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Loyalty Programs: Do Companies Really Make Consumers Loyal?

Author

Listed:
  • Savica Dimitrieska

    (International Balkan University, Faculty of Economics and Administrative Sciences, Republic of North Macedonia)

  • Tanja Efremova

    (National Bank of the Republic of North Macedonia, Statistics Department)

Abstract

In the markets of different products and services, the interests of both, companies and consumers collide. Companies that offer products and services expect a return on investment and higher profits. They can achieve these goals only if they have regular consumers, preferably loyal who will buy products and services more often or in larger quantities. The companies are interested in achieving long-term and sustainable relationships with the consumers and they want to minimize the churn and their switching to competitors. Consumers, on the other hand, have more sophisticated demands and expect more value for less money. They are interested not only in the quality of the product, but also in packaging, discounts, cashback, rewards, additional customer services, free shipping, maintenance, special treatments, reputation, etc. To meet these consumer expectations, companies offer many promotional activities, including loyalty programs. Loyalty programs, as part of the CRM (customer relationship management), are marketing programs that reward consumers for their repeated purchases over a longer period of time. Unlike other promotional tools, loyalty programs need to build a long-term relationship between companies and their consumers. But despite the offer of such programs, many studies show that consumers are not loyal and do not fully enjoy the benefits of the programs. Do companies give “something for nothing” and spend their money in vain? What are the reasons for the downfall of loyalty programs? This paper aims to investigate the reasons for consumer disloyalty despite the offered companies' loyalty programs. The paper will also provide guidance for companies to design loyalty programs that will attract more consumers.

Suggested Citation

  • Savica Dimitrieska & Tanja Efremova, 2021. "Loyalty Programs: Do Companies Really Make Consumers Loyal?," Entrepreneurship, Faculty of Economics, SOUTH-WEST UNIVERSITY "NEOFIT RILSKI", BLAGOEVGRAD, vol. 9(2), pages 23-32.
  • Handle: RePEc:neo:epjour:v:9:y:2021:i:2:p:23-32
    DOI: 10.37708/ep.swu.v9i2.2
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    More about this item

    Keywords

    loyalty program; consumer loyalty; customer retention; promotion; customer relationship marketing (CRM); rewards;
    All these keywords.

    JEL classification:

    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • M39 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Other

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