Edited by Robert M. Morgan, Janet Turner Parish and George Deitz
Chapter 5: Relationship marketing tools: understanding the value of loyalty programs
Loyalty programs have emerged as the most commonly utilized marketing tool for developing and preserving valued customer relationships. According to a 2007 Colloquy survey, the average American household is a member of 12 different loyalty programs and is active in 4.7 loyalty programs (Ferguson and Hlavinka 2007). Other countries where loyalty programs are prevalent include the United Kingdom, Canada, Germany, India, Switzerland, and Australia. Loyalty programs are considered standard in many industries. Current examples of leading firms across a broad spectrum of vertical consumer markets employing proprietary loyalty programs include airlines (e.g., American, Delta, United, British Airways), car rental companies (e.g., Enterprise, Budget, Dollar, Thrifty, Hertz), hotels (e.g., Hilton, Hyatt, Marriott), financial services companies (e.g., American Express, Citibank), and supermarkets and drugstores (e.g., Kroger, Tesco, CVS, Eckerds, Boots), as well as an array of specialty retailers (e.g., Best Buy, Barnes & Noble, Hallmark, Nordstrom). The wide proliferation of loyalty programs has led to increasingly widespread attention among marketing scholars (e.g., Kivetz and Simonson, 2002; Roehm et al. 2002; Keh and Lee 2006; Nunes and Dreze 2006; Liu and Yang 2009). Amidst mixed theoretical and empirical support for how firms and customers, alike, benefit from loyalty programs, they remain a controversial relationship marketing tool.
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