Last week, I wrote about the key loyalty program design factors that a loyalty manager should consider. In the second part of this series, I’d like to review what we know about effective loyalty program design from published academic research. I should start by saying that this area is still pretty new. So we don’t know a whole lot at this point. I’m hoping that by putting together here what we know will also help academic researchers identify the holes that still need to be filled in this area.
I. Program Requirements
Key References: Kivetz and Simonson (2003); Demoulin and Zidda (2009)
- Although increasing program requirements may make a loyalty program less relevant to some consumers, it can also make the program more appealing to frequent customers. So if the goal of a loyalty program is to selectively attract heavy buyers, a relatively high program bar should be set.
- Make sure the program is straightforward. Too much complexity in a program, whether it’s the point earning action required or the redemption of rewards, can turn consumers away right at the beginning.
Continue reading “Loyalty Program Design Fundamentals Part II”
