Loyalty Program Members Research Articles

METODE ANALISIS DISKRIMINAN KUADRAT TERKECIL PARSIAL UNTUK KLASIFIKASI SEGMEN LOYALITAS KONSUMEN SUSU PERTUMBUHAN

Consumer segmentation is the process of dividing consumers into different segments based on consumer characteristics, making it easier for companies to develop marketing strategies. The segmentation is carried out based on consumer loyalty using the RFM (Recency, Frequency, Monetary) approach a number of 7753 members of a nutritional product loyalty program is considered in the analysis. Partial least square discriminant analysis classification modeling is built using the results of consumer segmentation being the a response variable. The model is not good enough based on the AUC (Area Under Curve) value of the ROC (Relative Operating Characteristic) curve that quite low for each segment. The explanatory variables that have high contribution to the model is X5, X9, and X2 with VIP (Variable Importance in the Projection) values more than 1.

Fee-Based Loyalty Programs: An Empirical Investigation of Benefit Redemption Behavior and Its Effects on Loyalty

Loyalty program (LP) membership gives customers access to benefits such as free, discounted, or upgraded products or services; however, firms are increasingly charging customers enrollment fees for access to benefits instead of allowing them to earn benefits through repeat patronage. We sketch the evolution and design of LPs over the past 200 years and distinguish between several types of programs (free rewards-based programs and paid membership programs) and the types of benefits they offer (discounts and giveaways). We propose a theoretical model that hypothesizes that members who pay directly for LPs will use different benefits than customer who receive LP membership as a bundled package. Furthermore, we hypothesis that different benefit use moderates loyalty behavior. We test the hypotheses using a database of restaurant LP customers and find partial support for our hypotheses; in response to the sunk-cost effect and expectancy-value theory, a paid LP enrollment brings with it a need to self-justify and find the easiest path to investment payoff. Bundled members are more inclined to use lesser-used benefits. Our results suggest that proliferation of benefits may not translate into improved service, loyalty, or satisfaction.

The evolution of behavioral loyalty and customer lifetime value over time: investigation from a Casino Loyalty Program

Despite the widespread usage of loyalty programs across various businesses in the hospitality industry, its effectiveness is still being questioned. Thus, it is meaningful for hospitality marketers to evaluate the effectiveness of their loyalty programs to increase profitability and this study aims to investigate the effectiveness of a loyalty program. Specifically, this study examines the evolution of behavioral loyalty from a longitudinal perspective and observes whether loyalty program members produce positive customer lifetime value. This study obtains secondary data from a casino and hotel resort and performs time series ordinary least squares (OLS) modeling and study results support the research hypotheses. This study contributes to the understanding of the relation between a loyalty program and a firm’s profitability. It provides practical insights to hospitality marketers on how to manage loyalty programs more proficiently.

Tactical use of rewards to enhance loyalty program effectiveness

A key member benefit for participating in a loyalty program (LP) is the rewards earned for points accrued. One popular reward structure is a catalog of many diverse items. The rewards among this broad selection are likely to differ in their appeal due to their intrinsic differences and customer heterogeneity. Prior research has shown that after redeeming a reward, LP members are more motivated to increase their purchase volume/frequency and share-of-wallet within the program, thereby becoming more active. In this study, we fit a hidden Markov model to a 4½ year longitudinal data set of points accrual and reward redemption activity for about 4500 members of a large coalition LP. Our analysis reveals three latent states — active, hyperactive and inactive. We then investigate the likelihood of LP members transitioning between these states across successive time periods, and examine the reward categories and marketing effort associated with these transitions. Subsequently, we use our model to optimally promote particular reward categories to encourage LP member migration to managerially desirable states or prevent them sliding into a less desirable state. Our proposed optimal reward strategy potentially increases the estimated proportion of LP members in the hyperactive latent state from 35.7% to 40.1%, with a resultant increase in sales revenue for retailers and service providers in the LP of 7.7%. We find that rewards which are more fungible have the strongest influence on increasing points accrual activity.

Length of stay control: Is it a fair inventory management strategy in hotel market?

According to past revenue management (RM) research, length of stay control (LOSC) plays a significant role in building effective RM systems and increasing revenues in the hotel industry. While LOSC has been widely implemented in the hotel’s online booking systems, little attention has been paid to this important non-pricing RM practices. Thus, the current study aims to provide a holistic view of customers’ perceptions toward hotel’s LOSC practice. In particular, this study (1) investigates the impact of LOSC practice on customers’ perceived fairness and subsequent behaviors and (2) tests the moderating role of customers’ membership status on perceived fairness. A between-subjects factorial design and partial least squares structural equation modeling (SEM) analysis were employed to test the structured relationships. Research findings demonstrate that customers perceive LOSC as unfair, such poor fairness perceptions leading to negative word-of-mouth and a decrease in willingness to book. Hotels’ loyalty program members are likely to perceive LOSC as much more unfair than those who are not. The current study is the first study to reveal the critical roles of hotels’ LOSC practice and loyalty membership on customers’ perceived fairness and subsequent behavior intentions.

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.

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.

Store Attribute Factors Inducing Customer Loyalty in the Context of Apparel Retailers

The aim of this paper is to explore elements and variables of store attributes impelling customer loyalty. This study uses loyalty program members from apparel stores. Initially the variables were explored through literature and interview with retailers. In the second step, exploratory factor analysis was used to identify factors of store attributes. Multiple regression test the significant effect of extracted factors on customer loyalty intentions. It was evident from the result that, interpersonal communication fail to induce loyalty among members of loyalty program. In future the study would be carried out in different stores.

Online/offline information search patterns and outcomes for services

Purpose This study aims to determine the antecedents and consequences of information source choice to support a purchase decision for services high in experience attributes. Design/methodology/approach The authors conduct two studies to test their propositions. Study 1 is a single-category application using data from a national survey of 974 consumers who recently made a hotel-stay purchase/reservation. Correspondence analysis was used to identify search patterns, and regression analysis was used to identify their antecedents and influence on search outcomes. Study 2 is a cross-category study using data from a survey of 422 MTurk respondents reporting on search processes across six different services contexts, including hotel reservations. In this study, the authors seek generalization of their results to other services categories. Findings The authors identify four dimensions that characterize what information sources consumers, on average, use together when purchasing services. It is found that loyalty program membership and consistency in service delivery across a brand’s outlets for the brands in a consumer’s evoked set are important determinants of search patterns. Search patterns partially mediate the impact of consumer characteristics, choice context and choice set characteristics on search effort and, ultimately, on price paid. Practical implications An understanding of the factors that are associated with consumers’ choices of information sources and whether these choices are systematically related to search outcomes has implications for market segmentation and for marketers’ initiatives with respect to what information content to emphasize across sources. Originality/value The contribution is an understanding of the antecedents and consequences of consumer search patterns – and what information sources consumers tend to use together, considering the diversity of both internet and non-internet sources. There are limited insights in the services literature regarding how the internet impacts information search processes.

The Effect of Customer Satisfaction on Customer Loyalty: The Moderation Roles of Experiential Encounter And Customer Patronage

This study investigated the links between customer satisfaction and customer loyalty related to customers patronizing star rated hotels, and the moderation roles of experiential encounter and customer patronage. This was investigated in a sample of 347 loyalty program members. Data was analyzed using descriptive analysis and bivariate relationships. In addition simple moderation, additive moderation and moderated moderation were performed to analyze the effects of customer satisfaction, experiential encounter, and customer patronage in predicting customer loyalty of loyalty program members patronizing star rated hotels. Results show that customer satisfaction moderated by experiential encounter did not predict the levels of change in customer’s loyalty to star rated hotels. Additive moderation shows a significant conditional effect of experiential encounter and customer patronage on the relationship between customer satisfaction and customer loyalty. This raises the importance of further researching customer satisfaction impacts on loyalty programs members especially during periods of high customer patronage of the star rated hotels.

Moderation Effect of Perceived Benefits of Loyalty Programs on the Link between Store Attributes and Customer Loyalty

The objective of this paper is to examine the moderation effect of perceived benefits of loyalty programs on the link between store attributes and customer loyalty. This study uses data from loyalty program members covering different apparel retailers of Northern districts of Karnataka. In the first step variables were identified through literature review and interview method. In the next step, exploratory factor analysis was performed to identify the critical factors which measure customer loyalty in the apparel retailer’s context. Finally, moderation analysis was employed using SPSS and results indicate that perceived benefits of loyalty programs significantly moderate the relationship between stores attributes and customer loyalty.

To Study the Relationship between Service Encounter and Retail Experience on Customer Satisfaction and Customer Loyalty with Impact of Loyalty Program Membership

The authors of the study are inquisitive to understand the relationship between Service Encounter and Retail Experience under the dynamic business environment in India. The purpose behind conducting this study was to examine the link between the customers’ idea of a retail customer experience (CE), service encounter and its effect on satisfaction and loyalty and to further establish the effect of loyalty programs on these links as well. The study was undertaken in Pune city, which is well established, and it has been evident to observe and possibly imitate entrance of international competitors. The data was collected using convenience-sampling technique from the Major supermarkets, hypermarkets, malls and single brand retail stores of Pune with or without loyalty programs based on their location and model of operations. In addition to that, partly data was collected using google forms to capture the attitude of retail customers from major cities such as Delhi, Mumbai, Kolkata, Hyderabad and Ludhiana. The findings confirmed the model of customer experiences and service encounter leading to customer satisfaction and customer loyalty and supported positive relation with customer satisfaction. However, it discarded the role of loyalty programs membership in enhancing customer loyalty. Further studies can / may examine whether the findings hold true for each individual loyalty program or not. The paper calls for more studies and measures to encourage publication of negative empirical outcomes to ensure empirical generalization and self-correction in the literature. Managers in retail segment should focus their attention on the design and delivery of customer experience, without placing reliance on loyalty programs. Both cognitive and emotional attributes of retail services must be considered for managing a holistic Customer Experience.

Are loyalty program members really engaged? Measuring customer engagement with loyalty programs

In a quest to engage customers in long-lasting relationships, many firms rely on loyalty programs (LPs). They do fairly well in acquiring new members of LPs, but firms often fail to engage them in the long term. This article seeks to understand what engagement in LPs is, how to measure it, and how it relates to company engagement. With four studies, the authors conceptualize LP engagement as six behavioral manifestations: proactively using cards, redeeming points, adapting purchase behavior, being receptive to information, sharing information, and searching for information. The 20-item scale proposed to measure these behaviors provides a viable, novel tool for determining customers' LP engagement. Whereas previous research on LPs mainly considers card usage or point redemption behaviors as proxies for customers' LP engagement, the current research shows that these behaviors are insufficient indicators of the actual level of engagement in LPs.

Direct mail promotion mechanisms and their application in supermarkets

In this study, we consider the problem of selecting supermarket loyalty program members to receive physical direct mail and promotional electronic direct mail (i.e., direct email). To help marketers choose the target members for physical direct mails, we modify the customer’s preference index of our original model to predict members’ repurchase rates for a physical supermarket’s members. Based on members’ predicted repurchase rates, marketers can design proper marketing strategies for different types of supermarket member to improve marketing effectiveness. In addition, because members can only spend a short amount of time reading direct emails before choosing the products that they like, a recommender system based on a simple combination method is introduced. The system determines the most suitable combination of commodity types under the condition that a customized direct email can include only a small, fixed number of such types. In this study, member transaction records from a well-known Taiwanese supermarket were used as the test data. This supermarket’s marketing department reviewed all the experimental results and confirmed that our approach is not only superior to the current approach employed by the supermarket but also useful in designing appropriate direct-mail marketing strategies for selected supermarket members. Our approach is also suitable for direct email sent by the supermarket.

Loyalty programs in the pharmaceutical retail: The impact of a network loyalty program on the pharmacy loyalty

The paper aims to explore the role of network loyalty programs (LPs) in the pharmaceutical retail industry. A questionnaire, directed to the members of a network LP, was carried out in a community pharmacy, in order to test the various relationships in a conceptual model. Results indicate that the positive effect of program perceived value on store loyalty is strengthened by the existence of program satisfaction and program loyalty, suggesting that a network loyalty program may be a source of competitive advantage for pharmacies. However, due to its nature, a network LP may solely increase sales but not generate true loyalty toward the pharmacy. In that case, firms should rethink their efforts on the program. A clear strategy, consistent relationship marketing initiatives, and an effective communication on LP's value proposition are needed to generate differentiation advantages and commitment toward the program and the pharmacy. Contributions to pharmacy management are offered.

Measuring Perceptions of Fairness of Loyalty Program Members

ABSTRACTThis research develops a measure of perceptions of fairness (POF) toward loyalty programs. Grounded in the Theory of Justice (TOJ), the POF scale connects principles of distributive, procedural, and interactive justice to the process, value, and communication components of the loyalty circle (Shoemaker, 2003). Following the recommended multi-method, the multistage scale development process, the 14-item, two-factor POF scale is constructed and validated with four samples of loyalty program members. The data support two dimensions: value-based fairness and communication-based fairness. The scale can serve as a dependent variable in future research to explain how program features, structures, and changes affect members from the fairness perspective. The scale can serve as an antecedent to behavioral intentions and outcomes, thereby providing insight into the influence of marketing initiatives on loyalty program effectiveness.

Social influence in the adoption of a B2B loyalty program: The role of elite status members

This study investigates the role of elite loyalty program members in influencing other customers to adopt a hierarchical loyalty program (or HLP) in a business market. Drawing from the social psychology literature, the theoretical framework proposes that elite status members exert a disproportionate positive influence on neighboring non-members to adopt the HLP, and that this social influence has an inverse U-shaped effect. A unique dataset from a B2B loyalty program of a firm in the agribusiness industry with detailed information on members and marketing efforts from 1378 zip codes in Germany from 2008 to 2012 is used for the analysis. The study finds that, compared to members in lower status, elite status members have a stronger social influence on non-members. Importantly, as the proportion of elite status members increases, the adoption probability of non-members increases. However, as the fraction of elite status members increases beyond a certain point, the adoption probability of non-members decreases. Overall, the results of this study advances our understanding of loyalty programs in B2B markets, particularly with regard to the drivers of loyalty program adoption and the role played by social influence in driving new member enrollment.

Customers' relationship with their grocery store: Direct and moderating effects from store format and loyalty programs

This paper aims: (i) to characterize the priorities designed and implemented by grocery retailers concerning relationship marketing with customers; (ii) to analyse customers’ relationship with their grocery store and to evaluate store format and loyalty programs as key determinants of this relationship. Exploratory interviews were conducted with grocery store managers. Two independent samples of Portuguese customers answered a questionnaire and collected data were analysed using Structural Equation Modelling. Main results suggest that supermarkets lead to higher levels of customers’ trust (directly) and customers’ loyalty (indirectly). Furthermore, the positive effect of customers’ satisfaction on customers’ loyalty is higher for members of grocery store loyalty programs.

Loyalty programs and personal data sharing preferences in the Czech Republic

Effective loyalty program management and evaluation requires that retailers have access to relevant data. In most cases, loyalty program organizers aim to establish consumer databases for the purpose of identifi cation of individual customers: loyalty program members. The structure and quality of customer data often has a strategic effect on retailers’ decision-making accuracy and profi tability. On the other hand, consumers worry about their privacy and fear their personal data may be misused. For a good-faith loyalty program organizer, it is an ongoing task to reconcile their corporate interests with the interests of consumers who are often rewarded by purchase incentives and personalized services. Consumer’s willingness to disclose personal information to loyalty program organizers is not uniform. In fact, individual preferences, sociodemographic and lifestyle factors play a very important role. This study provides a structured quantitative analysi s of customers´ willingness to share selected key types of personal and contact data with loyalty program organizers in the Czech Republic. Cost-benefi t assessments based on our results may help marketing managers with establishing and/or amending key LP incentives. We identify and discuss important differences in personal and contact data-sharing preferences among specifi c consumer groups. To highlight some of the empirical results, respondents aged 65 and older are signifi cantly less willing to disclose personal data as compared to younger consumers. On the other hand, we do not fi nd a statistically signifi cant evidence for education-based differences in data sharing preference. Our results may be utilized by marketing professionals (loyalty program organizers) as well as by academic researchers in order to optimize their consumer data-gathering processes.

Interplay between air passengers’ service quality, satisfaction, loyalty and loyalty programmes in South African owned airlines

Orientation: Delivering service quality is crucial for the continuous operation and sustainability of South African owned airlines. The term ‘South African owned airlines’ refers to six South African owned registered airlines, and is used for purpose of anonymity and confidentiality.Research purpose: The main aim of this study was to examine the interplay between service quality delivery, satisfaction, loyalty programmes and passengers’ loyalty to South African owned airlines.Motivation for the study: Intended to provide insight into quality to society of airline services, the global airline industry in general and the airline industry in South Africa in particular.Research approach, design and method: A quantitative research approach was adopted, using a cross-sectional (sample survey) method. Empirical data was directly collected by the researchers from 684 passengers at O.R. Tambo International Airport in Johannesburg and King Shaka International Airport in Durban using a non-probability random sampling technique.Main findings: The study’s main findings were that: (1) generally, passengers of South African owned airlines were satisfied with the airlines’ service quality and rated such satisfaction as moderate to high. (2) Only 22% of passengers were part of a loyalty programme. However, in the South African context, loyalty programme membership is not indicative of passengers’ loyalty to airlines: 86% of the respondents stated that they are consistently loyal to the airlines (3). There was no association between passengers’ loyalty and frequency of travel. (4) South African passengers have limited choice of airlines; therefore, loyalty and patronage does not lean towards a particular airline.Practical implications: By offering superior service quality to passengers, South African owned airlines could gain competitive advantage ongoing patronage and loyalty, thus increasing overall profitability.Contributions: This study provides cognitive information, which management could use to design new marketing strategies to enhance loyalty in the airlines in South Africa and globally.