Implications of Loyalty Program Membership and Service Experiences for Customer Retention and Value

Companies that offer loyalty reward programs believe that their programs have a long-run positive effect on customer evaluations and behavior. However, if loyalty rewards programs increase relationship durations and usage levels, customers will be increasingly exposed to the complete spectrum of ser...

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Bibliographic Details
Published in:Journal of the Academy of Marketing Science 2000, Vol.28 (1), p.95-108
Main Authors: Bolton, Ruth N, Kannan, P K, Bramlett, Matthew D
Format: Article
Language:English
Subjects:
Affinity groups
Competition
Consumer attitudes
Customer retention
Customer satisfaction
Customer services
Effectiveness
Hypotheses
Insurance policies
Longitudinal studies
Loyalty
Loyalty programs
Marketing
Operations research
Pickpockets
Regression analysis
Service industries
Studies
Value analysis
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Summary:Companies that offer loyalty reward programs believe that their programs have a long-run positive effect on customer evaluations and behavior. However, if loyalty rewards programs increase relationship durations and usage levels, customers will be increasingly exposed to the complete spectrum of service experiences, including experiences that may cause customers to switch to another service provider. Using cross-sectional, time-series data from a worldwide financial services company that offers a loyalty reward program, a study investigates the conditions under which a loyalty rewards program will have a positive effect on customer evaluations, behavior, and repeat purchase intentions. The results show that members in the loyalty reward program overlook or discount negative evaluations of the company vis-a-vis competition. One possible reason could be that members of the loyalty rewards program perceive that they are getting better quality and service for their price or, in other words, "good value."
ISSN:0092-0703
1552-7824
DOI:10.1177/0092070300281009