Loyalty Program: Some Literature Review

According to Tuchen and crisp (2002), loyalty programs, marketing programs, are often seen as an effective strategy for identifying, growing and retaining profitable customers. And the early results of research conducted among telecommunications companies around the globe in 2000 and 2001 by Accenture and customer retention specialist Emagine International show that telecommunications loyalty program can indeed bring promising benefits.
Based on Seneres (2011), Customer loyalty programs range from simple ones that offer, for example, a free coupon for a certain number of visits or volume purchased, to complex ones such as an airline’s frequent flyer program or a telecom operator’s loyalty awards. These programs also differ, among others, on the manner of redemption (e.g., redeemable upon grant vs. those requiring accumulation), who operates (e.g., the company itself vs. outsourced to third party or the company participates in a program run by a third party), and the source of credit (e.g., from single or group of purchase or purchases over a specified period of time). Credits can also be earned by buying products or services from another entity who is not necessarily participating in the program, or awards can be redeemed for products or services of the company or of another entity.
Castellon (2013) quoted that the beauty of running a loyalty rewards program is that it not only can increase overall product or service usage but also offer elements of exclusivity and personalization. It has the power to reinforce the desired market behaviors and buying patterns of the customers even as it strengthens their relationship with the company or product.
As quoted by Jamieson (2013), retail loyalty programs are growing significantly in the Philippines in recent years, both in terms of availability and popularity. These programs are influencing consumers’ choice of store, with Filipino consumers saying that they more likely to be enticed by loyalty program offerings.