Loyalty Programs: Customer Factors

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Several factors influence the success of the loyalty program, among which the role of the customer is important. The customer is a subject of modern society, which is included in an extensive network of communications, economic and information flows. The customer does not exist as a given, but appears as a result of interaction, which is largely formed by loyalty programs. We should not forget that the subject's customer resource is limited. Increasing the capacity of this resource is a matter of marketing strategy, which forms the idea of the necessity of this or that product for the subject, that is why the factors of customer are, first of all, the factors of the loyalty program itself, unfolding in specific temporal and spatial conditions.

Let us ask a few questions about key customer factors:

  • With what help does a loyalty program connect with customer needs and desires?
  • How does the previous experience of the customer related to loyalty programs affect the behavior related to obligations?
  • How are individual differences in the customer's spending habits determined?

Customer Program Fit

An important key to the success of any loyalty program is getting to the point of identification of the subject, i.e. the possibility for the customer to see and identify himself with the benefits of membership. To the extent that the customer will feel that his or her buying behavior meets the program requirements, he or she will consider the program favorably. Satisfaction with the program means not only the existence of identification structures, but also an open opportunity to develop a positive identity. The wider the open opportunities, the more frequent and active the program purchases will be. In addition to increasing purchase frequency, loyalty programs with a high degree of matching can also create a sense of community among members, i.e. collective identity. Collective identity is the most important and valuable effect for modern loyalty programs, as it guarantees security and success for the company. By distributing economic benefits through the purchasing activity of the collective entity, the loyalty program becomes more sustainable. The collective identity effect can be based on the idea of globality, or vice versa, on the idea of traditional values or local interests. Both options can be developed by creating opportunities for interaction and sharing the privileges of program members. Such joint community activities can foster a sense of attachment to the programme.

To begin with, the 'fitness' study focused on matching customers' running costs with program requirements. The next step is to move from rational compliance assessment to emotional assessment of compliance and attachment to programs. An important research task is to examine the specific factors that stimulate a sense of community in a program. These triggers can vary greatly - there is some evidence that consumers' desire to maintain relationships with service providers can vary from segment to segment. It would be useful to know if there are any such sections of consumers in relation to their interest in communities participating in loyalty programmes. In this regard, it would be useful to know what incentives are effective in creating a sense of community belonging in the programme.

The role of the consumer

It is clear that the abstract concept of "customer" requires adjustment and clarification depending on the specific case. Characteristics of customers can significantly affect their evaluation of the program. The active or passive role of clients in making initial purchase decisions may affect their preference for remuneration. In particular, when points are achieved through work or effort, rewards become more desirable and perceived more emotionally.  As it is obvious that client characteristics influence program evaluation, a more systematic understanding of the role of client characteristics in perception of the loyalty program and its attributes is necessary. The question about what role consumers actually expect from the loyalty program remains open. The customer fatigue factor remains completely unexplored. Irritants and incentives of loyalty programs can have a negative effect leading to the accumulation of fatigue and reduction of consumer activity. In general, the picture of the transformation of incentives in loyalty programs fits into the media logic. The search for new techniques of customer retention develops in parallel with forms of network communication. It would be useful to describe in detail the tasks that seem pleasant to consumers within the framework of an incentive program, as well as what changes in communication between the consumer and the firm affect the evaluation of the program. 

Georgetta F. Palsen

Georgetta F. Palsen

About the author

Georgetta F. Palsen spearheads the Loyalty Programs Project, aiming to unravel the global impact of loyalty programs. Leading a dedicated team, she adopts an interdisciplinary approach to explore these programs' influence on consumer behavior and capitalism, offering critical insights for academics and businesses navigating the complexities of today's societal dynamics. More info


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