Title: The impact of financial and non-financial benefits of loyalty programs on commitment and customer loyalty
Authors: Van Goolen, Robrecht ×
Fran├žois, Pierre #
Issue Date: 2006
Publisher: Northwestern University, Kellogg School of Management
Conference: Thinking Big, Thinking Different: Contributions and Challenges in B-to-B Research, Institute for the Study of Business Markets (ISBM) location:Chicago, IL (U.S.A.) date:Aug. 3-4
Abstract: Today there is a belief that marketing has not paid sufficient attention to customer retention and that increasing rates of retention lead to increased profitability (Reichheld and Sasser, 1990). There is a renewed academic interest in obtaining loyalty of your business-to-business customers. The scale and prevalence of loyalty reward programs have increased in just a few years across a range of industries. In our research we will focus on the frequent flyer schemes of the airline industry. Loyalty programs in this industry have an extremely difficult design for business travellers. We hypothesize that customers are not able to know every detail of a loyalty program due to the complexity of loyalty programs in the airline industry, the limited memory capacity of a user and an inefficient communication of the company. In our research we focus on two types of benefits of the same marketing instrument to obtain a loyal customer base: financial and other non-financial benefits of loyalty programs. There are two streams in academic research. One states that loyalty programs are effective in increasing behavioural loyalty, while others state that loyalty programs are ineffective. Why are loyalty programs not always effective and under what conditions will a loyalty rewards program have a positive effect on the customer's behaviour (customer repurchase behaviour and intentions)? Do financial and other non-financial benefits of a loyalty program increase commitment and behavioural loyalty? We aim to focus on the type of tie that is obtained between customer and firm.Research contributionFirst, we contribute to the general research question: which is the relative impact of financial and non-financial benefits of a loyalty program on behavioural loyalty? Second, we hope to make clear that some marketing programs can strongly increase genuine loyalty and others don't. We hypothesize that financial benefits improve calculative commitment and bribe customers to be loyal. Marketing loyalty programs that include non-financial benefits improve attitudinal commitment to the company which is a stronger tie and buyers display genuine behavioural loyalty. Non-financial benefits tie customers to the brand in another way. Our work also has implications for the measurement of relationship equity. It is in this stream of research that this doctoral research can have a clear contribution. Our framework enables what-if evaluations of marketing return on loyalty programs, given a particular shift in customer perceptions. This enables the firm to focus its marketing efforts on strategic initiatives that generate the greatest return.(Shortened for publication)
Publication status: published
KU Leuven publication type: IMa
Appears in Collections:Research Centre for Marketing and Consumer Science, Leuven
× corresponding author
# (joint) last author

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