Edited by Robert M. Morgan, Janet Turner Parish and George Deitz
Chapter 9: Taxonomy of hotel loyalty program members: examining differences in service quality perceptions
Perhaps the most tangible evidence of marketing’s paradigm shift toward relational exchange has been the widespread diffusion of corporate loyalty programs. Loyalty programs seek to bond customers to the firm by offering incentives that reward continued patronage, such as frequent flyer miles, customer loyalty bonuses, free gifts, and personalized coupons (Peterson 1995). A census of the US loyalty program industry found individual program memberships topped 1.3 billion, an increase of over 35 percent since 2000 (Ferguson and Hlavinka 2007). Moreover, the appeal of these programs spans a broad array of service industries, including credit card issuers (e.g., American Express), restaurants (e.g., Subway), hotels (e.g., Holiday Inn), rental car companies (e.g., Hertz), and entertainment firms (e.g., Disney). In the race to expand membership rolls, however, it would seem many program managers have lost sight of the goal of producing long-term, mutually beneficial customer relationships. Shugan (2005: 186) suggested that many programs are no more than price promotions in sheep’s clothing, stating “[T]hese so-called loyalty programs are shams in the sense that they produce liabilities rather than assets . . . Rather than demonstrating trust by committing to the customer, the firm asks the customer to trust that, in return for current revenue, the firm will provide future customer rewards.”
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