Customer Loyalty Program: Chapter 1

CHAPTER 1

PROBLEM AND ITS SETTING

INTRODUCTION
Customer loyalty is a behavioural state, which reflects value, confidence and commitment between the supplier-customer relationships (Buttler, 2002). Hence, developing a strategy that would retain and boost loyalty from customer has become the objective of most companies nowadays (Duffy, 2003). Many see it as primarily an attitude-based phenomenon; therefore, offering customer relationship management initiatives such as customer loyalty programs can be significantly influenced by it (Uncles, 2003).
Loyalty programs gained significant “practical and academic attention in the context of customer loyalty and customer relationship management" during the last decade (Sharp and Sharp, 1997). It has been explained that the simple objective of any loyalty program is to reward loyal customers with special services or discounts and, at the same time, to achieve an economic benefit of a long-term business relationships towards the customers by promoting this loyalty schemes.
These programs were initially hailed as an imaginative ways of inspiring and maintaining loyalty from customers, but over the years, more and more doubt has been throw on them. Loyalty programs that seek to bond customers to a company or its products and services by offering an additional incentive had posed an interesting dilemma (Dowling, 1997). It seems that beside the refusal of some certain customers to be dependent on a company, factors such as sense of privacy and discrimination or unequal treatment raise the customers' reaction and concerns (Evans, 1999; Hansen, 2000).
As explained by Uncles et. al. (2003), in spite of the general characteristic of all loyalty programs that they reward benefits to customers, w...

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...ct of a customer loyalty program and other elements of the marketing mix on customer buying behavior, such as the adaptation of a loyalty card that provide a reward for members and much bigger incentives for members who purchased on a large-volume frequently. An increase of customer’s investment in the program and customer’s likelihood of earning a reward will be achieved as purchases are done.
Customer loyalty program specifically the reward program can motivate and encourage customers to base their purchasing decisions. Similarly, an effective loyalty program can encourage customers to make decisions that can maximize projected utility of the customers to the business.
Customer loyalty program, under assessment is still successful in changing customer behaviour and in motivating customers to increase purchasing that leads to an increase of customer loyalty.