respondents were chosen from one selected retailers in Penang and a purposive sampling technique was used. The result shown that both hard and soft att...

2008

Complexity of modern business requires managers to strive for innovative strategies to acquire and retain customers in any product market field. As acquiring new customers is getting costlier day by day, business organizations have offered continuity/loyalty programmes to retain/reward existing customers and maintain relationships. The premise of CRM is that once a customer is locked in, it will be advantageous to both the organization as well as customer to maintain relationships and would be a win-win situation for both. Consumers find it beneficial to join such programmes to earn rewards for staying loyal. Through loyalty programmes, firms can potentially gain more repeat business, get opportunity to cross-sell and obtain rich customer data for future CRM efforts (Yuping Liu, 2007). This paper, exploratory in nature, attempts to provide a conceptual overview of Loyalty in organized retail sector, outlines practices of grocery retail outlets in Ahmedabad, the largest city in the s...

AD ALTA: 11/01, 2021

An increasing number of retailers and service providers are aware of the importance of loyalty programmes as a tool to support sales. The aim of this paper is to evaluate the benefits of loyalty cards for sales support at three selected companies in the Czech market, especially Kaufland, Globus and Tesco, and to determine whether the implementation of the loyalty programme leads to gaining a loyal customer. The basic source of data is the data obtained through an interview and the CAWI method, which consists in collecting data using an online questionnaire survey. The obtained data are evaluated using a prognostic marketing and comparison method. In total, responses were obtained from 121 respondents. The results of the research show that the implementation of loyalty programmes does not lead to gaining a more loyal customer. If the customer does not have to register to join the programmer, he does not perceive himself as loyal to the brand. The Kaufland Card programme has become th...