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Loyalty Programs Effectiveness and Customer-Company Identification

  • University of City Island
  • New York Institution for Continuing Education

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In the current competitive market, specialists and experts have underscored the importance of close connections with clients for an effective business. Organizations are being differentiated to pull in potential clients and hold existing ones. It is acknowledged that loyal customers generate prominent incomes and benefit and maybe somewhat, expanded market share. Hence, it is a profitable idea to have an association towards client loyalty. Literature review revealed that introduction of loyalty programs is a prevalent instrument through which firms differentiating themselves and, in that capacity, these programs have turned out to be one of the real determinants of organizations’ accomplishment. Customer loyalty programs are characterized as defensive marketing instruments structured by organizations to change the customers personal conduct standards in long term by giving them motivators, so they stay with a particular brand or company. The results of article both empirically and conceptually sets up a deep investigation system that can help marketing managers and specialists assess and improve dedication program adequacy.
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International Journal of Innovation, Creativity and Change.
Volume 9, Issue 6, 2019
Loyalty Programs Effectiveness and
Customer–Company Identification
Thanaporn Sriyakula, Kittisak Jermsittiparsertb,c*, Watcharin
Joemsittiprasertd, Chayongkan Pamornmaste, aFaculty of Business
Administration, Mahanakorn University of Technology, Bangkok, Thailand,
bDepartment for Management of Science and Technology Development, Ton
Duc Thang University, Ho Chi Minh City, Vietnam, cFaculty of Social
Sciences and Humanities, Ton Duc Thang University, Ho Chi Minh City,
Vietnam, dDivision of Business Administration, ASA College, New York,
USA, eFaculty of Business Administration, Mahanakorn University of
Technology, Bangkok, Thailand,
*Corresponding Author Email: b,c*,, dwatjoemsittiprasert1@a,
In the current competitive market, specialists and experts have
underscored the importance of close connect ions with clients for an
effective business. Organizations are being differentiated to pull in
potential clients and hold existing ones. It is acknowledged that loyal
customers generate prominent incomes and benefit and maybe
somewhat, expanded market share. Hence, it is a profitable idea to
have an association towards client loyalty. Literature review revealed
that introduction of loyalty programs is a prevalent instrument through
which firms differentiating themselves and, in that capacity, these
programs have turned out to be one of the real determinants of
organizations’ accomplishment. Customer loyalty programs are
characterized as defensive marketing instruments structured by
organizations to change the customers personal conduct standards in
long term by giving them motivators, so they stay with a particular
brand or company. The results of article both empirically and
conceptually sets up a deep investigation system that can help
marketing managers and specialists assess and improve dedication
program adequacy.
Key words: Marketing, Loyalty Program, Customer–company identification.
International Journal of Innovation, Creativity and Change.
Volume 9, Issue 6, 2019
Loyalty programs are broadly utilized in relationship advertising. The present loyalty reward
projects give particular treatment to their high-paying or frequent customers (Wetzel et al.,
2014). Customers are isolated into well-characterized levels depending on their spending
levels. Reliability programs offer extraordinary advantages to the company's best clients,
including hard advantages (e.g., rewards) delicate advantages (e.g., acknowledgment). In the
new stratified client society, those at the top of the hierarchy appreciate access to exclusive
services and remarkable degrees of individual consideration (Liu and Mattila, 2016).
In the existing econo mical trade setting, analysts and professionals have underlined the
criticalness of close customer connections to an effective business (Kang, 2016; Mullins et
al., 2015). As a significant method for customer relationship management, loyalty programs
discovered extensive usage in airlines, grocery stores, hotels and other enterprises and these
plans have pulled in impressive enthusiasm among specialists (Ivanic, 2015; Liu and Mattila,
2016; Jermsittiparsert, Sutduean, & Sriyakul, 2018).
Loyalty projects utilize numerous kinds of systems to draw in and hold faithful clients. A
portion of these techniques include: enabling clients to collect emphases, miles or other
program-explicit monetary standards for procurement of prizes, for example a concrete
rewards-based technique; providing clients better treatment or administrations that are not
accessible to other people, for example, need boarding, for example a particular treatment-
based methodology; or blessing clients with favoured status or first class enrolments, for
example an apparent status-based procedure. These techniques expect to incite desirable,
benefit producing client behaviours, for example, retention, loyalty and share of wallet (Ma et
al., 2017). Notwithstanding, Shugan (2005) contended that programs of loyalty produce
liabilities for organizations and not future incomes. We may likewise discover that
individuals of loyalty programs demand lower costs, benefits or additional contemplations
from organizations. These nonsensical practices can be comprehended as entitlement
behaviours that undermine income and profitability (Wetzel et al., 2014).
The development and extension of Loyalty Programs worldwide in enterprises from
hospitality to retail to entertainment has quickened due to the phenomenal pace of
globalization and digitalization. Reward or dependability programs (LPs) plays a
progressively significant part in retaining shoppers, invigorating utilization and creating
connections. The redemption rates of Loyalty Programs are low for the world's biggest LP
supplier,, averaging around the globe: 13.67% (McEachern, 2018). The breakdown
demonstrates that low redemption rates are predictable crosswise over societies: 9% for
Indonesia, 17% for Singapore, 12% for Hong Kong, 14% for New Zealand, 14.8% for the
International Journal of Innovation, Creativity and Change.
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United States, 15% for Australia, 15% for the United Kingdom and 16.8% for Canada
(Morgan et al., 2019).
Theoretical background
Loyalty of customers & Loyalty programs
The customer’s frame of mind, willingness to purchase and conduct to incline toward one
brand over all the other competitor brands due to fulfillment with the item or service is
known as “Customer Loyalty”. It is the condition which make the customers to shop more.
Since loyalty is the outcome of past positive encounters creation with the customers and
having them returning to the company again and again because of previous positive
encounters, regardless of whether they might not have the best item, cost or service
conveyance. It is being said that loyalty is added of a repetitive action. Customers can
illustrate dependability to value, brand, business and different clients. Though, satisfaction of
customers to the company influences them to shop from there due to improved services. This
expects the essential components that influences loyalty of customers: consumer loyalty,
emotional bonding, trust, decision propensity and history of company (Magatef & Tomalieh,
Consumer loyalty with the products or services is seen as an approach to organization’s
prosperity and long-term competitiveness. Therefore, the motive of organization should be to
move a fulfilled customer to faithful customer. Customer commitment is a consequence of a
positive enthusiastic experience, physical trait-based fulfillment. Loyalty programs are
organized showcasing endeavours that reward and, in this way, energize, steadfast purchasing
conduct, which is advantageous to the firm. Reward programs are presented to those
customers making purchases every now and then. Loyalty program is beneficial as it gives
customers access to new items, uncommon deals coupons or free products. Registration of
customers’ own data with the company and it becomes the reason that proves beneficial to
customers as they can do cumulative purchasing over time. Loyalty programs plays a major
part in developing customer relationship by offering the points, rebates, discounts etc.
Loyalty offers support to the customers and is a tool which can build loyal customers, by
offering company’s a chance to accumulate data about customer shopping preferences which
in future helps modify the services of company (Magatef & Tomalieh, 2015).
The point of loyalty projects is to distinguish and support those customers showing a high
customer lifetime value (CLV), we advance a view that regularly isn't observed in CLV of
existing customers. For instance, almost all customers start their connections with the firm as
observers, but if they feel firm’s behaviour as unreasonable to them, they may think that it’s
hard to later build up a firm relationship. As indicated in research, getting a reward evokes
gratitude of that target customer towards the organization (Steinhoff and Palmatier, 2016).
International Journal of Innovation, Creativity and Change.
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Customercompany identification
Loyalty projects are utilized in organizations to remunerate and energize repeat support. The
prizes or advantages of such programs can be either monetary/financial or non-
monetary/social. CCID as distinguished by researches as a compelling sociological system
through which devotion projects can keep up relationship-based client devotion and fabricate.
This creates a need for progressively centred research for advantages of devotion programs
and fills the research gaps required in CCID. In the setting of reliability programs, a more
profound relationship and identification with the organization, specifically CCID, is
developed due to non-financial advantages provided to the customers. Identification of
customers links clients and their characters to the company’s image, representatives and
brands. CCID is subsequently a significant aspect of the client organization relationship
which keeps the clients associated and is a key pointer of relationship value (Brashear-
Alejandro et al., 2016). Great results are prompted by CCID, for example, faithfulness, share
of wallet, positive informal and eagerness to pay (Netemeyer et al., 2012).
Conceptual model
The theoretical model and study speculations found in Figure 1, pursue a loyalty formation
structure utilized in earlier study writing. Within this structure, formed of program value,
program faithfulness and company loyalty, the current study centres around the impacts of
monetary and public advantages on loyalty programs and therefore the loyalty of
organization. In loyalty programs, clients are likely to create relationship-based reliability to
the organization just if the program of loyalty offered is useful and the clients have great
frames of mind toward the program. As per this procedure, CCID is a driver of relationship-
based faithfulness and in this manner gives a potential connection among program loyalty
and loyalty towards organization. In expansion, customer loyalty can be managed
distinctively by program loyalty and company loyalty; client dependability to a program as
opposed to the organization speaks to a double-edged sword. Both positive and negative
outcomes are evaluated of client loyalties, this examinat ion incorporates both client share of
wallet and inactive monetary risks.
Constructing program loyalty
Loyalty programs are formulated to encourage customers to buy more, build connection with
the company and encourage more loyal customers (Hughes, & Ahearne, 2010). Loyalty
programs, through promotion, contribute emphatically to improve buys and product
consumption. Depending on instruments; their aim is to retain customers having a high
financial worth. These benefits created the frequency of buying and the number of averages
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buys a customer makes. The more purchases made by the customer from the same company,
the increment of profit also increases. This in return creates a trust between the vender and
buyer. It is simpler, as indicated by a few specialists, attract non-purchasers and to increase
sales based on trust because, the expense of new client is multiple times higher if we compare
it with the cost of keeping a client acquired. The authors Vesel and Zabkar in 2009 affirm this
and characterize the loyalty program as a discriminative advertising instrument that prizes not
just the frequent yet furthermore the reliable clients.
Figure 1. Conceptual Model.
The customer loyalty benefits the company in long run, hence below st atement is
H1. The fina nc ia l benefit a loyalty program o ffers relates positively to pro gram loyalty.
Customer loyalty enables the organization to proceed the business relationship from time to
time and to set up and create a history. Loyalty develops from a dream based on the
necessity's fulfillment to a societal vision. It is communicated by duty and trust between the
trades on-screen characters. It is a dynamic idea that is created by fortifying shared duty and
trust in accomplice. The organization points, through fulfillment, trust and responsibility, the
dedication of its most beneficial clients. As indicated by, dedication is estimated by
enthusiastic and intellectual states. They can be showed by attitudinal loyalty, protection from
resisting offers, affinity to be loyal, complaining behaviour intentions and loyalty (Bahri-
Ammari, 2013). A sense of belonging fulfils emotional belonging of the consumers and
maintains a relation with the customers hence below statement is hypothesized:
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H2. The so cial benefits a loyalty program offers relate positively t o program lo yalt y.
Constructing loyalty for company
Loyal customers tend to develop more good relationships with the company sponsoring them
for gifts and discounts. Customers can also interact directly with the company by gaining
access to the information. The perception of customers towards company influences customer
company identification and they view attributes of company more attractive (Kang et al.,
2015). The development of loyalty to store, in return lessen the negative side of the store, if
available and is augmented by the positive effects (Krithika & Ganesh, 2013).
H3. Pro gram lo ya lt y relat es positively to customer company identification.
Customers bring out commitment towards the individuals who treat them well or offer some
incentive (DeWulf et al., 2001). In this manner loyalty projects can make full of feeling duty,
general positive respect for and connection to, the association. As such loyalty programs
purchases not only increase the buys but also gains client dedication.
Positive effect of loyalty cards has been observed in previous literature on expanding client
unwaveringness. This is once more accentuated by Gilbert who stated, "reliability cards plan
to construct additional noteworthy client unwaveringness and maintenance; longer-term
connections are be created by techniques and lead at last to expanded deals and benefits".
H4. Pro gram lo ya lt y relat es positively to company loyalty.
Results of Loyalty Programs on company loyalty
Customercompany identification states the essential psychological substrate for profound,
committed and significant connections that advertisers are progressively looking to work with
their customers. CCID prompts positive results, for example, dependability, share of wallet,
positive word of mouth and eagerness to pay. Customer identification sets the customers
linkages and their identities to the organization’s image, brands and employees. CCID is in
this way a significant aspect of the relationship between customer-company which keeps
clients associated with firm and is a key marker of relationship value (Ronald & Amelia,
Loyalty, share of wallet, positive word of mouth and willingness to pay are the promising
consequences of CCID. Rise in customer spending and capturing share of customer wallet are
the results of loyalty programs (Brashear-Alejandro et al., 2016). Having a formal connection
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(e.g loyalty cards) with the company provides a promising state for identification and to build
CCID, hence below statements are hypothesized:
H5. Customercompany identificat ion relates positively to co mpany loyalty.
H6. Program loyalty relates positively to share of wallet.
Positive Results of Loyalty Programs
Loyalty programs are characterized by the American Marketing Association as " continuity
incentive programs a retailer offers to remunerate clients and energize repeat business"
(Dorotic et al., 2012, p. 218). Accordingly, principle objective of loyalty projects is to set up
and improve client connections (Steinhoff and Palmatier, 2016) to produce an unfaltering
income stream. The present examination has inspected the loyalty programs viability in
creating faithfulness of clients (Stathopoulou and Balabanis, 2016), empowering repeated
buys (Steinhoff and Palmatier, 2016) and expanding share of wallet (Verhoef, 2003),
altogether of which conceivably lead to expanded inco me and benefit. Given that adjacent
associations with clients might upgrade organization execution, client connections can be
interpreted a loyalty program generating positive results.
H7. Program loyalty relates positively to company latent financial risk.
Negative Results of Loyalty Programs
Wetzel et al. in 2014 declares that loyalty programs offer companies to endorse close
relationships which in return increase the company’s performance. It also results in proposing
extra privileges which results in the decline of profits. Loyalty programs have negative
effects as well.
Shugan (2005) contended that loyalty plans are contradictory to marketing connections since
they extricate short-term income from clients, while creating significant future commitments
to them in return. Considering the investigation by Wetzel et al. (2014) called attention to that
prioritization methodologies prompt clients to turn out to be excessively request ing and
demanding. Their discoveries show that loyalty program individuals feel qualified for
solicitation for additional endeavours by organizations, that is, privilege behaviour. Earlier
research has talked about the negative results of client entitlement. Client entitlement
behaviours can undermine profitability of account, such as lower prices and these privilege
actions proliferates the cost of service which ultimately causes profits reduction (Wetzel et
al., 2014), adversely influence the physical and mental prosperity of laborers (Fisk and
Neville, 2011), consumer faithfulness reduction (Zboja et al., 2016) and challenge perceived
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fairness. In this exploration, we also analyze about customer qualification practices to have
an undesirable result of loyalty programs.
Taking everything into account, most existing exploration centres around the positive impacts
of loyalty programs. Yet, constrained writing investigates the negative results of these
projects, which thus constrains the capacity of scholastics and experts to completely
comprehend these projects.
H8. Company loyalt y relat es negatively to company latent financial risk.
The information was accumulated fro m online panel members of loyalty programs in
Indonesia. Snowball sampling is used for the investigation of distinct loyalty behaviours to
recognize the online respondents. Loyalty studies use convenience tests (e.g., Liu and Yang,
2009) and give a sensible way to get to specific networks without the involvement of
resources. The authors additionally qualified the board of members by guaranteeing every
respondent interest in any one of the loyalty program and acts as a purchase leader. Total of
580 purchasers were considered, 47% of whom were ladies, the average age of them is 29
years, similar to tests in past investigations of customer loyalty (Kwon and Lennon, 2009)
and CCID (Lee et al., 2011). At start of the study, respondents are asked to keep that loyalty
program of which they are members in their mind through the survey.
This examination utilized Likert scales measures (1 = "strongly disagree," 2 = " disagree," 3
= "neutral," 4 = "agree," 5 = "strongly agree"). Appendix 1 displays measurement items,
factor loadings, psychometric properties and sources. The money related and social
advantages views of respondents earned through the loyalty program, as indicated by a few
regular loyalty program attributes.
To evaluate apparent money related advantages, rewards, prices and in general financial
value are included in survey (Palmatier et al., 2007) (α = .69). For social benefits, this
analysis estimated employees with customer acquaintance, personal recognition and
friendship development (α = .80).
The measure of program loyalty utilized a three-item scale from Yi and Jeon (2003) (α = .80)
while company loyalty depended on three items adapted from Palmatier et al. (2007) (α =
.88). Every estimated item referenced either organization or the program, to abstain from
confusing program loyalty questions with company loyalty questions.
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For the measurement of CCID, three items adapted from Homburg et al. (2009) ponder (α =
.82). Share of wallet showed the level of future purchases intended by the respondent to make
through the present loyalty program, as indicated by a proportion scale (Meyer-Waarden,
2008). The standardized estimation of ratio showed up in the estimated model account for the
different products and service categories. However, scale used in paper by Palmatier et al.,
2007 is utilized to measure latent financial risk, showing the level of a respondent's buys that
would move if a loyalty program finished.
Considering the nature and study sample size PLS-SEM method is su itable. In PLS-SEM, R-
square values are used for model evaluations of the dependent constructs and the effect size,
significance level and t-values of the structural path coefficients. The assessments of t-values
and standard errors originated from a procedure of bootstrap resampling (Kang et al., 2015;
Anyanwu, 2016).
Multi-item scales constructs are connected to build construct reliability, convergent validity
and discriminant validity tests. Appendix 1 displays each latent construct psychometric
properties and Table 1 shows their intercorrelation. The outcomes show adequate reliability
and validity. In support of the reliability of the multi-item scales, Cronbach's alpha qualities
(α) and composite reliabilities (ρ) were over .69. Values of all average variance extracted
(AVE) were more noteworthy than .49, adequate convergent and discriminant validity is
being shown as the value of each construct AVE was more noteworthy than the squared
correlat ion with any other construct.
After the estimation of the structural model which uses a single, latent method variable in the
structural model analysis, an examination uncovered that the path coefficients remained
significant (see Appendix 2).
Structural model and hypothesis testing
The outcomes affirm the hypotheses. Table 2 contains the evaluated path coefficients, t-
values and R-square values estimations of every construct. Specifically, positive relation
between financial benefits, social benefits and program loyalty is affirmed by value .55 for
H1 of standardized path coefficients and .15 for H2. H3 also gets support by predicted
positive relationship between program loyalty and CCID = .56, p b .01). If we talk about
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H4 and H5, program loyalty (γ = .29, p b .01) and CCID (γ = .54, p b .01) positively relates to
company loyalty, separately.
The outcomes affirm H6, a positive outcome on program loyalty is anticipated on share of
wallet of customer = .20, p b .01). At last, for H7 and H8, program loyalty has a positive
impact = .17, p b .01), though a negative effect applies on company loyalty (γ = −.15, p b
.01) on financial risk of the company.
We can conclude it by saying that combined impact of program loyalty on company latent
financial risk is positive but not significant (γ = .08, p b .10). The R square values for
program lo yalt y is .35, company loyalty is .44, company latent financial risk is .01, value for
share of wallet = .03 and CCID is .33 which confirms that model explanatory power is
rationally high.
Table 1: Descriptive statistics and correlations (N = 580).
Financial benefits
Socia l benefits
Program loyalty
Company loyalty
Share of wallet
Company latent
financial risk
Hypothesis Testing
Hypothesis are affirmed by the outcomes. The values of each dependent construct of
estimated path coefficients, t-values and R-square are in Table 2. Positive relation among
financial benefits, social benefits and program loyalty is shown by standardized path
coefficients values of .55 for H1 and .15 for H2. Support (γ = .56, p b .01) is also got by
positive relationship between program loyalty and CCID is anticipated (H3). In backing of
H4 and H5, company loyalty relates positively to program loyalty (γ = .29, p b .01) and CCID
(γ = .54, p b .01). The outcomes affirm H6, which anticipated a beneficial outcome on
program loyalty on customer share of wallet (γ = .20, p b .01). A negative impact applies on
company loyalty = −.15, p b .01) on company latent financial risk however, a positive
impact has been seen on program loyalty (γ = .17, p b .01) in support of H7 and H8.
Altogether, the absolute impact is positive however not significant of program loyalty on
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company latent financial risk is observed = .10). High explanatory power of the model
wit h R-square values for program loyalty = .35, company loyalty=. 54, CCID=.33, company
latent financial risk=.01 and share of wallet = .03 are analyzed.
Table 2: Structural model coefficients
Initial Model
Final Model
Financial benefits
program loyalty
Social benefits → program
Program lo yalt y → CCID
Program loyalty
company loyalty
CCID → company loyalty
Program loyalty share of
Program loyalty
company latent financial
Company loyalty
company latent financial
Socia l benefit sCCID
Notes: The t-value estimates used the bootstrap resampling procedure in SmartPLS (580
⁎ p b .01.
Mediation tests
Zhao et al. in 2010 investigated the program loyalty and CCID mediating role by looking at
nested mode ls. The F-tests of the contrasts between models shows whether the R-square of
each dependent construct demonstrates change (Cohen, Cohen, West and Aiken, 2003).
The outcomes demonstrate that program loyalty and CCID fully mediate the company loyalty
on impacts of financial and social benefits; the immediate impacts of financial benefits (F =
.13) and social advantages (F = .06) are not significant on company loyalty. Only partial
mediation of program loyalty with those of social benefits = .22, p b .01; F = 19.70) and
fully mediates the impacts of financial benefits (F= 2.69) on CCID. Direct impact of program
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loyalty (F= 41.45) is significant on company lo yalt y, demo nstrating partial med iation in this
relat ionship by CCID. The direct path from social benefits to CCID is sho wn in last model in
Figure 2 below:
Figure 2. Final Model
This investigation gives new research discoveries which plays a significant part for
relationship marketers on the role of marketing tools in managing CCID. It demonstrates that
CCID can be prompted through customer loyalty programs by investing in non-budgetary
advantages. This finding shows that loyalty projects provide extra assessment in the
formation of profound client networks. Traditional points of view on loyalty projects
empowers repeated buys through monetary prizes, also the financial trade on creating and
keeping up client connections (Ronald & Amelia, 2017).
This examination demonstrates that a relationship implanted in social needs and
collaborations can be created through CCID if non-money related incentives to loyalty
program individuals are utilized. There exist both loyalty programs outcomes i.e. positive and
negative. The strategies utilized by loyalty programs have constructive outcomes on
relationship quality. Our outcomes feature the difficulties related with creating productive
loyalty programs in administration and retail ventures, particularly those in profoundly
competitive settings, for example, airlines, hotels, banking and catering. Customer
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ident ification cannot be formed without persuading client sentiments of status even if the
rewards are delivered through a loyalty program.
As per the outcomes of the current study it is concluded that building and sustaining customer
loyalty programs is ver y important. It also me ans that loyalty program init iat ives can benefit
the company by retaining customers. Retailers and marketers attract customers by offering
certain sales promotion to increase their sales by providing different deals and additional
incentives. As it is also stated in the literature review retaining customers is less expensive
than to find new ones. Based on the above findings, we can say that loyalty programs play a
major role in improving consumers buying decision power. Research shows that customer
loyalty is improved through offering certain loyalty programs which impacts purchase
behaviour positively which increases profitability. The research would be beneficial in
designing tactics to stay in close contact with customers and to maintain relationship with
them by offering them rebates, discounts etc. It is important for the marketer to focus on
loyalty programs as a sales promotion tool to make it a perfect promoting strategy for
advertising of products.
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... Customer loyalty, considered in the context of loyalty programs as well as incentive programs aimed at intensifying the use of rented vehicles in order to replace the use of private sector cars, seems to be an important factor here. Loyalty programs are designed to encourage customers to use the organization's products or services as well as maintain sales relationships with loyal customers by, for example, collecting points and redeeming them for rewards, promotional price reductions or offering additional services to a limited group of customers [9]. Hofman-Kohlmeyer [10] in her publication indicates that customer loyalty is created as a result of establishing a longer relationship between sellers of products or services and their recipients. ...
... Moreover, among the publications listed in Table 1, four papers refer only to the issues of incentive systems as well as their impact on customer loyalty and changes in their behavior and habits. [9,10,41,43]. The authors of publication [44] refer to the identification of factors under the incentive program, which will ensure an increase in the number of rentals in areas far away from the city center, improving the efficiency of short-term cars distribution system. ...
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The problem of road traffic is one of the key challenges that cities will have to deal with in the future. It is also a problem directly related to the concept of sustainable development. Reducing the negative impact of road traffic in future cities can be achieved through cooperation in the following areas: social—shaping customer behavior and habits, economic—changing attitudes towards owning a car, and environmental—aimed at reducing the vehicle’s impact on the natural environment. A literature review was used to identify the research gap concerning the impact of the incentive system on increasing the environmental performance of drivers under short-term rental. Referring to the research gap, the main goal of the article is to identify the attractiveness of eco-driving incentives for drivers under short-term rental. The study used the survey method. The study was based on 323 completed questionnaires (female—122 and male—201). The following methods were also used in the analysis of the results: Anderson–Darling, Mood’s Median test and Kruskal Wallis multiple pairwise comparisons. The evaluation of the attractiveness of the incentive to eco-driving depends on the characteristic of the client who rents the car. Thus, it is possible to shape incentive systems for car rental customers that can shape their positive behavior on the road. Among the most attractive incentives for eco-driving in a rented car are: the possibility of upgrading a car in the next rental, discount for future rental and free car-wash.
... A key driver of shareholder value is the aggregate value of the customer base. The aim of any company in customer relationship management is to generate high customer lifetime value (Sriyakula, Jermsittiparsert, Joemsittiprasertd, & Pamornmaste, 2019). ...
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Companies should focus on customer lifetime value, its management, and on profitable customers for company growth. The objective of the study is to analyze customer lifetime value and to manage it effectively. The methodology adopted is a conceptual analysis of various aspects of customer lifetime value and its management. Companies should appreciate the importance of customer lifetime value and the connections among customer lifetime value, brand equity, and customer equity. They should develop and build customer lifetime value through various measures (viz., improvement in customer services, customer engagement, enhancing the growth potential of customers, management of unprofitable customers, rewarding profitable customers, and developing customer touch points). They should develop customer loyalty through trust and measure customer lifetime value. Academicians may suggest models that are effective in measuring customer lifetime value and identifying profitable customers. Managers may suggest effective strategies and initiatives for better management of customer lifetime value.
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Aided by the exponential rate of globalization and digitalization, reward or loyalty programs (LPs) have attained global reach. Paradoxically, however, dropout rates of LPs have averaged over 75%. This disconcerting statistic, coupled with the lack of culture-specific insights in the literature, points to a research area of great theoretical and practical importance. To address the aforementioned issues, we develop a culture-based and progress-based model of consumer motivation that is especially applicable to LP members. Drawing on cross-cultural literature and goal pursuit theory, our research enriches a field that is inherently global in nature. Through a series of research propositions that elucidate how Western individualist (vs. Eastern collectivist) consumers are differentially motivated to pursue LP rewards, we advance theoretical understanding of reward-induced behavior across cultures and offer useful insights for global managers of LPs.
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Social media emerged as most influential phenomenon since few years, and organizations need to reconsider their strategies due to significant influence over the goals achievement. Firms need to reform their strategies related to marketing specifically in managing the customers. Firms are redefining their customer relationship management strategies and developing in-house capabilities for effective use of technological advanced applications. The purpose of the current study is to examine how to integrate social media application and develop capabilities for CRM to maintain successful customer relationship management and performance. Social CRM capabilities are critical for marketing strategy and maintain relationship management to be effective. The moderating role of social media (face-book) usage is introduced as moderator in the study to examine the role of face-book pages to strength the relation between under discussion constructs among Indonesian firms. The study contributes to body of knowledge in explaining the relationship between social CRM capabilities and CRM performance, social media usage and CRM performance and with moderating role of social media usage between social CRM capabilities and CRM performance. Resource based view theory and dynamic theory confirm the basis of theoretical foundation of the study as underpinning.
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This study proposes that loyalty programs lead to customer–company identification (CCID) formation. The empirical results show that non-financial benefits from loyalty programs can promote CCID by inducing customers' feelings of status and belonging in a company-initiated community. Relationship marketers interested in building customer identification with loyalty programs therefore should design proper non-financial investment portfolios to strengthen and confirm customers' feelings of status and belongingness.
Purpose This paper aims to demonstrate both the positive and negative effects of loyalty programs. The study proposes a model to demonstrate why and how loyalty program strategies can result in good customer relationships and customer entitlement behaviors. Various configurations of three different loyalty program strategies are analyzed – tangible rewards, preferential treatment and perceived status. Design/methodology/approach The authors’ hypotheses were tested by analyzing the survey data of 152 frequent flyer program members in China through partial least squares-structural equation modeling. Fuzzy-set qualitative comparative analysis (fsQCA) was used to test different configurations of the three loyalty program strategies. Findings A net effects analysis demonstrates that loyalty programs are a double-edged sword. While loyalty programs can improve customer relationships, strategies based on perceived status have a positive relationship to customer entitlement, which may lead customers to expect extraordinary efforts from companies, such as greater discounts and extra privileges. Using fsQCA, the authors determined four sufficient configurations of high level of relationship quality and high level of customer entitlement, which also support their findings. Originality/value First, this study expands the research on loyalty programs by providing an examination of their positive and negative consequences. Second, by proposing the configuration paths that lead to high level of relationship quality and high level of customer entitlement using fsQCA, this research enriches research on the net effects of loyalty programs, providing researchers and practitioners with a more comprehensive understanding of loyalty programs. Third, this research extends the concept of customer entitlement to the context of buyer–seller relationships by introducing perceived status as an important antecedent of customer entitlement and by identifying four sufficient configurations.
Purpose This paper aims to examine the strategic importance of perceived internal branding in building symbolic and behavioral relationships with a corporate in the service sector. Research on internal branding has been confined only to how internal staff understand brand values. Despite the importance of alignment between internal and external communication, little emphasis has been placed on consumers’ perception of how internal staff understand brand values. Even before experiencing service, consumers can shape their overall evaluation on service based on external communication about internal training and its congruence with brand values. Design/methodology/approach The theoretical model of cognitive, affective and behavioral responses is empirically tested using the structural equation modeling approach with a sample of 258 adults. Multiple group comparison is also conducted to identify the difference between user and non-user groups. Findings The findings indicate that perception of employees’ training and its congruence with external communication enables consumers to shape their cognitive and affective response toward a corporate, which is a source of future purchase intention. How consumers think about internal branding forms their attitudes and images of business and social conduct and enhances their behavioral intention. Practical implications The results imply that internal branding should not be limited to organizational communications but should be stretched into a critical topic for external communications. In particular, notable differences between user and non-user groups determined in the model provide further implications for corporate communication. Originality/value This paper stretches the concept of internal branding into the area of public interest. Theoretically, it tests a dual process model that suggests cognitive and affective antecedents in predicting consumer intention. Practically, it provides new ground for viewing internal affairs as part of a continuum of external communication and not a separate element of a corporation. The results are conducive to robust customer-firm relationship building in the service sector.
This study examines the differential effects of the benefits customers receive from a loyalty program (LP) on satisfaction with the LP, trust in the LP, and store loyalty for high- and low-end fashion retailers. With survey data from U.S. LP subscribers, the study tests the relationships using multiple regressions and analysis of covariance. The results show that symbolic benefits are more important for high-end fashion store consumers' satisfaction with the LP; conversely, utilitarian benefits increase consumers' satisfaction with the LP more in low-end fashion retailing, whereas hedonic benefits increase consumers' satisfaction with the LP in both types of retailers. All benefits in both types of retailers affect trust in the LP. Finally, satisfaction with and trust in the LP are important drivers of loyalty to the retailer. The findings have important implications on how managers of high- and low-end fashion retailing can effectively design their LP rewards to maximize loyalty.
Purpose Presently, loyalty programs often offer preferential treatment to the firm’s best customers, and recently, service firms started to incorporate corporate social responsibility (CSR) initiatives into the loyalty reward programs (e.g. Starwood’s “Make A Green Choice”). However, academic research advancing the understanding of the effectiveness of CSR-focused loyalty programs is lacking. To bridge that gap, this paper aims to examine the influence of a “green” loyalty program on members’ and bystanders’ service encounter satisfaction in light of preferential treatment. Furthermore, this paper investigates the psychological mechanisms (prosociality perceptions and status perceptions) that underlie these effects. Design/methodology/approach This study used a 2 (loyalty program: green vs standard) × 2 (customer type: member vs bystander) × 2 (observability of preferential treatment: low vs high) between-subjects experimental design. Respondents were asked to read a hotel check-in scenario and then completed scales that measured their perceptions and evaluations of the service encounter. Findings Results from this study suggest that a green loyalty program can buffer the negative effect of preferential treatment on bystanders’ service encounter satisfaction. An examination of the underlying mechanism reveals that prosociality perceptions of the firm mediate the impact of loyalty programs on bystanders’ satisfaction. As expected, the results show that a green loyalty program is as effective as a standard program in elevating members’ satisfaction. Furthermore, findings from a moderated mediation analysis indicate that status perceptions mediate the impact of customer type on satisfaction. However, status perceptions have a greater leveraging power in satisfaction when observability of preferential treatment is high. Originality/value The results of this study have significant implications for service firms with loyalty programs and customer prioritization practices. By incorporating CSR into their loyalty programs, firms may be able to mitigate the negative bystander effect while maintaining the positive effects of preferential treatment on members’ service encounter satisfaction.
The goal of this study is to obtain a deep understanding of the impact of customer loyalty programs on customer retention. This study was applied to Jordanian customers. The study investigates the impact of independent variable; loyalty programs: point system, tier system reward, charges an upfront fee for VIP benefits and non-monetary programs, on the dependent variable: customer retention. To achieve the objective of the study, a survey was conducted to collect data from the sample. In total (350) questionnaires were distributed randomly to Jordanian customers who could be reached by the researchers, and were contacted through friends, relatives, students and local malls. The participants had different social, educational, and occupational backgrounds. Response rate was (81.14%) Percent. The findings clearly show: there is significant evidence of the effect of all loyalty programs on building and maintaining customer retention. The major effect was for Tier system reward followed by charge Up-front fee for VIP benefits, and then point system, the weakest effect was for Non-monetary programs.
This research provides an extension of Oliver's (1980) expectancy disconfirmation model of satisfaction by examining the moderating role of consumer entitlement in the relationships between service quality and perceived value with customer satisfaction. Using a sample of season ticket holders of the National Hockey League franchise in the southeastern USA (n = 234), we found that consumer entitlement moderates the relationship of value with satisfaction, such that the impact of consumer-perceived service value on satisfaction is mitigated for highly entitled consumers. That is, the positive value–satisfaction relationship is stronger for individuals low in consumer entitlement. This finding suggests that highly entitled consumers' satisfaction judgments are dominated by expectations, while less entitled consumers rely more on disconfirmation assessments. Strengths, limitations, suggestions for future research, and practical implications are offered. Copyright