1) RM Reward Elements + 3) Customer Loyalty Portfolio + + _ + _ 2) RM Delivery (Steinhoff and Palmatier 2014)
Reward 1: priority check in Reward 2: lounge access Reward n: Gratitude Status Unfairness Firm portfolio performance Target 1 Target 2 Target n Bystander 1 Bystander 2 Bystander n Visibility of reward Clarity of rules
60% of Sales Lift Comes from Gratitude and 70% of Drop Comes from Unfairness
(Steinhoff and Palmatier 2014)
Customers Across Multiple US Airlines See Understanding the Effectiveness of Loyalty Programs for overview
Maintaining Relationships: Takeaways
Preventing customer perceptions of unfairness; may be “highest impact” RM strategy
Prevents large negative effect
Suppresses negative effect of other negative activities
Prevents punishing or retaliatory behaviors
Understanding ”true effectiveness” of loyalty programs needs a multidimensional view:
Reward element perspective
Reward delivery perspective
Portfolio perspective (targets and bystanders)
However, RM Doesn’t Always Work
Some customers try to avoid relationships
Hassle, cost, and time
Prevent psychological debt as know they will feel pressure to reciprocate and/or guilt
RM more effective to customers that are “relationship oriented,” desire or need relationship to “solve” an exchange problem, and want governance benefits: