Abstract:Research on the customer value to an organization has been widely explored, yet most studies only determined on the financial value based on the customer's purchasing behavior. The value of customers beyond their purchasing behavior -defined as the relational worth -has not been commonly captured yet. This non-financial value is one of the drivers in retaining customers, hence it becomes a crucial factor in preserving the profitability of the organization. For this reason, this paper aims to examine the customer non-financial valuations of a loyalty reward program. The scope of the study covered a reward program involving consumer exertions in the context of a Frequent Flyer Program (FFP) offered by an airline in Indonesia. The hypotheses are empirically tested with a sample of FFP members conducted through an online survey (n=475). The data were statistically analyzed using structural equation modeling (SEM) as a first order construct. Results indicate that the perceived social rewards lead to an affective and normative commitment as well as consumers' satisfaction, while the economic reward did not have an effect on developing affective bonds with members for long-term relationships. The relational benefit offered through the FFP creates affectively and normatively committed members who produce relational behaviors, in terms of WOM, immunity, openness and acquiescence of the members to the airline. Furthermore, the FFP members produced social behaviors toward the airline when they felt satisfied with their relational exchanges.Abstrak: Pada umumnya penelitian untuk mengidentifikasi siapa pelanggan-pelanggan yang berharga hanya berasarkan pada nilai transaksi (berapa banyak uang yang dibelanjakan pelanggan) dan belum mempertimbangkan nilai-nilai sosial pelanggan yang diberikan kepada perusahaan. Nilai sosial ini merupakan salah satu penentu keuntungan perusahaan. Penelitian ini bertujuan untuk mengetahui pengaruh hadiah yang diberikan kepada pelanggan terhadap nilai sosial yang dihasilkan. Penelitian dilakukan terhadap program loyalitas yang melibatkan usaha pelanggan dalam mendapatkan hadiah dan dalam konteks Frequent Flyer Program. Hipotesa diuji dengan menggunakan sampel yang terdiri dari 475 anggota FFP yang diperoleh dengan melalui survey online. Data dianalisis secara statistik dengan Stuctural Equation Modelling (SEM). Hasil penelitian menunjukkan bahwa hadiah yang bersifat sosial mempunyai pengaruh signifikan terhadap terciptanya perasaan emosional dan kepatuhan terhadap peraturan atau norma, dan perasaan puas dari

The goal of loyalty reward program is to retain customers who are profitable to the organization. However most airlines have very little understanding of their customers yet have a little knowledge about their most valuable passengers. This study is aimed to analyze financial aspects of customer value to the company in the context of aviation loyalty reward program in Indonesia. Financial value of customers is analyzed using CLV approach. Modeling of financial value of the members to the airline is developed by performing regression analysis of CLV against RFM and the associated socio-demographic characteristics of the members. This study used secondary data of customer profiles and financial transactions of the Garuda Frequent Flyer members in 2012. The empirical findings observed in this study explain that the financial value of the frequent flyer members to the airline is influenced by RFM, Gender, Age, and Frequent Flyer Tier levels. It is also found that the RFM valuation is aligned with CLV analysis. The result contributes to the knowledge of aviation loyalty program by improving the effectiveness from the aspect of capitalizing on the lifetime value of the members, and to the industry in designing proper marketing strategy and implementing accurate marketing functions in term of Frequent Flyer Program.

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The aim of loyalty reward program is to retain profitable customers to the organization. Airline loyalty program such as frequent flyer program (FFP) is a phenomenon in marketing strategy used by airline industries to maintain customer loyalty and gain more financial benefit. However most airlines have very little understanding of their FFP members yet have little knowledge about their most valuable customers. This study aims to determine customer value to the company in the context of aviation loyalty reward program in Indonesia based on RFM analysis as well as to analyze the correspondence between the members' value and their socio-demographic profile. This study used a proprietary dataset from a FFP' membership of an Indonesian airline. The empirical result shows that axiomatic 80/20 rule is fit well on this FFP. Around 75% of the revenues come from only 20% of the members. Furthermore, seven segments of the FFP members are identified sequentially from the most valuable to the least valuable customer to the airline. Top Members generate the highest revenue and the highest RFM whereas Inactive Members are the least valuable customers. In summary, high value members are dominated by male members, age 46-55 years, having elite tier levels (Platinum & Gold) and working as a director and or an owner of the companies. The result contributes to the industry in developing marketing strategy, enhancing customer loyalty and implementing accurate marketing functions in term of FFP. The study offers a more accurate model for FFP member valuation than just simply based on the miles flown.