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An emerging theory of loyalty program dynamics

Author

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  • Jisu J. Kim

    (University of Washington)

  • Lena Steinhoff

    (University of Rostock)

  • Robert W. Palmatier

    (University of Washington)

Abstract

As exemplary instruments of relationship marketing, loyalty programs are being implemented and studied at an unprecedented rate. Yet real-world efforts often fail—or at least do not live up to expectations—and despite the growing richness of loyalty program literature, the field remains fragmented. Thus, a comprehensive perspective is required. To guide further research and suggest ways that managers might improve loyalty program effectiveness, this article synthesizes insights on loyalty programs from empirical research and underlying psychological theories. The proposed conceptual model of loyalty program effectiveness consists of psychological, design, and operational elements; in turn, it suggests a set of 12 propositions that account for differential effects across customer acquisition, onboarding, expansion, and retention stages. With an evolving theory of loyalty programs across relationship dynamics, this propositional inventory parsimoniously delineates the trade-offs associated with relationship stage–based management of these programs. The proposed comprehensive foundation can guide loyalty program practice and research.

Suggested Citation

  • Jisu J. Kim & Lena Steinhoff & Robert W. Palmatier, 2021. "An emerging theory of loyalty program dynamics," Journal of the Academy of Marketing Science, Springer, vol. 49(1), pages 71-95, January.
    • Handle: RePEc:spr:joamsc:v:49:y:2021:i:1:d:10.1007_s11747-020-00719-1
    DOI: 10.1007/s11747-020-00719-1
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    3. Junzhou Zhang & Yuping Liu-Thompkins, 2024. "Personalized email marketing in loyalty programs: The role of multidimensional construal levels," Journal of the Academy of Marketing Science, Springer, vol. 52(1), pages 196-216, January.
    4. Minguez, Ana & Javier Sese, F., 2022. "Why do you want a relationship, anyway? Consent to receive marketing communications and donors’ willingness to engage with nonprofits," Journal of Business Research, Elsevier, vol. 148(C), pages 356-367.
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    6. Meyer-Waarden, Lars & Bruwer, Johan & Galan, Jean-Philippe, 2023. "Loyalty programs, loyalty engagement and customer engagement with the company brand: Consumer-centric behavioral psychology insights from three industries," Journal of Retailing and Consumer Services, Elsevier, vol. 71(C).
    7. Katarína Gubíniová & Thorsten Robert Moller & Silvia Treľová & Malgorzata Agnieszka Jarossová, 2023. "Loyalty Programmes and Their Specifics in the Chinese Hospitality Industry—Qualitative Study," Administrative Sciences, MDPI, vol. 13(6), pages 1-12, June.
    8. Lim, Weng Marc & Rasul, Tareq & Kumar, Satish & Ala, Mamun, 2022. "Past, present, and future of customer engagement," Journal of Business Research, Elsevier, vol. 140(C), pages 439-458.
    9. Eunice Minjoo Kang & Seul Ki Lee, 2022. "The Impact of Monetary Benefits in a Pandemic Situation—Navigating Changes in Customer Loyalty through Negative Switching Barriers in the Hotel Industry," Sustainability, MDPI, vol. 14(13), pages 1-19, July.
    10. Marcus, Hagström & Rosengren, Sara & Hagberg, Johan, 2022. "The Role of Bonuses in Loyalty Programs – A literature review," SSE Working Paper Series in Business Administration 2022:1, Stockholm School of Economics.
    11. Alex Belli & Anne-Maree O’Rourke & François A. Carrillat & Ljubomir Pupovac & Valentyna Melnyk & Ekaterina Napolova, 2022. "40 years of loyalty programs: how effective are they? Generalizations from a meta-analysis," Journal of the Academy of Marketing Science, Springer, vol. 50(1), pages 147-173, January.
    12. Bies, Suzanne, 2022. "Examining the effectiveness of activation techniques on consumer behavior in temporary loyalty programs," Other publications TiSEM ade86df3-4846-4318-938f-a, Tilburg University, School of Economics and Management.
    13. Afonso Vieira, Valter & Agnihotri, Raj & de Almeida, Marcos Inácio Severo & Lopes, Evandro Luiz, 2022. "How cashback strategies yield financial benefits for retailers: The mediating role of consumers’ program loyalty," Journal of Business Research, Elsevier, vol. 141(C), pages 200-212.

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