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This article aims to examine the negative effects of loyalty programs from the perspective of frustration theory. It seeks to develop a model of customer frustration on the basis of frustration theory and an exploratory qualitative study.
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Customer frustration in
loyalty programs
Bernd Stauss, Maxie Schmidt and Andreas Schoeler
Department of Services Management,
Catholic University of Eichstaett-Ingolstadt, Ingolstadt, Germany
Purpose This article aims to examine the negative effects of loyalty programs from the perspective
of frustration theory. It seeks to develop a model of customer frustration on the basis of frustration
theory and an exploratory qualitative study.
Design/methodology/approach – First, frustration is defined as a special form of dissatisfaction
and a general model of frustration in business relationships is developed by evaluating the literature
on frustration theory. Second, an explorative and qualitative focus group study among participants of
a loyalty program for frequent travelers is conducted. A multi-level iterative content analysis of the
participants’ statements reveals the existence of different categories of frustration incidents. Third, the
findings of the study are used to develop a system of propositions that generate a specific model of
customer frustration in loyalty programs.
Findings Seven categories of frustration incidents that were triggered by the loyalty program and lead
to frustration sensation and subsequent frustration behavior, like protest or avoidance, could be identified.
With four categories of incidents inaccessibility, worthlessness, qualification barrier and redemption
costs customers’ frustration sensation and behavior are directed on the program itself (program-related
frustration incidents). For the other three – discrimination, economization and defocusing frustration
sensation and behavior also affect the perception of the relationship with the firm (relationship-related
Research limitations/implications The exact differentiation of frustration from related constructs
should be the topic of further research. The findings of the empirical study are of limited generalizability
because the object of investigation was a single company’s loyalty program in a special industry sector.
Hence, the introduced propositions should be further specified and tested in a large-scale quantitative
study in different sectors and with a number of companies and programs. Further work is necessary to
allow deeper insights into the relationships between the elements in the customer frustration model.
Practical implications Several implications for planning and implication arise from the results of
the study. Management has to make sure that program-related and relationship-related negative
effects are avoided. That calls for offering only those benefits that represent genuine additional value
to customers and for ensuring that the benefits can be claimed at any time and without any additional
effort by the customer. Furthermore, the perceived quality of the program should be monitored to
obtain prompt information about possible customer frustration and indications of protest (i.e.
customer complaints) should be viewed with particular attention.
Originality/value – This paper provides new insights into the so far highly neglected negative side
effects of loyalty programs. Also, innovative is the first-time application of the frustration construct to
the analysis of customer behavior in the context of loyalty programs. The contribution is of high value
for all who research in the field of customer relationship management and customer loyalty.
Keywords Customer loyalty, Customer relations
Paper type Research paper
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
The authors wish to thank the participating company and students involved in the empirical
research project for their assistance and support.
frustration in
loyalty programs
Received 14 September 2004
Revised 3 February 2005
Accepted 3 February 2005
International Journal of Service
Industry Management
Vol. 16 No. 3, 2005
pp. 229-252
qEmerald Group Publishing Limited
DOI 10.1108/09564230510601387
Loyalty programs recently gained considerable practical and academic attention in the
context of customer retention and customer relationship management. The
fundamental managerial objective of these programs is to reward loyal customer
behavior with special services or rebates and thereby at the same time to promote this
loyal behavior in order to realize the economic benefit of long-term business
relationships (Reichheld, 1993, p. 64; Sharp and Sharp, 1997, p. 474). The extent to
which loyalty programs actually achieve this objective has become increasingly the
subject of scientific study (Stauss et al., 2001; Bolton et al. (2000); Verhoef, 2003; Yi and
Jeon, 2003; Noordhoff et al., 2004). Usually, such studies have focused on the question of
how strong the supposed connection between participation in a loyalty program and
increased customer satisfaction and loyalty actually is.
Supplementation of this perspective appears to be necessary. Everyday observation
and media reports on problems that customers experience in loyalty programs suggest
that these programs may also cause negative emotional and/or cognitive effects. If
these effects do occur, it is possible that the loyalty programs are not only falling short
of their goal of increasing customer retention, but may even be leading to a reduction in
loyalty. In view of the considerable investment required to set up and maintain loyalty
programs, it appears especially relevant, both scientifically and practically, to examine
the type and extent of negative effects of loyalty programs.
This examination is conducted on the basis of the “frustration” construct.
Frustration involves a highly negative emotion that occurs when a potentially
rewarding act or sequence of behavior is blocked (Colman, 2001, p. 291). Loyalty
programs explicitly promise customers rewards for certain loyal behavior patterns.
This makes the relevance of the frustration concept in this context evident: if the
customer does not receive the promised reward or if the indicated benefit proves
worthless to him, customer frustration may arise.
It is, therefore, the goal of the present study to examine the negative effects of
loyalty programs from the perspective of frustration theory. To this end, the main
features of loyalty programs are presented and initial indicators of negative effects
described. A basic model of frustration will subsequently be developed by evaluating
the literature on frustration theory. This model is then applied to loyalty programs by
using the findings of an explorative and qualitative study. The paper ends with a
summarizing conclusion, a discussion of limitations of the study and research
questions that remain to be answered, as well as managerial implications.
Loyalty programs
Loyalty programs are marketing efforts which reward and, therefore, encourage loyal
customer behavior in order to increase the profitability of stable customer relationships
(Sharp and Sharp, 1997, p. 474). Firms aim at increasing customer-specific turnover
and profit margins by intensifying customer dialog, developing customized service
packages and thereby stimulating repurchase and cross-buying behavior. At the same
time, they strive to increase the efficiency of marketing by carefully targeting customer
communication (Dowling and Uncles, 1997; Palmer et al., 2000; Rapp and Decker, 2003).
It is characteristic of all loyalty programs that they grant benefits to customers,
depending upon the volume of sales that they generate. These benefits can consist in
monetary or non-monetary incentives like rebates, bonuses or services. In practice,
loyalty programs differ with respect to the importance which they attach to the various
types of benefits and whether they grant them exclusively their most valuable
customers (Rapp and Decker, 2003).
Research on loyalty programs has increased in the last years. The effect of loyalty
programs on loyalty and their critical success factors were investigated in the context
of various industry settings such as automotive industry (Stauss et al., 2001), packaged
goods (Roehm et al., 2002), financial services (Bolton et al., 2000), airlines (Whyte, 2002),
retail stores (Noordhoff et al., 2004) or telecommunication (Gustafsson et al., 2004). The
results of an empirical study of Stauss et al. (2001) indicate that the membership in an
automotive customer club has a remarkable impact on the customer’s relationship
satisfaction and retention. Bolton et al. (2000) show that participants of a loyalty
program of a financial service provider actually tend to realize increased revenues and
higher service usage levels and to overlook negative service experiences.
Several studies reveal the importance of a careful program design. Roehm et al.
(2002) demonstrate that the loyalty of customers of packaged goods brands increases
when the incentives are closely connected to the brand. The study of Hallberg (2004)
yields similar results. Another aspect of successful program design is elaborated by
Kivetz and Simonson (2003). They provide evidence that by heightening the level of
effort required to receive benefits, the attractiveness of loyalty programs can be
Yi and Jeon (2003) investigate how different program rewards influence the
perceived value of a program and show that customer involvement has an important
moderating role on the program’s success. Noordhoff et al. (2004) find out that a small
number of alternative loyalty programs in a market and only little familiarity of
customers with these programs positively affect the success of the program. This is in
accordance with the results of the study of Whyte (2002) who finds an especially high
level of spurious loyalty among members of frequent flyer programs who are
participating in several different programs.
Indications of negative effects of loyalty programs
The aim of loyalty programs is to create a win-win situation for the initiating company
and its customers. The customers receive monetary and non-monetary benefits for
proven loyalty, which is supposed to increase their satisfaction and their inclination to
engage in further loyal customer behavior (Sharp and Sharp, 1997). The providers
benefit from positive effects on turnover and profits of loyal business relationships.
These supposed benefits for both market partners result only when customers find
participation in the program to be rewarding and have no negative experiences.
There is, however, evidence to indicate that this is not always the case. An analysis
of CRM activities has already shown that the use of certain instruments of customer
retention may have quite a negative effect that weakens customers’ commitment
(Stauss and Seidel, 2002). Hansen (2000, p. 429) demonstrates that
customer-value-oriented differentiation in loyalty programs may be perceived by
customers as discriminatory and unfair. In a recent study Gustafsson et al. (2004)
provide some indications that operational problems in collecting promised incentives
for loyal behavior and complicated operational procedures of a telecom company’s
customer club are perceived negatively by customers.
frustration in
loyalty programs
Further evidence of negative effects is found in practice. Critical customer voices
about loyalty programs can be found in internet chat rooms. The American web site, for instance, has established a separate category for customer opinions
regarding mileage programs or frequent flyer programs; and in Germany,
allows customers to share their experiences with loyalty programs in various
industries. The critical statements made by customers in these forums show that
participants in loyalty programs experience problems that evoke great emotional
annoyance. Customers complain, for example,
.that firms do not keep their promises because they do not provide a sufficient
supply of the products advertised as rewards, so that customers are turned away
or put off;
.that the rewards can only be obtained with some difficulty or not at all because
the required number of loyalty points is very high, because rewards are
associated with a disproportionately high purchase volume or because
accumulated points expire after a certain period of time;
.that the promised rewards prove to be of little value; and
.that provisions for privacy protection are violated.
In view of these observations, it seems sensible to focus intensively on the negative
effects of loyalty programs. For this a frustration-theoretical perspective is adopted.
Reasons for choosing the frustration construct
In general, when negative affective and/or cognitive effects are discussed, one is faced
with the problem of the underlying construct for these effects. In accordance with
conventional research into customer behavior, it seems reasonable to choose the
dissatisfaction construct, since dissatisfaction is the result of a negative assessment of
a customer experience. Furthermore, it can be assumed that dissatisfaction leads to a
reduction of customer loyalty in terms of decreased willingness to engage in repeat
purchases and word-of-mouth recommendations. Consequently, it seems obvious to
analyze aspects of customer dissatisfaction with loyalty programs and its influence on
the reduction of customer loyalty.
However, both practical experiences and scientific empirical insights have raised
doubts about the legitimacy of the conceptual dominance of the satisfaction construct.
In particular, it turns out that the correlation between customer satisfaction and
customer retention on one hand, and between customer dissatisfaction and customer
defection on the other hand, is not always as close as is traditionally supposed (Stauss
and Neuhaus, 1997; Oliver, 1999; Anderson and Mittal, 2000). This leads to the
conclusion that the correlation between customer satisfaction and loyalty behavior
should be looked at in a more differentiated fashion. Among the results of such
analyses is the finding that, along with other factors, it is strong customer emotions in
particular that induce loyal customer behavior in positive cases and defections in
negative cases. With respect to positive emotions, this finding has resulted in the fact
that an independent construct in the form of “delight” has increasingly become the
focus of interest in practice and research (Oliver et al., 1997; Schneider and Bowen,
1999, p. 36; Rust and Oliver, 2000; Keiningham and Vavra, 2001).
With regard to highly negative emotions associated with pronounced customer
dissatisfaction, the above discussion has rarely had an equivalent. This is astonishing,
as it is specifically those customers with highly negative emotions that tend to defect
(Schneider and Bowen, 1999, p. 36). Among them a higher percentage of “terrorists”
(Heskett et al., 1997, p. 85) can be expected, who take advantage of every opportunity to
express their dissatisfaction within their social environment and thus can have a
particularly damaging effect on business.
Only rather few contributions discuss the relevance of specific negative emotions
like frustration, anger, fear, or rage for disloyal customer behavior. Nguyen and
McColl-Kennedy (2003), for instance, analyze the role of customer anger provoked by
service failures. So
¨derlund (2003) shows that the explanation of repatronage intentions
can be substantially improved by taking customer frustration into account. Mattsson
et al. (2004) investigate the influence of anger, sadness, and fear of complainants on
loyalty. All these contributions show that specific and highly negative emotions from
customer experiences may represent an alternative or special case of dissatisfaction
and possess a stronger predictive power with respect to the negative loyalty effect.
In the context of loyalty programs the construct of customer frustration seems to be
of particular relevance. Frustration involves a highly negative emotion that occurs
when a potentially rewarding act or sequence of behavior is blocked (Colman, 2001,
p. 291). Loyalty programs explicitly promise customers rewards for loyal behavior. If
the customers do not receive the promised reward or if the indicated benefits prove
worthless to them, customer frustration may arise.
Definition and theoretical foundation of frustration
Frustration is a concept from psychoanalysis in the Freudian tradition. Freud focuses
originally on explaining aggression, which he conceptualizes in his early works by the
occurrence of frustration. He uses the term “frustration” to describe unpleasant inner
conditions, which primarily emerge when expected rewards are lacking or targeted
goals are missed (Freud, 2000a,b). Later Freud gives up his early theories and puts
aggression in the context of his dualistic instinct theory (Freud, 1933; 2000c).
Building on Freud’s early works Dollard et al. (also known as the Yale Group) in
1939 published their monograph Frustration and Aggression to explain the origin and
consequences of human aggression and develop the frustration-aggression hypothesis,
identifying aggression as a consequence of frustration (Dollard et al., 1939, S. 1). They
relate to frustration as an external instigating condition and attribute it to the
“interference with the occurrence of an instigated goal-response at its proper time in
the behavior sequence” (Dollard et al., 1939, p. 7). In accordance with this
understanding, many authors define frustration as the “blocking or prevention of a
potentially rewarding or satisfying act or sequence of behaviour” (Colman, 2001, p. 291;
Britt and Janus, 1940, p. 455; Popplestone and McPherson, 1988, p. 137; Anderson and
Bushman, 2002, p. 37; Bessie
`re et al., 2004). Frustration sensation is thus triggered by
frustrating incidents which are the negative experiences of not achieving a goal aimed
at or to miss an expected and anticipated reward (Berkowitz, 1989, p. 60). This
frustration sensation leads to subsequent behavior such as aggressive protest or
avoidance designed to prevent the recurrence of the frustration.
Frustration as a special form of dissatisfaction
Facing the fact that frustration is defined as a negative customer emotion following
from unfulfilled expectations, the question comes up where to draw the line between
frustration in
loyalty programs
frustration and the customer satisfaction construct, which mostly is defined as
disconfirmation of expectations and, therefore, includes similar definition components.
The differentiation between the two constructs can be made considering the following
five aspects (Stauss, 2004):
(1) The satisfaction construct regards both positive and negative expectation
disconfirmations (satisfaction/dissatisfaction). In contrast to this, frustration is
exclusively the result of a negative expectation discrepancy.
(2) Dissatisfaction may refer to the whole spectrum of unaccomplished
expectations. But frustration only refers to the negative consumer events in
which the expected goal or reward is not reached.
(3) Frustration is defined as a strongly negative emotion. In this respect there is a
difference to dissatisfaction, where the arousal can also be weak.
(4) Dissatisfaction may appear ex post, without the customers being aware of their
expectations before the consumption. In contrast, frustration postulates ex ante
an explicit goal, i.e. the customers have a definite idea about the aspired
situation or the expected rewards.
(5) A necessary precondition of frustration – but not of dissatisfaction – is that the
customers assume that they will reach the aspired goal because of their
previous experiences or explicit promises by the company.
Thus, frustration is the special case of a strongly felt dissatisfaction, which appears if
individuals do not reach goals that were thought as feasible or do not get rewards that
were pledged.
General frustration model
Model elements
According to the definition above, the following three elements of frustration may be
differentiated (Britt and Janus, 1940, p. 453; Sta
¨cker, 1977, p. 7): frustration incident,
frustration sensation and frustration behavior.
A frustration incident is understood to be the withdrawal of a positive affirmation
or a non-affirmation following an affirmation that occurred previously. Frustration
thus implies the expectation of a reward based on a preceding reward experience or at
least the antecedent promise of a reward (Sta
¨cker, 1977, p. 15; Smith and Ellsworth,
1985, p. 833). A number of frustration incidents have been differentiated in frustration
research (Sta
¨cker, 1977, p. 17). In business relationships primarily the following forms
of frustration are involved: refusal of reward, reduction of reward and postponement of
reward. In the case of a refusal of reward, the expected reward is completely withheld
from the person in question; in the case of a reduction of reward, a part of the reward is
withdrawn or withheld; and in the case of a postponement of reward, the reward is
made available later than promised before. In the frustration-aggression hypothesis it
was assumed that frustrating incidents lead directly to aggressive behavior. But as
Berkowitz (1989, p. 68) argues, frustration is an aversive event which does not
instantaneously lead to an (aggressive) behavior but in an intermediate step evokes
negative affect in the sense of a frustration sensation.
The frustration sensation triggered by frustration incidents is a negative
emotion and is described as “very unpleasant” (Smith and Ellsworth, 1985, p. 833).
This negative emotion is associated with a high degree of arousal and particular
attentiveness toward the causing incidents and the person who can be made
responsible (Janis, 1971, p. 152). This is confirmed in the study by Smith and
Ellsworth (1985), who determine in their comparative empirical analysis of 15
different emotions that frustration was accompanied “by a stronger desire to
attend to the situation than for any other negative emotion” (Smith and Ellsworth,
1985, p. 833).
Frustration behavior involves the actions following the frustration sensation,
seeking to lessen or eliminate the negative feeling (Berkowitz, 1989, p. 68). These
subsequent actions may be basically classified as protest, intensification of effort and
Protest is a form of aggressive behavior that has been the main topic of
psychological frustration research for a long time. Aggressions as the consequence of
frustration have attracted a great deal of attention, primarily in the context of the
frustration-aggression hypothesis (Dollard et al., 1939; Miller et al., 1941; Alcock, 1994).
According to this theory, an aggressive activity designed to remove or to break
through the frustrating barrier is carried out as the consequence of the aversive
emotion. Such activities include not only physical violence, but also thoughts of
revenge and verbal punishment and protests. Frustration behavior is primarily
directed against the person (or even thing) that is regarded as being responsible for the
fact that the target was missed (Harriman, 1961, p. 143). Alternatively, however, this
behavior may also be directed toward persons – or objects – that cannot be made
responsible for the problem at all (Anderson and Bushman, 2002, p. 37). Originally, it
was assumed that “the existence of frustration always leads to some form of
aggression” and “aggression is always a consequence of frustration” (Dollard et al.,
1939, S. 1). Based on empirical studies, however, this assumption was revised and
nowadays it is acknowledged that other behavioral reactions are possible (Miller et al.,
1941, p. 339; Berkowitz, 1989).
Frustration behavior may also involve actions that can be interpreted as
constructive in the sense of an intensification of effort toward coping with the problem.
As a result of the emotional activation, energy is produced that is then used to
overcome the frustrating barrier. In this case, the failure in the expected performance
leads to compensatory reactions that make achievement of the goal seem possible
¨cker, 1977, p. 67).
Avoidance is a collective term for various forms of withdrawal behavior.
Individuals display avoidance tendencies in order to evade situations that lead to
frustration incidents and hence to frustration. This avoidance behavior may have a
passive character in the form of evasion, withdrawal and refusal (Sta
¨cker, 1977,
p. 69) and, therefore, be of a resigned type. However, active avoidance is also
conceivable. In this case, individuals develop a strategy in order to achieve their
goal, preferably while eliminating or reducing the frustrating conditions.
Figure 1 shows an overview of the general frustration model.
Relationships of model elements
The relationships between the model elements that is, the relationships between
frustration incidents and frustration sensation on one hand, and between frustration
frustration in
loyalty programs
sensation and frustration behavior on the other hand will be examined more closely
in the following section.
The relationship between frustration incidents and frustration sensation is
primarily a matter of which types of frustration incidents lead to a stronger or weaker
frustration sensation. Frustration research has chiefly emphasized four aspects:
(1) the extent of the (withheld) reward;
(2) the time of the withdrawal;
(3) the perceived deliberateness or arbitrariness of the reward withdrawal; and
(4) the expectation of the reward withdrawal (Sta
¨cker, 1977).
Extent of the reward withdrawal. The intensity of the negative arousal that is, the
intensity of the frustration sensation tends to be greater, the larger the anticipated
(and then withheld) reward (Alcock, 1994, p. 42).
Time of the reward withdrawal. The time of the reward withdrawal also plays a
major role. Empirical frustration research shows that the intensity of the frustration
sensation grows when the withdrawal happens at a time shortly before realization is to
occur that is, shortly before the goal is achieved. The sensation is less intense, on the
other hand, when the withdrawal occurs long before the intended goal is to be
achieved. The later the frustration incident occurs, therefore, the longer the aversive
feeling can be expected to last (Sta
¨cker, 1977).
Perceived deliberateness or arbitrariness of the reward withdrawal. The perceived
deliberateness or arbitrariness of the reward withdrawal is also of fundamental
importance in determining the intensity of the frustration sensation. Stronger arousal
can be expected if the withdrawal is perceived to be deliberate/arbitrary (Janis, 1971,
p. 156; Berkowitz, 1989). This perception influences the frustration behavior in such a
way that protest behavior becomes more likely and intensification of efforts, in terms
of a constructive search for solutions, decreases. It is also likely that there is a direct
effect on frustration behavior that is to say, aggressive behavior is encouraged by
perceived deliberateness or arbitrariness (Sta
¨cker, 1977, p. 53).
Expectation of the reward withdrawal. The intensity of frustration also depends on
whether individuals expect that they will be frustrated when trying to achieve their
goals. Insofar as frustration incidents have already been anticipated, the situation
becomes less unpleasant, the arousal is less intense when the frustrating incident
occurs, and a change in the frustration behavior takes place (Berkowitz, 1989). If
Figure 1.
General frustration model
individuals assume, based on their experiences, that their expectations will be
frustrated and that protests will change nothing about the situation, a high tendency
toward avoidance can be expected as these individuals attempt to evade situations that
lead to frustrating incidents and thus to frustration sensation (Sta
¨cker, 1977, p. 58).
As far as the relationship between frustration sensation and frustration behavior is
concerned, there are established findings that the intensity of activation/arousal
determines the frustration behavior. In general, this means that greater arousal leads to
an intensification of the subsequent behavior. As Berkowitz states: “It is not the exact
nature of the aversive incident that is important but how intense the resulting negative
affect is” (Berkowitz, 1989, S. 68). The type of the frustration behavior is further
determined by a number of influencing factors (such as situational conditions) (Sta
1977, p. 60). Some general statements are, however, possible. The probability of
aggressive behavior increases as the arousal intensifies. The greater the arousal, the
more likely is protest behavior. Accordingly, efforts toward finding constructive
solutions decrease when large rewards are withdrawn from individuals or when the
deliberateness/arbitrariness of the reward withdrawal leads to greater arousal.
In considering the relationships between the model elements, frustration tolerance
should be considered the primary moderating variable. The assessment and
processing of frustration incidents are dependent upon the personality
characteristics and the conditioning of the individual, which are reflected in the
frustration tolerance (Rosenzweig, 1938). Frustration tolerance is the ability of an
individual to tolerate a frustrating situation for a longer period of time without
distorting the objective factors of the situation (Rosenzweig, 1938, p. 153; Rutishauser,
1994, p. 36), “without making efforts either to resolve the tensions indirectly or to
satisfy the motive directly” (Harriman, 1961, p. 144) or “without disruption or
disordering of one’s behaviour” (English and English, 1974, p. 217). The more
pronounced the frustration tolerance, the fewer aggressive forms of behavior are found.
Individuals with high frustration tolerance will thus tend to exhibit either a
constructive intensification of efforts or avoidance behavior.
Figure 2 shows the detailed general frustration model with its relationships, which
will form the basis of the following examination of frustration in loyalty programs.
Research questions and methodological approach
In order to analyze the extent to which frustration incidents that lead to customer
frustration and frustration behavior occur in loyalty programs, an exploratory
qualitative study was conducted among participants of a loyalty program. The
empirical study had a two-fold purpose. First, the existence and type of customer
frustration in the specific loyalty program was examined from a descriptive
perspective. To that effect the following research questions were defined:
.Do customers experience frustration incidents?
.What types of frustration incidents can be observed?
.What subsequent effects do the triggered frustration sensations have with
respect to the behavior of customers?
Second, the findings of the exploratory study were used to develop a system of
propositions that generate a specific model of customer frustration.
frustration in
loyalty programs
Figure 2.
Detailed general
frustration model
The research object was a loyalty program for frequent travelers of a transportation
service provider. The program has a clear emphasis on status components aiming to
identify, get to know and bind valuable customers to the firm. For each trip,
participants in the program are credited a certain number of points, depending on the
price of the ticket. Accumulated points expire one year after they are earned. If a
certain number of points is exceeded during this year, the travelers are awarded a
special status that remains in effect for at least 24 months and is associated with
various exclusive services that are either not available for customers without this
status or only upon payment of a fee.
There is a highly explorative character to the research problem, since up to this
point neither proposals for the operationalization of the frustration construct nor
extensive knowledge about customer frustration in loyalty programs exist. For this
reason, a qualitative research approach was selected (Flick, 1998). In order to obtain the
most comprehensive and precise insight into the frustration experience of customers in
their roles as participants in loyalty programs, the focus group method was adopted.
Particularly for the exploration of so far unknown customer evaluations the focus
group method has considerable advantages (Morgan, 1988; Frey and Fontana, 1991;
Krueger, 1994; Flick, 1998; Fontana and Frey, 1998). The method allows participants to
depict their experiences with the program in the content and language of their choice
and to reflect and analyze these experiences in the course of their conversation with the
other participants (Krueger, 1994, p. 24; Fontana and Frey, 1998, p. 53). The
communication situation largely corresponds to everyday discourse, which makes it
possible to record opinions and attitudes as they would be expressed in private
discussions. On one hand, this process prevents research-led directing of the test
subjects. On the other hand, the moderator can ensure that participants precisely depict
their experiences, their impressions and the resulting actions (Fontana and Frey, 1998,
p. 53; Chrzanowska, 2002, p. 19; Imms and Ereault, 2002, p. 78). Deep insights could
thus be expected in terms of which specific incidents triggered frustration, how strong
the frustration sensation was in each case and which behavioral steps frustrated
customers took.
Since it was to be expected that the potential frustrating incidents would differ for
varying customer groups, depending upon whether the customers had already
qualified for the exclusive status or were still in the qualification phase of reaching the
required point total, the customers were divided into groups. This division is based on
the assumption that members of the groups differ in their expectations and
experiences, especially with regard to the experienced frustrating incidents. Therefore,
they might feel a different amount of frustration sensation or display different
frustration behavior. The division into groups fulfills the methodological requirement
to establish reasonably homogeneous focus groups whose members share particular
and similar experiences (Imms and Ereault, 2002, p. 77).
For dividing the customers into groups, first, customers who had already reached
exclusive status as a result of having reached the required number of points
(“Qualified”) were differentiated from those who were accumulating points but were
not yet among the status customers because their point total was still too low
(“Non-Qualified”). Second, the group of “Non-Qualified” was further divided into the
sub-groups “Just Missed” and “Bound to Fail”, in terms of their chances of reaching
“Qualified” status. The “Just Missed” group included all customers who traveled
frustration in
loyalty programs
frequently and consequently were able to accumulate a large number of points, but fell
short of the point limit, as they only had 50-99 percent of the necessary points.
Customers in the “Bound to Fail” group also accumulated points, but had or have no
real chance of ever reaching the status level, since their point accounts showed less
than 50 percent of the necessary number of points.
The “Qualified” group of customers and the two sub-segments of “Non-Qualified”
(“Just Missed” and “Bound to Fail”) were examined separately. For each of the three
sub-groups, two focus group discussions were conducted, in which on average six
customers participated. The potential participants were selected from the program
provider’s customer database based on their membership in the respective customer
segments. The customers were contacted by telephone and the final 36 participants
were acquired after a total of 418 telephone contacts had been made. All group
discussions were recorded on video and subsequently fully transcribed as a necessary
base for a thorough qualitative analysis (King, 1995, p. 25). Afterwards, a qualitative
content analysis of the discussions was conducted (Krueger, 1994). The goal of this
qualitative content analysis was to find out to what extent the members of the loyalty
program experienced frustrating incidents, perceived a feeling of frustration and
showed frustration behavior. Therefore, as a first step, during a multi-level iterative
content analysis customers’ statements in the different groups were analyzed for
negative customer emotions that could be interpreted as frustration sensation. That
was the case when the incidents causing the emotions could be interpreted as refusal,
reduction or postponement of a reward. Then, in a second step, the frustration
incidents were assigned to categories (Strauss and Corbin, 1998, p. 113). Afterwards,
the results of the different customer groups were compared with respect to kinds and
frequencies of the perceived frustration incidents and the occurrence of frustration
A total of 169 participants’ statements contained depictions of experiences that were
associated with negative customer emotions related to loyalty programs. Of these, 123
incidents were judged to be frustration incidents and a total of seven categories of
frustration incidents could be identified. Furthermore, for each customer depiction of a
frustration event, it was analyzed how pronounced the frustration sensation was (low
medium – high) and what type of frustration behavior resulted from it. The results
of the content analysis are presented below in the context of developing the specific
model of customer frustration in loyalty programs.
Developing a model of customer frustration in loyalty programs
The customer depictions of frustration incidents could be classified into seven
categories. During the analysis it turned out that the customers’ statements differed
regarding their point of reference. Some were directed mainly at the loyalty program
while some were directed at the company itself. A total of 86 out of 123 customer
statements related directly to the loyalty program and could be assigned to four
categories. “Directly related” means that the frustration sensation in these 86 cases was
not only triggered by experiences connected with the loyalty program but also that
both the frustration sensation and the subsequent behavior of customers were directed
towards the program. The four program-related categories are “Inaccessibility”,
“Worthlessness”, “Redemption Costs” and “Qualification Barrier”. The remaining 37
frustration incidents were also directly triggered by participation in the loyalty
program; however, participants’ frustration sensation and frustration behavior were
not focused simply on the program itself, but rather affected their perception of the
relationship with the firm as well. These relationship-related frustration incidents can
be assigned to the categories of “Discrimination”, “Defocusing” and “Economization”.
The following presentation first refers exclusively to the program-related categories of
frustration incidents, after which the relationship-related categories will be addressed
in detail in a separate section.
Program-related frustration incidents
The four categories derived from the content analysis can be characterized as follows:
Qualification Barrier. Frustration incidents that belong in the category
“Qualification Barrier” are related to circumstances in which the reward is tied to
conditions that are difficult or impossible to fulfill. Non-qualified program participants
complain about the amount of required points that has been set, because they view it as
an insurmountable barrier (example: “... for me as a private customer it is simply
impossible to collect the necessary number of points in 12 months – that is something
for the business customers”; “... it can be pretty difficult to collect the points and it is
usually quite an effort”).
Inaccessibility. A different category of frustration incidents exists when customers in
fact do overcome the qualification barrier, but cannot access the expected reward in the
form of program benefits e.g. because the provided capacity is insufficient, or
because employees are poorly trained and hence do not or cannot perform the promised
service (example: “... when I wanted to actually use the preferred support, I found out
that in my hometown there just is no such exclusive counter”).
Worthlessness. Frustration incidents fall into the category “Worthlessness” when
customers do not see the program benefit they receive as being a reward because they
find the additional value to be too low (i.e. worthless). Participants report their
disappointment about the fact that the benefits either prove not to be exclusive or that
the value of the benefits bears no relationship to the volume of sales the customer must
generate in order to receive them (example: “... there are no real advantages because
the benefits are totally irrelevant to me ...”).
Redemption Costs. It is also frustrating to customers when they can only access the
reward by investing additional material or mental costs. With respect to the loyalty
program investigated, qualified participants of the program reported situations that
overtaxed them because they had to make their demands during the presence or even
at the expense of the “Non-Qualified” participants, which partly deterred the qualified
from claiming the benefits at all (example: “The system is designed in a way that I have
to overcome certain inhibitions to come to my right. It was really embarrassing that I
had to ask other customers to leave their seat and make room for me, so I waived my
All customer depictions included in the analysis are rightly designated frustration
incidents, since each represents a form of reward refusal, reward reduction and/or
reward postponement, and since each triggered strong negative emotions. Clearly,
inaccessibility is to be classified as reward refusal. A qualification barrier can also be
interpreted as a reward refusal, provided that the reward proves to be unattainable, in
spite of loyal behavior. Should the required number of points and, therefore, the reward
be actually acquired, but later than expected, this incident can be classified as
frustration in
loyalty programs
postponement of reward. Worthlessness and redemption costs represent reductions in
the expected amount of the reward from the customers’ perspective.
Based on these results, we may make the following proposition:
P1. Program-related frustration incidents do occur in loyalty programs.
A comparison of the various customer segments (“Qualified”, “Just Missed” and
“Bound to Fail”) showed that the different categories of frustration incidents occur with
differing frequencies. In the group of qualified customers, most of the frustration
incidents are attributed to a perceived worthlessness of the program. Next are the
perceived redemption costs and the inaccessibility. Worthlessness also clearly
dominates among non-qualified customers. In view of the fact that they are not yet able
to claim the benefits, however, this perceived worthlessness may also be regarded, at
least to some extent, as the result of a dissonance reduction, in that the services that
cannot be or have not been procured are devalued. For non-qualified customers,
frustration about the height of the qualification barrier ranks second. In light of this
division between the two groups, the following proposition may be formulated:
P2. Different frustration incidents occur, depending upon the possibility of
claiming the reward.
Program-related frustration sensation
Considerations in frustration theory have indicated that the level of the frustration
sensation is dependent upon the extent of the reward withdrawal, upon the time of the
reward withdrawal, upon the perceived deliberateness/arbitrariness and upon the
expectation of the onset of frustration.
Participants of the “Qualified” group primarily displayed highly negative emotions
in the case of frustration incidents of the “Inaccessibility” and “Redemption Costs”
categories. With reference to the theoretically ascertained determinants of the
frustration sensation, this result would appear to be quite plausible. When the
promised benefit is refused or high material or mental costs must unexpectedly be paid
by the customer in order to claim the reward, then the extent of the reward withdrawal
is judged to be high. Moreover, the withdrawal occurs only after what is sometimes a
long qualification phase and when the actual claim is made; that means the time of the
reward withdrawal is late. In addition, the results from the “Inaccessibility” and
“Redemption Costs” categories cannot be interpreted as random or temporary
occurrences from the customer point of view, but rather as the intentional results of a
concept that was planned by the provider. Furthermore, occurrence of inaccessibility or
redemption costs was not anticipated, meaning that no reduction of the frustration
sensation could occur for this reason.
Also in the case of the numerous frustration incidents in the “Worthlessness”
category, many program participants experienced a strong frustration sensation,
because they viewed the reward withdrawal as serious in view of the great effort they
had expended in accumulating points, because the reward withdrawal occurred late
and because the incident was clearly the result of a purposeful decision on the part of
the company. The frustration sensation was, however, less clearly pronounced in the
case of some participants, since these participants had already scrutinized the
promised reward before making their claim, had determined its value to be low and
thus had also expected the onset of frustration (Table I).
The following proposition can thus be phrased:
P3A. The frustration sensation of participants in loyalty programs is greater, the
more intensely they experience the extent of the reward withdrawal, the later
the reward is withdrawn and the more the reward withdrawal is seen as
deliberate or arbitrary.
In terms of the “Qualification Barrier” category, the empirical findings for the
“Non-Qualified” group are especially insightful in illustrating the reducing influence of
expecting the frustration on the frustration sensation, as is implied in proposition P3B
(see below). The findings provide clear indications that the problem of falling short of
the high number of points required led to a high frustration sensation among the
members of the “Just Missed” segment, whereas this was not the case to the same
extent among the “Bound to Fail” group. This result appears to be likely when taking
into consideration the determinants of the frustration sensation. For the “Just Missed”
group, the reward withdrawal occurs late that is, shortly before the minimum
number of points is reached and the frustration is unexpected, as long as overcoming
the barrier is still seen as a possibility. The reward withdrawal for those “Bound to
Fail”, by contrast, is recognized early on, and the frustration is thus to be expected and
therefore frustration sensation is lower.
On the basis of these findings, the following proposition may be formulated:
P3B. The frustration sensation of participants in loyalty programs is lower when
the participants expect that they will be frustrated.
Program-related frustration behavior
Findings in frustration theory suggest that differing types of frustration incidents or
varying degrees of the intensity of frustration sensation also lead to varying
expressions of frustration behavior (protest, intensification of efforts or avoidance).
According to the general frustration model, protest behavior can particularly be
expected, when the reward withdrawal is perceived to be deliberate/arbitrary and
when the frustration sensation is intense, whereas avoidance behavior tends to occur
when the onset of frustration is expected.
A corresponding relationship can also be observed in the exploratory study. Those
“Qualified” participants, that were especially frustrated by incidents in the categories
of “Inaccessibility”, “Redemption Costs” and “Worthlessness” respond with protest
behavior that is to say, complaints against employees of the firm or intense negative
word-of-mouth in their social environment.
Concerning the frustration behavior of the “Non-Qualified”, a clear distinction can
be observed between the “Bound to Fail” and “Just Missed” groups. For customers in
the “Just Missed” group, barely falling short of the required number of points is
especially frustrating. Therefore, those customers who still believed that they could
reach the required number of points responded with an intensification of their efforts
that is, an increased accumulation intensity whereas the others were disappointed
and exhibited protest behavior. Participants in the “Bound to Fail” group indeed
frustration in
loyalty programs
Categories of
frustration incidents
Extent of the reward
Time of the reward
of the reward withdrawal
Expectation of the onset
of frustration
High, as the benefit was
Late, as only occurred
when benefit was
Low, as event not
foreseeable beforehand High
Redemption Costs
High, as the benefit has
already been “payed for”
Late, as only occurred
when benefit was
High, as the responsibility
for the result can be clearly
Low, as event not
foreseeable beforehand High
Medium to high,
depending upon
Late, as only occurred
when benefit was
Medium to high,
depending upon
Medium to
Table I.
Characteristics of the
frustration sensation of
“Qualified” participants
with program-related
frustration incidents
experienced the deliberateness/arbitrariness of the reward postponement in an intense
way, but they had been expecting the onset of this frustration for a long time.
Consequently, they exhibited heightened avoidance behavior by abandoning further
attempts to accumulate points.
Therefore, we can formulate the following propositions:
P4A. Highly frustrating frustration incidents tend to lead to protest behavior
among qualified participants of loyalty programs, less frustrating frustration
incidents to avoidance behavior.
P4B. Highly frustrating frustration incidents lead to an intensification of efforts
among non-qualified participants of loyalty programs, provided that they
expect to overcome the qualification barrier; otherwise, such incidents lead to
protest behavior.
P4C. Non-qualified participants with no prospect of overcoming the qualification
barrier respond with avoidance behavior.
Relationship-related frustration incidents
The results of the focus-group discussions led to the conclusion that frustration
incidents occurred that differed from the program-related incidents in their relevance to
the customer relationship. Indeed, these frustration incidents also stemmed from the
loyalty program, but the frustration sensation was not primarily focused on the
program itself, but rather on the firm and the customer’s perceived relationship with
this firm. These frustration incidents will be referred to here as relationship-related
frustration incidents.
From the focus-group participants’ statements 37 could be attributed to three
categories of relationship-related frustration incidents whose reference point is the
company or the overall customer relationship. Those categories are “Discrimination”,
“Defocusing” and “Economization”.
Discrimination. Frustration incidents in this category occur when less valuable
customers are disadvantaged by the company treating the valuable status customers
favorably. The customers that are less valuable from the firm’s perspective may still
demonstrate a strong commitment to the firm and perceive themselves to be valuable
customers. As “Non-Qualified” customers, they see the denial of equal treatment as
discrimination. Interestingly, participants in the “Qualified” group, who were not
affected by the discrimination themselves, also criticized other customers’ unfavorable
treatment as being discriminatory (example: “I don’t like superior treatment of certain
groups. They can’t do that” (Non-Qualified), “Everybody should be treated equally,
nobody should feel discriminated” (Qualified), “How unimportant must I be for the
company that I do not even get this advantage” (Non-Qualified)).
Defocusing. Many customers rate the core service of the provider as only somewhat
satisfactory. This impression leads to a perception that the firm has wrongly focused
its priorities on the loyalty program instead of on the core service. The participants in
the focus groups thus see the program as a reduction of the possible value, in terms of
frustration in
loyalty programs
service quality that the firm could in fact offer to them, provided that the firm would
have directed the resources used for the loyalty program toward measures designed to
improve the core service (example: “What do I need points for when I arrive
unpunctually or receive wrong information. In the first place they should improve the
core service”).
Economization. Loyalty programs move the economic character of the relationship
to the forefront of customers’ consciousness. For some customers who had strong
emotional ties to the firm, this development led to a re-evaluation of the business
relationship, as there was no reciprocity on the part of the firm for the customer’s
emotional commitment (example: “For every point I receive I have to spend one Euro,
making me realize how much I really spend for the company to become a valued
These three categories of relationship-related customer statements are frustration
incidents because each of them was a form of reward refusal or reward reduction and
because they triggered highly negative emotions. The discrimination is a willful
refusal of a possible reward. The defocusing can be understood as a reward reduction
because the service received in return for the price paid by the customer is diminished
by supposedly incorrect corporate investments in the loyalty program. Economization
may also be taken as a reward reduction, as the emotional reward for the customer’s
emotional ties is withdrawn.
In the case of these relationship-related incidents participants cannot intensify their
efforts as a possible reaction to the strong frustration sensation. Thus, the affected
customers chose either protest or avoidance as alternative actions. For instance, they
complained to the firm about the discrimination they experienced or decided to use the
core service less often in the future.
Accordingly, propositions P5A and P5B are as follows:
P5A. In loyalty programs frustration incidents occur that have negative effects on
the customer’s perception of the relationship with the firm.
P5B. Highly frustrating relationship-related frustration incidents lead to protest or
avoidance behavior with respect to the loyalty program and/or the core
More and more companies are implementing loyalty programs in order to enhance
their knowledge of their customers, to identify the valuable customers, to differentiate
and give personal attention to these valuable customers and especially to raise profits
by increasing customer retention and by a more efficient use of marketing tools. Few
firms, however, systematically verify whether the programs they implement actually
achieve these goals. An even more neglected question is whether customers as
participants of loyalty programs have negative experiences that frustrate them. The
consequence could be that the programs do not achieve the retention effect aimed at, or
even that the overall relationship with the firm is weakened.
Discussions in internet forums provide initial indications that participating
customers are annoyed with loyalty programs. The present exploratory study firmly
supports this impression. Customers do in fact experience a number of different
incidents that greatly frustrate them. Chief among frustration incidents directly related
to the loyalty program are difficulty of access (qualification barrier), impossibility of
claiming the reward (inaccessibility), low value of the reward (worthlessness) and
being required to invest additional material and mental costs in order to enjoy the
benefits (redemption costs). In addition, customers experience frustrating incidents
that directly affect their relationship with the firm. They feel disadvantaged by the
favorable treatment of other customers (discrimination), believe that the firm has
wrongly focused its priorities on the loyalty program, in light of a perceived deficiency
in the core service (defocusing) and are offended by the exclusive focus on the economic
aspects of the relationship (economization).
The frustration incidents lead to highly negative emotions the frustration
sensation that leads to frustration behavior in the form of an intensification of
efforts, protest behavior or avoidance behavior. It is in the interest of the firm if
customers intensify their efforts in order to be able to enjoy the benefits offered in the
loyalty program. This effect only sets in, however, if customers actually achieve their
goal and are not left with negative emotions. Protest behavior as a sign of intense
customer frustration must certainly be taken seriously by the firm as evidence of
undesirable developments in the program. The most problematic situation arises when
the participants choose avoidance behavior without providing feedback, particularly
when the behavior is directed not only to the use of the loyalty program, but also
extends to the use of the actual core service or to the assessment of the overall
Limitations and research implications
This research contributes to theory by revealing new research perspectives in two
regards. First, the general frustration-theoretical model presented offers an important
starting point for further research. Second, the study on frustration effects in loyalty
programs directs the attention toward the previously highly neglected area of
unintended negative side effects associated with customer-retention and
customer-relationship management measures.
So far, very few articles address the construct of customer frustration (So
2003; Stauss, 2004). This paper moves beyond the existing discussion by developing a
general frustration model and examining its adequacy for explaining the specific
behavior of frustrated customers. As this succeeds, it seems reasonable to expand the
thought and, for example, to reflect the suitability of using the frustration construct to
explain the behavior of customers who experience other frustrating situations. Among
cases to be considered in this context would be, when customers complain
unsuccessfully or when customers have to encounter breach of companies’ guarantees.
However, the limitations of the theoretical perspective have to be considered. The
discussion as to the exact differentiation of frustration from related constructs (such as
dissatisfaction) is by no means concluded. Above all, further work is necessary that
would allow deeper insights into the relationships between the model elements: the
relationship between frustration incident and frustration sensation, the relationship
frustration in
loyalty programs
between frustration sensation and frustration behavior and the influence of frustration
Concerning the possible negative effects of loyalty programs, the qualitative
empirical study shows that participants of such programs in fact get considerable
negative impressions that unfavorably affect the success of the program or even the
relationship with the firm. This is a remarkable result. Nevertheless, the limitations of
the empirical study need to be taken into account. The object of the investigation was a
single company’s loyalty program in a special industry sector, which limits the
generalizability of the results. Furthermore, the findings were derived from a
qualitative, exploratory study, which underlines their preliminary character. Of
research interest is thus the further specification of the propositions and their
formulation as hypotheses that can be tested in a large-scale quantitative study in
different sectors and with a number of companies and programs. In this context, there
are a number of individual questions that are yet to be clarified, such as how the
different relationship types can be differentiated from one another in an exact and
practical manner, and how the intensity of the frustration sensation or the forms of
frustration behavior can be operationalized and measured. Only based on such a larger
study will more exact information about the effects of frustration incidents in loyalty
programs on customer loyalty become available, which will also provide important
details as to the profitability of these instruments for practice.
Managerial implications
Specific implications for the planning and implementation of loyalty programs arise
from the results of the study.
In the strategic planning of loyalty programs particular relevance should be given
to the question of target-group orientation (Rapp and Decker, 2003, p. 211). In doing so,
the extent to which frustration incidents and sensation differ according to target
groups should be a primary focus of analysis. Here, differentiating customers as
relational and transactional according to their type of relationship may be important
¨nroos, 2000, p. 35). It is to be expected that relational customers—that is, those
more interested in a “real” relationship may be more sensitive to discrimination and
economization. Loyalty programs with a strong economic focus and distinct
customer-value differentiation would only appear to be appropriate when there is a
high percentage of transactional customers for whom the search for an acceptably
priced solution, not an emotional connection with the provider, is the primary focus.
In addition, when planning the implementation of loyalty programs it is imperative
to keep in mind that customers need to perceive the core service as satisfactory. If,
however, dissatisfaction with the core service is prevailing, the firm’s concentration on
loyalty programs may be largely seen as defocusing and produce intense frustration
As far as operative program planning is concerned, what is important is to
preventively ensure that program-related frustration effects are avoided to the greatest
extent possible. This calls for:
.using customer-based marketing research to establish a level of points required
for qualification that is regarded as appropriate by the majority of the concerned
target group in order to avoid frustration resulting from a qualification barrier;
.offering only those service benefits that represent genuine additional value to
customers so as to avoid perceived worthlessness;
.making sure that the rewards can be claimed by customers at any time and in
any place in order to avoid inaccessibility; and
.making sure that customers are not overburdened by being required to invest
additional material or mental costs in order to claim benefits so as to avoid
redemption costs.
If loyalty programs have already been implemented, it is important that the quality of
the program perceived by the customer is constantly monitored on a customer
segment-specific basis, thus allowing the firm to obtain prompt information about
possible customer frustration. Furthermore, the behavior customers exhibit when
accumulating points and claiming benefits should also be monitored continuously, so
that the firm can recognize the first signs of avoidance behavior by customers in a
timely manner. Moreover, indications of protest such as customer complaints
should be viewed with particular attention. In this regard, not only must employees
having contact with customers be empowered to answer these complaints and to
conduct a dialog with the complainants, but also to forward the complaints, so that the
critical aspects and proposals contained in customers’ protests are also used to improve
the program on an ongoing basis.
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... Consumer behavior research has generally focused on satisfaction and dissatisfaction (Oliver, 1997;Söderlund, 2003;Stauss, Schmidt, & Schoeler, 2005). ...
... Dissatisfaction hides the fact of negative emotions (Söderlund, 2003;Stauss et al., 2005), and it is recommended that research focuses on consumers' negative emotions. One form of negative emotion is customer frustration. ...
... Research on customer frustration continues to primarily concerns the experience of negative emotions in online shopping (Kukar-Kinney & Close, 2010) and loyalty programs (Stauss et al., 2005;Sven Tuzovic, 2010). The importance of customer frustration emphasizes that customer frustration is an excellent source for getting new product ideas, which of course includes service improvement. ...
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The primary purpose of this article is to do classification and thematic analysis of previous research on customer frustration using a systematic mapping study (SMS). The main research was carried out by combining automatic and manual search. The automatic search was through electronic journal database references: ProQuest Research Library, EBSCOhost: Academic Search Complete, Google Scholar, Emerald Insight and Scopus, while the manual one was performed on Google search with the snowball sampling method. A total of 28 studies on costumer frustration in the form of journal articles and proceedings were included in the inclusion criteria. The results of the mapping show that: 1) the object of study on customer frustration is dominated by the quality of service and the internet, therefore, in the future it can be developed in other objects and subjects, 2) the context of costumer frustration is defined as a negative emotional reaction because consumers' goals are not accomplished or hindered, hence research needs to reinforce this definition so as not to be ambiguous with other definitions of negative emotions, especially anger, 3) the location of the research still needs to be expanded, and 4) quantitative and qualitative or mixed approaches can be applied. Keywords: systematic mapping study, customer frustration, research
... 로열티 프로그램에서 기업이 일부 고객에게 차별대우를 제공하여 서비스가 실패한 경우에는 고객들의 불만족이 증가하게 된다 (Concepcion et al, 2010). 로열티 프로그램의 보상에 관련하여 고객들은 보상의 지연, 감소, 중단과 같은 부정적인 경험을 하게 되고 이러한 경험은 불평행동을 야기한다 (Stauss et al, 2005). 그리고 고객들은 로열티 프로그램의 기준을 충족하지 못하면 하위 등급과 적은 혜택을 제공받는 강등을 경험하게 된다. ...
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One of the important tasks of a company, at the beginning of the start-up or as it grows its business, is customer relationship management, and the loyalty program is an effective means to create, sustain, or expand customer relationships. However, in order to control the cost of the loyalty program or to increase efficiency, many companies regularly evaluate the customer situation to reduce the customer benefit of the loyalty program or to demote the customer rating. The purpose of this study is to investigate the demotion in the loyalty program and the resulting customer reaction. Considering the lack of a core theoretical explanation system in this field, the perception of and responses to the demotion were collected from customers who experienced demotion in a loyalty program of customer tiers structure through the focus group interview method, an exploratory research method. Specifically, using a grounded approach, this study extracted common factors from data collected for customers who experienced demotion and performed open coding to form subcategories, and then connected the connections between each category. We grasped and coded the axes that make up the paradigm model. In addition, the research model and research propositions were derived through selective coding that selects the relationship between categories or factors that we aim to focus on and deeply understand. The main findings are as follows. Customers experience a decline in grade and a decrease in benefits, which may be caused by a customer's failure to meet the criteria or by a company changing the loyalty program's criteria, with or without prior notice about demotion. In some cases, customers did not know the cause. The experience of demotion occurs in three ways: negative reactions (switching to other companies), positive reactions (maintaining a relationship with an existing company), or no responses. These customer responses are influenced by other moderating conditions relationship norms, satisfaction, trust, involvement, loyalty, number of alternatives, and switching cost. We can find the significance of this study in terms of discovering the 41 propositions drawn, especially the ones regarding the important influence of the relationships norms customers have with companies. For example, consistent with existing studies’ finding, we found that customers were more negative about demotion in the case of external attribution than internal attribution. In addition, however, we further found that customers responded more negatively in the case of internal attribution when customers have communal relationship norms with their companies. Furthermore, these customers were more sensitive to the decline in status without actual losses. In other words, this study found that the customer response due to demotion can be different depending on the relationship norms that customers builds to expect from the company. Considering that it is not easy to manage customer relationships at the beginning of starting a business or in growing a business, we present managerial implications and directions for future research.
... Consumer LPs received a lot of scientific investigation in the past decade Meyer-Waarden, 2015;Meyer-Waarden et al., 2013;Dorotic et al., 2012;Bijmolt et al., 2010;Liu and Yang, 2009;Liu, 2007). However, their impact on business performance has been found to be marginal (Lacey, 2009;Lacey and Morgan, 2008;Leenheer et al., 2007) or even potentially damaging (Evanschitzky et al., 2012;Stauss et al., 2005). On the other hand, some studies show the capability of LPs to drive company performance (Chaudhuri et al., 2019) and produce relationship marketing (RM) effects, i.e. building and enhancing customer loyalty (Meyer-Waarden, 2015;Liu, 2007). ...
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Purpose Despite the abundance of B2B loyalty programs (LPs), the research on their interplay with relationship marketing is scarce. The purpose of this paper is to investigate a LP (a relational practice) on a transactional business market to test if and how a B2B LP affects relationship outcomes. Design/methodology/approach The study is based on dyadic research in a multi-theory framework. Data were collected from 200 small and medium enterprises that purchase office supplies from a company and merged with the company’s internal records.The formative-reflective measurement model is estimated using structural equation modeling – partial least squares (SEM-PLS). Findings Relationship quality (RQ) directly affects sales and customer share of wallet. The effect is strengthened by customer activity in a LP. RQ results directly in a longer tenure and willingness to recommend only for members of a LP. Research limitations/implications RQ is driven mainly by customer’s evaluation of prior experience with a supplier, while a LP is based on a forward-looking promise of a reward. The results of the study point to the level of customers’ activity in a LP as a boundary condition of the program’s efficacy. Practical implications RQ affects both attitudinal and behavioral outcomes but through distinct mechanisms. Once a supplier is a preferred one, LP membership strengthens the attitudinal outcome of a relationship. The effect of RQ on company performance is magnified by the level of customer activity in a LP but not by the membership status. Originality/value The theoretical framework integrates transaction costs, relational contract and relational exchange theories to investigate a LP on a transactional market. The study adds to the scant literature on LPs in business-to-business and provides evidence for similarities and differences in comparison to consumer research.
... When they receive unearned status rewards, customers even might develop skepticism about the motive for the reward, despite feeling somewhat grateful (Eggert et al. 2015). Other miscellaneous emotions also might be elicited by loyalty programs, such as discomfort (Jiang et al. 2013), frustration, or feelings of pressure and accomplishment (Stauss et al. 2005). However, this study focuses on the four primary listed mechanisms, to delineate their influential effects in tiered loyalty programs. ...
As exemplary instruments of relationship marketing, loyalty programs are being implemented and studied at an unprecedented rate. Yet real-world efforts often fail—or at least do not live up to expectations—and despite the growing richness of loyalty program literature, the field remains fragmented. Thus, a comprehensive perspective is required. To guide further research and suggest ways that managers might improve loyalty program effectiveness, this article synthesizes insights on loyalty programs from empirical research and underlying psychological theories. The proposed conceptual model of loyalty program effectiveness consists of psychological, design, and operational elements; in turn, it suggests a set of 12 propositions that account for differential effects across customer acquisition, onboarding, expansion, and retention stages. With an evolving theory of loyalty programs across relationship dynamics, this propositional inventory parsimoniously delineates the trade-offs associated with relationship stage–based management of these programs. The proposed comprehensive foundation can guide loyalty program practice and research.
... The emergence of these technologies has intensified consumers' interest and access to information regarding loyalty rewards information, although gaining loyal customers is still a challenge for brands (Shaw and Lin, 2006). Furthermore, discussions in Internet forums have long revealed that participating members are often frustrated with some loyalty programs (Stauss et al., 2005;Lee and Jung, 2017). ...
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The proliferation of sophisticated e-commerce platforms coupled with mobile applications has ignited growth in business-to-consumer (B2C) commerce, reshaped organizational structures, and revamped value creation processes. Simultaneously, new technologies have altered the dynamics of brand marketing, enabling a broader reach and more personalized targeting aimed at increasing brand trust and enhancing customer loyalty. Today, the Internet allows marketers to penetrate deeper into their existing markets, create new online marketplaces and to generate new demand. This dynamic market engagement uses new technologies to target consumers more effectively. In this conceptual paper, we discuss how blockchain technology can potentially impact a firm's marketing activities. More specifically, we illustrate how blockchain technology acts as incremental innovation, empowering the consumer-centric paradigm. Moreover, blockchain technology fosters disintermediation, aids in combatting click fraud, reinforces trust and transparency, enables enhanced privacy protection, empowers security, and enables creative loyalty programs. We present six propositions that will guide future blockchain-related research in the area of marketing.
... As a result, the customers will be more associated with the online activities of the loyalty program and have greater desire to participate in the program. On the other hand, if the customers do not receive the promised reward or if the indicated benefits of the loyalty program prove worthless to them, customer frustration may arise (Stauss, Schmidt, & Schoeler, 2005). The SYW program was innovative in that it offered many new features and approaches for its members to earn points. ...
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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.
Purpose Loyalty programs are pervasive across service industries. However, the examination of cross-customer effects represents a critical gap in the loyalty literature. To address this gap, this research conducts two between-subjects experimental design studies to examine traditional versus endowed loyalty status earner attitudinal loyalty intention toward the company, switching intentions and perceived unfairness. Design/methodology/approach Study 1 conducts a 2 (self: earned vs endowed) × 2 (others: earned vs endowed) between-subjects experimental design on the direct effects of attitudinal loyalty intention toward the company and switching intentions. Study 2 builds upon these findings by examining the mediation effect of perceived unfairness on the attitudinal loyalty intention toward the company and switching intentions. Findings Results from Study 1 find that cross-customer comparisons exist, and traditional loyalty members have negative attitudinal loyalty intention toward the company and switching intentions when comparing their rewards to endowed earner rewards. Study 2 examines an airline context and finds that unfairness mediates the relationship. Originality/value The research builds upon the literature surrounding cross-customer comparisons, loyalty programs, equity theory and endowed status and discusses the unintended negative consequences related to endowed loyalty rewards on other customer intentions that have critical managerial implications.
The 2019 novel coronavirus is a non-segmented positive-sense RNA virus belonging to the Coronaviridae-Nidovirales family. We examined the swings in purchase behavior following the outbreak of the COVID-19 in Wuhan, China, and across the world based on the theory of fear appeal. We gathered published statistics (suspected, confirmed, and fatality) on the COVID-19 alongside the purchase of personal protective equipment to examine the swings in online purchase behavior. With a serial mediated analysis, we established that fear appeal is associated with the sharp dynamics in the online purchase as related to the COVID-19. The results confirmed that fear appeal promotes social presence in anticipation of seeking affection, acceptance, and social information. This feeling is a precondition for developing e-loyalty, which promotes purchase behavior. Even though our variables might not be conclusive enough, we believe the findings are fundamental to understanding the swings in the purchase trend in this and any similar situations.
Loyalty cards programs have been used by retailers to increase customer retention. Loyality cards provide means to identify a particular customer and to collect customer-specific data, thus enabling individualized marketing; however, operating a loyalty program is complicated for retailers since they require to manage balances, collections, and transfers of customers. This is exactly the same problem the retailers were facing before credit cards were readily available. A new problem is that customers now have too many cards, customers may forget, or even deliberately decide to carry only a selection of their cards. This paper proposes a loyalty program based on a blockchain that does not require a physical card for identifying customers as it associates customers to their phone numbers, since nowadays people always carry their phone. In this perspective, companies can reduce overhead costs associated to managing the loyalty program. This paper reviews the technology required and describes the implementation of a loyalty program based on blockchains. Finally, it also enumerates the reasons for choosing the blockchain technology for this application.
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Evidence indicates that satisfied customers defect at a high rate in many industries. Because satisfaction alone does not translate linearly into outcomes such as loyalty in terms of purchases, businesses must strive for 100 percent, or total, customer satisfaction and even delight to achieve the kind of loyalty they desire. Current studies attribute a higher degree of emotionality to the dissatisfaction end of the satisfaction continuum than in the past. For example, customers who have experienced service failures feel annoyed or victimized. Although victimization is felt at a deeper emotional level than irritation, both can result in outrage. By focusing on more intense customer emotions, such as outrage and delight, the authors explore the dynamics of customer emotions and their effect on customer behavior and loyalty. Schneider and Bowen base their conceptualization on people's needs rather than the more conventional model that focuses on customer expectations about their interactions with a firm. The authors propose a complementary needs-based model far service businesses that assumes customer delight and outrage originate with the handling of three basic human needs - security, justice, and self-esteem. By recasting a situation as one that has violated any of a customer's fundamental needs, the deeper emotional outcome (e.g., outrage) does not seem incongruous. The authors describe each need and offer specific managerial tactics for avoiding outrage and creating delight. Recent emphasis on relationship marketing - that is, attracting, developing, and retaining customers is pertinent because building relationships requires that companies view customers as people first and consumers second. Service is an exchange relationship in which customers swap their money and loyalty for what Schneider and Bowen argue is need gratification - a psychological contract with service firms to have their needs gratified. The authors discuss strategies that help firms gratify and, in some cases, delight customers. while avoiding the perception that they do not respect customer needs. Companies must manage how they show concern for customer needs in all actions, including the activities of the back office (e.g., billing, shipping), not just front-office personnel who directly contact the customer.
Kundenzufriedenheit hat im letzten Jahrzehnt einen hohen Stellenwert in Marketingpraxis und -Wissenschaft eingenommen. Verschärfte Käufermarktsituationen rückten die Notwendigkeit einer stärkeren Kundenbindung durch Kundenzufriedenheit vermehrt in das Bewusstsein der Marketingmanager. Auf marketingwissenschaftlicher Ebene spiegelte sich dieser Bedeutungszuwachs in einer zunehmenden und vertieften Beschäftigung mit vielfältigen konstruktbezogenen sowie messtechnischen Aspekten der Kundenzufriedenheit wider (siehe Silberer 1987b, Schütze 1992, Oliver 1996, Stauss 1999, Hinterhuber & Matzler 2002, Silberer, Magerhans & Wohlfahrt 2002, Homburg 2003).
The growing application of relationship marketing has social implications which need to be given more attention in the future development of the concept. The author uses an outline history of relationship management as a springboard for assessing the costs and benefits for consumers of long-term relationships with business enterprises. The core of the chapter examines the different problems and difficulties which relationship marketing might bring the individual consumer. These issues need to find a careful response in both marketing science and practice, if society is to continue to accept a concept which claims to focus on customer orientation.
This paper explores the effects of market structure on the effectiveness of loyalty programmes. A literature review led to the proposition that effectiveness is dependent upon firms' existing customer information deficit and their ability to segment markets with differentiated products. A case study examines two sectors with differing market characteristics: civil aviation and car ferries. Loyalty programmes appeared to be less successful in the latter, where information about customers was more readily available than for airlines. Opportunities for segmentation were less. Although questions are raised about how the effectiveness of a loyalty programme can be measured, the proposition that market characteristics can influence the effectiveness of a loyalty programme is accepted.