Actions Speak Louder than Words: Understanding the Meaning of Loyalty Program Building Blocks

Abstract

Although the concept of a loyalty program has been widely adopted in business practice and researched by academics for decades, its efficacy is still disputable. Some researchers argue that studies on loyalty programs do not account for cross-customer effects and the simultaneous interplay of multiple psychological mechanisms with program delivery. Thus, the main aim of the study is to examine the meaning of marketing actions which form a "loyalty program" in an intercultural context. The authors argue that customers' understanding of the meaning of marketing actions plays a crucial role in the effective planning of marketing activities. The study draws from Wittgenstein's linguistic theory and investigates which marketing actions customers perceive as building their loyalty towards a company. The data was collected from over 300 customers in Poland, Serbia and Kuwait and analysed in a conjoint design. The study finds that intercultural differences do bring varying understanding of the same marketing activities which needs to be taken into account both in future studies and in business practice. This study provides guidelines for adaptation of marketing loyalty programs to specifics of culture which may go beyond country borders.

Loyalty program value: Give me more or treat me better?

“…In a comparative study Kwiatek et al (2018) show that benefits offered in a loyalty program are the most important element of loyalty program value. Supposed benefits could provide rationale why customers take part in loyalty programs, because these benefits increase loyalty and strengthen the relationship with the company (Bolton et al, 2004).…”

“…Companies tend to capitalize from their relationships with external stakeholders and therefore invest significant efforts in relational capital, which captures knowledge embedded in organizations relationships with customers, suppliers, creditors, and other external partners (Gunay et al, 2021). Loyalty programs (LPs) are one of the main marketing tools companies implement to nourish customer loyalty, both in B2C (Kwiatek et al, 2018) and B2B markets (Kwiatek & Thanasi-Boçe, 2019). Ha and Stoel (2014) define a loyalty program as an "identity marketing tool" which is based on providing customer with rewards.…”

Why organizational loyalty programs cannot prevent switching

“…Loyalty programs can be defined as a firm's structural effort to build attitudinal and behavioral bonds between customers and the firm through loyalty-building techniques (Kwiatek et al, 2018). Rosenbaum et al (2005) differentiate between communal loyalty programs that reward via increasing membership tiers and focus on brand communities as loyalty program, and non-communal loyalty programs that focus financial benefits or product gifts, and are predominantly used in fast moving consumer goods.…”

“…However, scholars have pointed out that the efficiency of loyalty programs is still disputable (Kwiatek et al, 2018). Given low redemption rates and high dropout rates (Capizzi and Ferguson, 2015), the question arises of how consumers' switching resistance (i.e.…”

“…While previous research has predominately focused on the link between perceived switching costs and loyalty (Burnham et al, 2003;Wirtz et al, 2007;Yang and Peterson, 2004), only a few studies have investigated how loyalty programs affect switching behavior (Banik et al, 2019;Bolton et al, 2000;Kim et al, 2001;Koo et al, 2020;Lewis, 2004). Literature on loyalty programs' effects presents mixed results, both positive and negative (Kwiatek et al, 2018;Leenheer et al, 2007;Liu and Yang, 2009). In addition, several scholars point out that cultural research on loyalty programs and the underlying consumer behavior is lacking (Beck et al, 2015;Pick and Eisend, 2016; M.X.…”