Customer Loyalty Programs Research Articles

THE IMPORTANCE OF CREATING CUSTOMER LOYALTY IN ACHIEVING SUSTAINABLE COMPETITIVE ADVANTAGE

In today's competitive environment, where products and services have more and more similar features, and consumer demands and expectations are constantly changing and increasing, increasing the customer satisfaction in the marketing process and thus creating loyal customers have become the primary objectives of the businesses. In an environment where acquiring new customers is much more costly than holding customers at hand, the fact that businesses have loyal customers is a very important factor in terms of business continuity. Improving customer loyalty is possible by establishing strong long-term relationships between the business and the customer. These relationships with the customer can increase the order frequency and quantity of the customer from the business, provide economic benefits to the business, and recommend new businesses and products to the surrounding people, and gain new customers at less cost. The purpose of this research is to reveal the importance of creating customer loyalty in businesses, to determine the factors effective in creating customer loyalty, and to contribute to the strategy formation of the enterprises. For this purpose, the relationship between the value offered to the customer and customer satisfaction in terms of creating customer loyalty has been examined through the literature review method, which is one of the qualitative research methods. For this purpose, it has been concluded that using customer loyalty programs as an effective marketing technique and using relationship marketing method to develop a long-term and loyalty-based relationship with customers is an important factor. Keywords: Customer, Competition, Customer Loyalty, Complaint Pages: 11-20

Customer loyalty program based on quality function deployment with fuzzy linguistic preference relation

The competition among shopping malls is getting increasingly more intense.In order to enhance corporate competitiveness and profitability, how toretain key loyal customers has become an important issue for the managers ofshopping malls. Customer loyalty programs are a universal practice. Thisstudy proposes an analytical model for developing the strategic managementof customer loyalty programs. Based on quality function deployment, ourmodel constructs a fuzzy relational matrix to integrate the customerbenefits and the customer loyalty programs. The results contribute to abetter understanding of the different importance of customer benefits withrespect to ``Utilitarian benefits'', ``Hedonic benefits'' and ``Symbolicbenefits''. The study's findings provide prioritized customer loyaltyprograms, including ``Newest information transmissions,'' ``Communicationservice specialists,'' ``Exclusive free gift promotions,'' and ``VIP loungeservice,'' which can be used to determine the directions for the improvementof shopping malls. The study has implications for the theory andpractitioners. First, it allows the integration of customer benefits incustomer loyalty programs and the consideration of VIP customers inthe programs. Second, the requirement evaluation considering fuzzylinguistic preferences allows for prioritizing the customer loyalty programswhen dealing with uncertainty and vagueness. Finally, this approach helps toobtain more realistic results by integrating fuzzy decision-making into QFD.

The role of the sense of entitlement for Russian consumers’ behavior

This study aims to identify the sense of entitlement of Russian consumers’ behavior in customer loyalty programs context. It describes the consumer sense of entitlement concept and its application to consumer behavior research based on an extensive literature review. Consumer sense of entitlement refers to the extent to which a customer expects special treatment from the company. According to foreign research, consumer sense of entitlement as a personality trait remains stable over time and relatively invariant across other factors, and a situational response to the company’s actions affects consumer behavior including the personal style of interaction and their expectations. The paper includes an empirical study of the sense of entitlement of Russian consumers, who are representatives of generations Y and Z. The analysis was conducted on the data collected through a quantitative online survey on the consumer attitude and expectations of airline services. As a result of factor analysis and structural equation modeling, key components of consumer sense of entitlement such as demanding behavior and distinction have been revealed. Th e interrelation with loyalty and complaint behavior was identified for two groups of respondents, namely the members of customer loyalty programs and non-members. The authors revealed the positive impact of consumer sense of entitlement on voicing complaints for both groups of respondents and the positive influence of loyalty on the demanding behavior of respondents who do not participate in loyalty programs. The article represents an initialattempt to examine the Russian consumers’ sense of entitlement.

Improvement of retail pricing strategies in food distribution networks in terms of global competition (St. Petersburg’s example)

The global crisis that hit the world economy at the end of the first decade of the 21st century has significantly affected Russia. Since 2014 and up until now, due to internal and external reasons, there has been an almost continuous decline in real disposable income of Russian households. Many Russian families are forced to economize down to the essentials. As is generally known, food costs are at the very bottom of Maslow’s hierarchy of needs, and their reduction occurs in the last place. However, within this primary segment of consumption negative processes also occur; in determining the structure of costs the choice is cast over the quality of food and in favour of its affordability. Faced with the fall of its turnover, even large retail chains brands are forced to improve their pricing strategies in order to stabilize their falling revenues in the face of increasing competition. “How can they achieve this?” is the question the authors of two articles in this series attempt to answer. The first article examines problems associated with development of “customer loyalty programs”, and proposes a model for improving the existing system of trade margins. The article also looks at the advantages and limitations of the proposed model.

Perceived Benefits of Loyalty Programs and Relationship Quality

The aim of this article is to investigate perceived loyalty program benefits inherent in loyalty programs and how they might affect relationship quality, specifically in the South African FMCG sector. A quantitative study was undertaken where loyalty program members were approached via a national database. Hypotheses were individually tested by means of regression analysis. All three forms of perceived benefits exhibited positive relationships with each of the relationship quality constructs. Retailers that are considering which benefits to include in a loyalty program would find the results instructive. This article also adds to the international body of research in the field of relationship marketing, customer loyalty and retail loyalty programs. This study reiterates the importance of loyalty program design and the potential for attitudinal change towards the retailer.

Effect of customer loyalty program on customer satisfaction and its impact on customer loyalty

The aim of this research is to examine the effect of the customer loyalty program on customer satisfaction and its impact on customer loyalty. This program is developed by the company in order to increase customer satisfaction. Optimal customer satisfaction will be able to create customer loyalty. For a company, customer loyalty will guarantee the company’s income to be constantly optimal. The research is conducted using the survey method involving 110 customers and 100 feasible data used. The sampling technique used is judgment sampling and data collected through the questionnaire. It uses SEM in examining hypotheses assisted by software AMOS version 20.0. Member card significantly affects customer satisfaction, while discount promo has no significant effect on customer satisfaction and it also doesn’t affect customer loyalty. Member cards and discount promo have a direct effect on customer loyalty. In general, it can be understood that the customer loyalty program applied by Alfamart either member card or discount promo affects customer satisfaction and has an impact on customer loyalty. This research gives input to retail business managers in managing customer satisfaction through the proper development of customer loyalty programs.

Customer Retention Strategies Effectiveness in the Zimbabwean Medical Industry: Perspectives from Cellmed Health Fund

The main objective of the study was to examine customer retention strategies at Cellmed Health, from the period 2012 to 2018. The focused was mainly on impact of customer retention strategies on market share, profit and sales turnover. A descriptive survey design was used with both qualitative and quantitative methods. Sixty participants from Cellmed Health were involved in the research. The study used both primary and secondary data where the primary data was collected using questionnaires and interviews while the secondary data was obtained from annual reports and magazines of the company. Descriptive statistics of mean, frequency and percentages were used to analyse demographic characteristics of the respondents. Regression analysis was used to measure and predict the relationship between the customer retention strategies and market share, profitability and sales turnover. Findings were that Cellmed used monitoring customer relationships strategies, market intelligence, loyalty programs and promotions to maintain its competitiveness. Furthermore, it also concludes that there was a significant relationship between customer retention strategies and profit as well as sales turnover that the company (Cellmed) was posting annually. In this light, the study recommendation was that customer retention strategies should be embrace in the decision making processes of the organisation covering products, price, services, responsiveness, tangibility and reliability of the brand name. The study also recommends that Cellmed Health should strengthen its customer bonds and moreover, in order to increase customer retention rates, Cellmed Health should provide extraordinary customer services.

Progressive tax: a proposal for customer loyalty programmes

Purpose The South African Government needs to increase fiscal revenues to cater to increased government spending. This paper aims to argue that the South African Revenue Service (SARS) has an opportunity to tax the receipt of customer loyalty programme awards in the hands of customers, with little amendment to current tax legislation or administration. This provides the South African Government an opportunity to increase much needed tax revenue in spite of limited resources. Design/methodology/approach Five instrumental case studies were used and analysed from a financial reporting perspective to quantify customer loyalty points earned by customers. These can form a basis for deriving the potential benefits from the taxation of customer loyalty programmes in the retail industry. The multiple instrumental case studies used and the application of accounting guidance in International Financial Reporting Standards allow generalisations to be made to highlight the amount of customer loyalty awards granted and possible tax revenues forgone in just one sector of the South African economy. Findings Should the proposals for taxation of customer loyalty programmes be implemented, the fiscus would be able to collect over R 234.35m (US$16.91m) in tax revenue from only five companies providing customers with loyalty awards. This indicates that this proposal for taxation is critical for investigation by the South African Government, as it may aid in achieving revenue goals for South Africa. Originality/value This paper contributes to the literature on taxation legislation within South Africa by proposing a model that may be used by the SARS to increase tax revenues to meet the Government’s needs.

ELABORATION OF CUSTOMER LOYALTY PROGRAMMES ON THE MARKET OF TRAVEL SERVICES WITHIN THE CONTEXT OF TOTAL QUALITY MANAGEMENT

Goal. The paper is aimed to disclose the nature of customer loyalty programms as a component of managerial technologies. It defines the conceptual principles for the construction of a more balanced customer loyalty programme on the travel services market within the context of total quality management. Methodology. The methodological basis for the scientific study of the customer loyalty system’s construction on the market of travel services within the context of total quality management is compiled from scientific works by foreign authors, statistical data of the State Statistics Service of Ukraine, as well as the information available on the official websites of transportation companies. The author considers new scientific research on the formation of customer loyalty programmes within the context of total quality management to be of great importance. That fact causes the need to analyse existing customer loyalty programmes of the participants on the travel transportation market, taking into account various impact factors, in particular, intra-industry and inter-industry competition. In order to study customer loyalty programmes on the market of travel services carrying out the transportation of tourists, some of them were analysed, including the representatives of the JSC "Ukrzaliznytsya"/ Ukrainian Railway, bus and air traffic service operators. Results. As a result of the study, the author identifies some high-risk situations in which companies could lose customers’ loyalty on the travel service market. The article provides general conceptual principles for implementation in order to increase the loyalty level of customers while their transportation by the aforementioned companies. The author introduces a pilot project for issuing a trial batch of the "Tourist Card of JSC" Ukrzaliznytsya, a fundamentally new for the JSC "Ukrzaliznytsya"/ Ukrainian Railway and previously not introduced service. The implementation of the pilot project and the study of consumers' demand for the "Tourist Card" JSC "Ukrzaliznytsia", as well as other gained conclusions, will create new opportunities to balance more effectively the mutual goals of all participants on the travel rail transport market. Consequently, the project will provide a higher individualisation level of the relations between the JSC "Ukrzaliznytsia" and its customers, and that will definitely increase the customers’ level of loyalty. Scientific novelty. The conceptual tools and framework proposed for all participants on the travel transportation market will contribute to more effective development of the customer loyalty programmes within the context of total quality management. The introduction of special personalised offers like the "Tourist Card" JSC "Ukrzaliznytsya" will provide a new level of relationships, a higher level of the JSC "Ukrzaliznytsya" efficiency and other advantages. Besides, the mentioned means will create more profitable economic platform to unite different participants on the travel services market, including transportation companies, reduce risks and provide a new stage of development for the JSC "Ukrzaliznytsya"/ Ukrainian Railway. Practical importance. In the long term, the implementation of the "Tourist cards of JSC “Ukrzaliznytsya” and the “Consumer Loyalty Programmess” personalised cards, as well as clear definition of conditions for their purchase and use, will provide an innovative level for the development of interrelations between the customers of the JSC "Ukrzaliznytsya" services.

Innovating the customer loyalty program with social media

Purpose Few academic studies specifically investigate how businesses can use social media to innovate customer loyalty programs. The purpose of this paper is to present an in-depth case study of the Shop Your Way (SYW) program, which is regarded as one of the most successful customer loyalty programs with social media. Design/methodology/approach This paper uses case study research as the methodology to uncover innovative features associated with the SYW customer loyalty program. The authors collected the data from SYW’s social media forums and tweets. The data set was analyzed using social media analytics tools including the R package and Lexicon. Findings Based on the research results, the authors summarize innovative social media features identified from SYW. The authors also provide insights and recommendations for businesses that are seeking to innovate their customer loyalty programs using social media technologies. Originality/value The results of this case study set a good example for businesses which want to innovate and improve their customer loyalty programs using social media technologies. This is the first in-depth case study on the SYW program, one of the most successful customer loyalty programs with social media. The results shed light on how social media can innovate customer loyalty programs in both theory and practice.

新収益認識基準が法人税務に与える影響 : カスタマー・ロイヤルティ・プログラムを中心に

新収益認識基準が法人税務に与える影響 : カスタマー・ロイヤルティ・プログラムを中心に

When Should Casinos Owe a Duty of Care Toward Their Patrons?

With the release of the Ontario Court of Appeal’s decision in Paton Estate, the possibility was left open for a casino to be found to owe a duty of care to patrons who gamble excessively. This article explores the circumstances under which the Anns/Cooper framework could be applied to find that such a duty exists. Specifically, where the gambler is a member of a casino’s customer loyalty program, thereby imputing knowledge of extreme gambling behaviour on the casino, and where the casino has no reason to believe the patron’s losses are sustainable, a duty of care should be imposed. Liability should follow in cases where the casino knowingly contributed to or deliberately ignored these losses.

Effect of Customer Loyalty Programs on Performance of Nakumatt Supermarket in Western Region in Kenya

Kenya's worth of retail industry has reached 1.8 trillion with increase in 13% of consumer spending in the industry. However, in spite of being Kenya's biggest retail chain, Nakumatt supermarket is currently facing a rise in the debt level from 4.7 billion in 2012 to 18 billion at the start of 2017. Financial problems have manifestations in the dwindling customer base. Yet customer related problems can be cured by good relationship marketing practices such as adoption of customer loyalty programs which can increase customer traffic and enhance revenue and customer retention. Even though past empirical studies have linked loyalty programs and organization performance, none has focused on the collective effects of three dimensions of loyalty programs namely: point system, upfront fees for VIPs and non-monetary program, on organizational performance. The purpose of this study is to examine the effect of customer loyalty program on organizational performance. The study population constitute 83 management staffs and include branch managers, assistant managers and supervisors of the five Nakumatt branches in Western region. A total sample of 73 respondents was selected using saturated sampling techniques while the remaining 10 respondents shall be used for pilot study. The findings revealed that customer loyalty programme explained 48.9% (R2 =0.489) variation in organizational performance. The study concludes that point system and non-monetary programme are both critical antecedents of performance in Nakumatt Supermarket in Western Kenya. Therefore, it recommends that the two dimensions should be enhanced to significantly increase the level of supermarket's sales performance. The study may be useful for the retail industry as it aid in re-design of customer loyalty arrangements in order to get more revenue and enhance profitability.

I Earn It, But They Just Get It: Loyalty Program Customer Reactions to Unearned Preferential Treatment in the Social Servicescape

Hospitality and tourism firms use two different strategies in customer relationship management: rewarding loyalty program customers with earned rewards (earned preferential treatment) and delighting the nonprogram customers with surprise rewards (unearned preferential treatment). However, research overlooks the key impact of how these two customer relationship management strategies may negatively affect the observing loyalty program customers. To address these gaps, Study 1 finds that providing a nonprogram customer with a high-value unearned treatment significantly decreases perceptions of distributive justice, status, and loyalty among the observing loyalty program customers. No significant interaction effects of a firm’s explanation were found, suggesting that the practice of unearned preferential treatment cannot be justified simply by presenting a reason for the practice. Study 2 finds that compensating the affected program customers with tangible compensation is the only significant factor that enhances the observing loyalty program customers’ perceived trust, suggesting rebuilding customers’ trust as the key element in recovery. This research is grounded in social comparison and justice theory and builds upon the loyalty, social servicescape, and customer delight literature to explicitly examine the reward comparison stemming from the social presence of other customers.

ELABORATION OF CUSTOMER LOYALTY PROGRAMMES ON THE MARKET OF TRAVEL SERVICES WITHIN THE CONTEXT OF TOTAL QUALITY MANAGEMENT

Goal. The paper is aimed to disclose the nature of customer loyalty programms as a component of managerial technologies. It defines the conceptual principles for the construction of a more balanced customer loyalty programme on the travel services market within the context of total quality management. Methodology. The methodological basis for the scientific study of the customer loyalty system’s construction on the market of travel services within the context of total quality management is compiled from scientific works by foreign authors, statistical data of the State Statistics Service of Ukraine, as well as the information available on the official websites of transportation companies. The author considers new scientific research on the formation of customer loyalty programmes within the context of total quality management to be of great importance. That fact causes the need to analyse existing customer loyalty programmes of the participants on the travel transportation market, taking into account various impact factors, in particular, intra-industry and inter-industry competition. In order to study customer loyalty programmes on the market of travel services carrying out the transportation of tourists, some of them were analysed, including the representatives of the JSC "Ukrzaliznytsya"/ Ukrainian Railway, bus and air traffic service operators. Results. As a result of the study, the author identifies some high-risk situations in which companies could lose customers’ loyalty on the travel service market. The article provides general conceptual principles for implementation in order to increase the loyalty level of customers while their transportation by the aforementioned companies. The author introduces a pilot project for issuing a trial batch of the "Tourist Card of JSC" Ukrzaliznytsya, a fundamentally new for the JSC "Ukrzaliznytsya"/ Ukrainian Railway and previously not introduced service. The implementation of the pilot project and the study of consumers' demand for the "Tourist Card" JSC "Ukrzaliznytsia", as well as other gained conclusions, will create new opportunities to balance more effectively the mutual goals of all participants on the travel rail transport market. Consequently, the project will provide a higher individualisation level of the relations between the JSC "Ukrzaliznytsia" and its customers, and that will definitely increase the customers’ level of loyalty. Scientific novelty. The conceptual tools and framework proposed for all participants on the travel transportation market will contribute to more effective development of the customer loyalty programmes within the context of total quality management. The introduction of special personalised offers like the "Tourist Card" JSC "Ukrzaliznytsya" will provide a new level of relationships, a higher level of the JSC "Ukrzaliznytsya" efficiency and other advantages. Besides, the mentioned means will create more profitable economic platform to unite different participants on the travel services market, including transportation companies, reduce risks and provide a new stage of development for the JSC "Ukrzaliznytsya"/ Ukrainian Railway. Practical importance. In the long term, the implementation of the "Tourist cards of JSC “Ukrzaliznytsya” and the “Consumer Loyalty Programmess” personalised cards, as well as clear definition of conditions for their purchase and use, will provide an innovative level for the development of interrelations between the customers of the JSC "Ukrzaliznytsya" services.

An Analysis of Gamification on Dota 2’s Business Model

Gamification has been widely applied to various fields to boost the user experience and engagement. Most businesses now have implemented gamification elements into their business models to increase their customer retention. These elements, often called the Customer Loyalty Programs have helped businesses retain their customer base by ensuring that their customers get rewarded for their support to the business. This paper analyses the business model of Dota 2, a Free-to-Play game which sells various in-game items including the Compendium annually. The compendium allows the players to earn or buy levels and receive rewards based on their achievements in the compendium. The compendium applies various concepts of gamification into it. The compendium is then annually improved by adding new rewards, milestones and features. We can expect that the sales of the compendium will increase with the implementation and improvement of gamification, which in turn can help to sustain the Free-to-Play model of the game.

Examining retail purchases of cigarettes and nicotine replacement therapy in Finland.

INTRODUCTIONFinland’s success in achieving the goal of its tobacco endgame largely depends on rectifying deficiencies in the delivery of smoking cessation services. One such weakness, which has not been documented with empirical data, is misuse of nicotine replacement therapy (NRT). This study’s objective was to examine purchase patterns of NRT for estimating improper use of the medication. The study was based on the assumption that duration of a purchase episode is indicative of either proper use or misuse of NRT.METHODSThe participants (n=728), who purchased at least one NRT product in 2016 (mostly gum/lozenge), were selected through enrollment in a large customer loyalty program in Finland (LoCard). Participants were categorized into one of five groups according to their longest purchase episode of NRT, defined by purchases made in consecutive, 4-week intervals.RESULTSMost participants, who did not adhere to NRT guidelines, either purchased the medication for too short (≤4 weeks, 63.5%) or too long (>24 weeks, 13.2%) of a purchase episode. Median purchases of NRT in the first month of use were one and four in the former and latter, respectively. In contrast to other groups, persistent users (>24 weeks) did not curtail purchases of NRT across several 4-week intervals, suggesting potential for dependence on NRT.CONCLUSIONSThe observation that most purchase episodes were terminated prematurely is consistent with surveys reporting widespread NRT misuse. Given uncertainty of greater regulation of NRT sales through legislation, it would be prudent for Finnish retailers to promote proper use of the therapy.

Effect of Customer Loyalty Programs on Earnings Quality and Disclosure

Effect of Customer Loyalty Programs on Earnings Quality and Disclosure

Trust fall: data breach perceptions from loyalty and non-loyalty customers

ABSTRACT Due to increased technological development in the service industry, protecting consumers’ personal data has become a critical concern. When companies’ information systems are attacked and customers’ profiles are compromised after data breaches, customers may feel more vulnerable about their information privacy. This study uses hotel data breaches as circumstances and aims to understand whether loyalty and non-loyalty program customers would distinguish differently the perceived severity, vulnerability, trust depletion, and crisis response strategies of an organization in response to a data breach. The results indicated that a data breach does not cause significant differences in perceived vulnerability and perceived severity between the two groups. However, loyalty program customers significantly reduce their trust toward the organization after a data breach crisis. This study provides implications to address the importance of customer data protection and crisis responses as part of customer relationship management.

Designing competitive loyalty programs: a stochastic game-theoretic model to guide the choice of reward structure

We develop a game-theoretic model to guide the choice of the reward structure in customer loyalty programs. We model a duopoly market in which one firm adopts a loyalty program. Firms independently and simultaneously set the prices and rewards. Heterogeneous customers buy homogeneous products in a multi-period setting. Customers are segmented into three groups based on their level of strategic behavior, which is expressed in terms of their degree of forward-lookingness. We use two exogenous parameters to represent the size of each segment. A third parameter captures the point pressure effect, which refers to the increase in customer spending as they approach a reward threshold. In each period, customers choose the firm that maximizes their utility, which is a function of offered prices, rewards, and the distance to the next reward. We use the logit model to model the customer choice behavior. Customers’ accumulated purchases evolve as a Markov chain. We derive the limiting distribution of accumulated purchases, which is subsequently used to formulate the firm’s expected revenue functions. We develop two algorithms to find the Nash equilibrium for both the linear and nonlinear rewards in term of the three parameters. Using a thorough numerical analysis, we show that the choice of the structure becomes more critical as the size of the strategic segment increases. The nonlinear scheme is superior when the size of the highly-strategic segment is very small. The linear rewards is superior in markets where the size of the highly-strategic segment and the sensitivity to distance are simultaneously not small.