The Pursued Benefits of Customer Loyalty Programs

Customer loyalty programs have increased in recent decades and customers are members in several loyalty programs. Loyalty programs are seen as a tool of exploiting customer relationship management with the aim of long-term, profitable customer relationships. Companies have created such a market where customers are rewarded automatically, even if they are disloyal. In addition, companies are struggling as they try to motivate customers to purchase more and make more frequent visits.

Applying customer value measurement to a customer loyalty program: Case of implementing a key performance indicator based on customer value

In recent decade customer loyalty programs have become very popular and almost every retail chain seems to have one. Through the loyalty programs companies are able to collect information about the customer behavior and to use this information in business and marketing management to guide decision making and resource allocation. The benefits for the loyalty program member are often monetary, which has an effect on the profitability of the loyalty program. Not all the loyalty program members are equally profitable, as some purchase products for the recommended retail price and some buy only discounted products. If the company spends similar amount of resources to all members, it can be seen that the customer margin is lower on the customer who bought only discounted products. It is vital for a company to measure the profitability of their members in order to be able to calculate the customer value. To calculate the customer value several different customer value metrics can be used. During the recent years especially customer lifetime value has received a lot of attention and it is seen to be superior against other customer value metrics. In this master’s thesis the customer lifetime value is implemented on the case company’s customer loyalty program. The data was collected from the customer loyalty program’s database and represents year 2012 on the Finnish market. The data was not complete to fully take advantage of customer lifetime value and as a conclusion it can be stated that a new key performance indicator of customer margin should be acquired in order to profitably drive the business of the customer loyalty program. Through the customer margin the company would be able to compute the customer lifetime value on regular basis enabling efficient resource allocation in marketing.

Customer Perception about Loyalty Programs in Agricultural Market: a case study

This study discusses the use of loyalty programs and Customer perception in, agricultural market. The theoretical review includes relationship marketing, its objectives, dimensions and instruments, and loyalty programs. The method for the empirical part consisted on qualitative research, through a case study conducted at one of the largest crop protection chemical companies in Brazil. The case is representative once this company was pioneer in its segment in adopting the customer relationship management. (CRM) approach to-their clients: It has been a consensus that customer relationship is a tool to amplify the Customer share. This.,is so, due the. increasing competition generated by the entrance of generic products and the retaliation actions adopted by the multinational groups. The case study includes a market overview, a description of the company, its loyalty program, the image of the program from the customer`s perspective, and the main results acquired with the CRM program. The Study also presents some recommendations for-companies that are pursuing strategies to. increase their customer share through loyalty programs.

Consequences of customer loyalty to the loyalty program and to the company

Gaining customer loyalty is an important goal of marketing, and loyalty programs are intended to help in reaching it. Research on loyalty programs suggests that customers differentiate between loyalty to a company and loyalty to a loyalty program, yet little is known about the consequences of these two types of loyalty. Therefore, our study intends to make two main contributions: (1) improving our understanding of the constructs "program loyalty" and "company loyalty", (2) investigating the relative impact of the two types of loyalty on preference, intention, and purchase behavior for the case of a multi-firm loyalty program. Results indicate that company loyalty influences a customer's choice to visit a particular provider and to prefer it over competitors, but it is not a strong predictor of purchase behavior. Conversely, program loyalty is a far more important driver of purchase behavior. This implies that company loyalty primarily attracts customers to a particular provider and program loyalty ensures that once inside the store, more money is spent. © 2011 Academy of Marketing Science.

Spillover effects of service failures in coalition loyalty programs:the buffering effect of special treatment benefits

Coalition loyalty programs are on the rise, yet few studies investigate the impact of service failures in such programs. Using data from a retail context, the authors show that a program partner deemed responsible for a service failure suffers negative customer responses. However, customers' perceptions of the benefits of the coalition loyalty program buffer these consequences. Perhaps most importantly, when customers perceive the program's special treatment benefits as low, direct and indirect spillover effects occur, such that a service failure by one program partner has a negative effect on customer loyalty toward the program itself. © 2013 New York University.

A lojalitásprogramok menedzselése (Managing of loyalty programs)

A lojalitásprogramok egyre népszerűbbek hazánkban is, ahogy a növekedési lehetőségek bezárultak, és a menedzserek figyelme a vevők és a piaci pozíciók megtartása felé fordult. A közelmúltban azonban számos nemzetközi példa mutatja, hogy egy ilyen program lehet sikertelen is, amely veszteséget termel, így vagy kivezetésre kényszerül, vagy a vállalat kénytelen átszabni. Tudatos tervezés és reális üzleti modell nélkül tehát nem feltétlenül térül meg az akár milliárdos nagyságrendű befektetés. Jelen cikk során a szerző kísérletet tett arra, hogy összegyűjtse azokat a döntési pontokat, amelyek hatással lehetnek a programok sikerére, és bemutassa a lehetséges választási alternatívák előnyeit, hátrányait. Konklúzióként három olyan elvet emelt ki, amelyek meghatározóak lehetnek. Eszerint a programoknak a vállalati stratégiába és folyamatokba történő integrációja, a megfelelő megtérülési indikátorok felállítása és azok szisztematikus nyomon követése, valamint a program megkülönböztető, többnyire emocionális és élményszerű jellege, amely kiemelkedő szerepet játszhat az eredményesség szempontjából. _____ As the opportunity of market growth seemed to be limited and managers started to pay more attention to customer retention and market defence, loyalty programs became more and more popular marketing tool in Hungary. Many international cases proved, however, that the implementation of this activity can also lead to failure realizing considerable losses and by necessity companies can end up or reposition the program. Without a deliberate design and realistic business model it is not easy to guarantee the return of investment that can be even billion in size. In the current article the author attempts to collect all the relevant issues that can have effect on the success of loyalty programs and determine the consequences of potential options. As a conclusion, the author emphasized three critical principles. The integration of loyalty programs into the company’s strategy and processes, the appropriate measure of returns with systematic tracking and the unique, mostly emotional and entertaining characteristics of the program can be crucial.

The differential effects of switching costs and attractiveness of alternatives on customer loyalty

Dissertação apresentada como requisito parcial para obtenção do grau de Mestre em Estatística e Gestão de Informação.

Spill-over effects in multi-partner loyalty programs

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Management from the NOVA – School of Business and Economics

Strategic account management: the path to gain customer loyalty

The account management field works closely with the sales team, serving as the customer’s primary point of contact. This project’s purpose was to understand if shifting the account management from brand centric to customer centric, would be the best fit for a Portuguese Pharmaceutical company. This customer centric approach - Strategic Account Management (SAM) - was studied, understanding the implicated trade-offs to the company. The workforce was probed about the project and their comments were analyzed. The conclusion points to an implementation of SAM and proposes the adaptations to follow in order to smooth the change.

Customer loyalty in DIY retailing in Russia: Innovative approaches for improving customer retention through technology

Customer satisfaction has been widely studied concept due to its importance on business performance. Customer satisfaction should ideally lead to customer loyalty and have a positive effect on business profitability and growth. This study investigates customer satisfaction and loyalty in the Do-It-Yourself retailing in Russian  market.  “K-rauta”  retail  chain  was  chosen  as  a  focus company for this study. Goal of the study was to investigate what creates customer satisfaction in this given market and what is the role of quality, trust and satisfaction for creating customer loyalty. The role of internet in consumer purchasing process was also investigated. Furthermore, consumer preferences towards new marketing solutions such as smart phone applications were briefly examined.

The Impact of Service Quality and Relationship Quality on Customer Loyalty in Business-to-Business Context

The main objective of this Master’s Thesis was to examine the interrelations of service quality and relationship quality (customer satisfaction, trust and commitment), and find out are they antecedents for customer loyalty in business-to-business context. Literature review revealed some research gaps concerning these focal concepts, which should be studied more closely. The theoretical basis for this research was collected for evaluating a strategic increase of customer’s perceptions of service quality and relationship quality as well as customer loyalty in business-to-business environment, and it was tested empirically in a sample of 164 corporate customers, who responded to the Internet-based survey. The measures, used in the survey, were first assessed by using confirmatory factor analysis (CFA), and then the hypothesized relationships were further verified using structural equation modeling (SEM) in LISREL 8.80. There was found support for a half of the hypothesized construct relations. The results of the research confirm the direct influence of trust and commitment on customer loyalty. Also, service quality turned out to have an indirect impact on customer loyalty through trust. No support, however, was offered for the proposed impact of customer satisfaction on loyalty in this case. The research provides managerially relevant and actionable results that may help service providers execute more specific customer relationship quality strategies that lead to higher customer loyalty.

Promoting Customer Loyalty Through a Telecommunication Specific CRM Framework

The objective of this thesis is to find new methods to promote customer loyalty in the telecommunication industry. The study was made on the appointment of Tecnotree Corporation, which operates in a telecommunication software business. This thesis comprises of a theoretical section, which includes the presentation of relevant theoretical background and of an empirical section, which is mostly based on interviews and professional opinions. One of the most important aspects of customer relationship management (CRM) is building customer loyalty. Telecommunication markets are becoming saturated in an increasing number of markets. Customer acquisition is no longer a way to grow; companies need to hold on to their existing customers. Companies are always looking for new ways to avoid churning customers. These new methods are searched from recent studies and they are discussed with marketing professionals from operators. Current CRM lacks the ability to extract data efficiently from databases. Social media’s utilization is also in its early stages. It contains a lot of possibilities, but also things that can be risky for companies. In order to obtain full advantage of the new methods companies are required to invest considerable amounts of time and money to develop new systems, but not all companies are ready for the change.

The effects of the service process on satisfaction, trust and value as creators of customer loyalty in a daily deals concept

This study aims at applying the customer behaviour studies of satisfaction, trust, perceived value and loyalty to a daily deals concept. The goal is to find out whether the relationships are the same in this specific context when compared to previous e-commerce studies. The study examines how the daily deals service process affects customer satisfaction, trust and value, and how these in turn impact customer loyalty and each other. The data was collected via e-mail survey from case company customers, and research was conducted on a quantitative basis by using multivariate methods as tools. The results suggest that daily deals service process and service quality do have a direct and positive effect on customer satisfac-tion, trust and value. Additionally, positive correlations between the latter variables and customer loyalty were found. The results imply that the daily deals concept does not differ from other e-services when considering the studied factors. The results also emphasize the importance of recognizing what determinants have the greatest impact on customer loyalty in this specific context.

The interconnections between customer loyalty, employee engagement and business performance

The interconnections of customer loyalty, employee engagement and business performance have been separately examined in several previous studies but actually a coherent study combining all of these components together has been lacking. This thesis aims to study all of these components and their interrelations at the same time in order to understand the organization as a one whole. The thesis includes an encompassing review of the previous studies related to customer loyalty and employee engagement. The theory presents both the theoretical approaches and the empirical findings from the earlier literature and builds therefore a strong fundament for the empirical part of this thesis. The empirical data in this thesis was provided by three case companies of a Nordic group operating in a business-to-business professional services branch and it used the Net Promoter Score method for measuring both customer loyalty and employee engagement. The thesis left interesting research questions open and provides therefore an intriguing study field for the future researches.