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[Display omitted] ► There is a positive relationship between customer satisfaction and loyalty. ► The variance explained by just satisfaction on loyalty is rather small. ► Moderators, mediators, antecedent variables, or all three are better predictors of loyalty than just customer satisfaction. ► The satisfaction–loyalty relationship has the potential to change over customer life-cycle. ► The study offers specific guidelines on who, when, and how much to satisfy. This extensive literature review highlights the state of the art regarding the relationship between customer satisfaction and loyalty, both attitudinal and behavioral. In particular, it brings to light several issues that should be carefully considered in analyzing the efficacy of customer satisfaction in explaining and predicting customer loyalty. In fact, for many years companies all around the world have heavily invested in customer satisfaction in the hope of increasing loyalty, and hence, consequently, profitability. But after having gone through a detailed analysis, it is clear that this link it is not as strong as it is believed to be and customer satisfaction is not enough to explain loyalty. In fact, the major findings of this review are captured in the form of a few empirical generalizations. We generalize that, while there is a positive relationship between customer satisfaction and loyalty, the variance explained by just satisfaction is rather small. Models that encompass other relevant variables as moderators, mediators, antecedent variables, or all three are better predictors of loyalty than just customer satisfaction. Further, the satisfaction–loyalty relationship has the potential to change over time. Similar weaker findings are uncovered and the study offers specific guidelines on who, when, and how much to satisfy. Finally, suggestions for future research to explore this domain are offered.

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.

The use of coupons delivered by mobile phone, so-called \"m-coupons,\" is growing rapidly. In this study, the authors analyze consumer response to m-coupons for a two-year trial at a large shopping mall. Approximately 8,500 people were recruited to a panel and received three text-message m-coupons whenever they \"swiped\" their mobile phone at the mall entrances, with downstream redemption recorded. Almost 144,000 m-coupons were delivered during the trial, representing 38 stores that supplied 134 different coupons. The authors find that an important feature of m-coupons is where and when they are delivered, with location and time of delivery significantly influencing redemption. How long the m-coupons are valid (expiry length) is also important because redemption times for m-coupons are much shorter than for traditional coupons. This finding suggests that their expiration length should be shortened to help signal time urgency. Nevertheless, traditional coupon features, such as face value, still dominate m-coupon effectiveness, as does the product type, with snack food coupons being particularly effective.

Despite firms’ extensive usage of loyalty programs (LPs) and decades-long academic research on their effectiveness, LPs’ effects on customer loyalty are still heavily debated. We perform a comprehensive meta-analysis of loyalty programs across various LP designs and industries and spanning different performance metrics to identify moderators of LP effectiveness. Based on a data set with 429 effect sizes, published or available between 1990 and 2020, we find strong evidence that LPs enhance customer loyalty. However, while LPs particularly enhance behavioral loyalty, shifting consumers’ attitudinal loyalty is more challenging. Further, LP effectiveness differs systematically depending on LP design characteristics (LP structure, reward content and delivery) and industry characteristics. These effects are enabled by both cognitive and affective drivers, acting sequentially, as underlying mechanisms. Despite a wide range of methodologies investigating LPs’ effectiveness, methodological choices have little impact on the substantive results. We develop a comprehensive research agenda and managerial implications.

Loyalty programs are a ubiquitous marketing tactic, yet many of them perform poorly and the reasons for loyalty program failure remain unclear to both marketing managers and researchers. This article presents three studies—two experiments and one survey—in support of the notion that a greater understanding of loyalty program performance demands an expanded theoretical framework. Specifically, researchers and managers must account for loyalty programs’ effects on both target and bystander customers in the firm’s portfolio, the simultaneous effects of three performance-relevant mediating mechanisms (gratitude, status, unfairness), and the contingent effects of program delivery (rule clarity, reward exclusivity, reward visibility) on specific mediating linkages. The results provide insights into why and when loyalty programs fail and into the complex trade-offs managers face. Loyalty programs have opposing effects on target and bystander customers’ loyalty and sales. While rule clarity suppresses both negative bystander as well as positive target effects, reward visibility enhances both types of effects. Exclusive rewards offer a means to alleviate negative bystander effects without affecting targets. The article both conceptually and empirically establishes a comprehensive analysis framework that can help marketing managers and researchers evaluate and improve loyalty program effectiveness.

This research studies repetition decisions—namely, whether to repeat a behavior (e.g., a purchase) after receiving an incentive (e.g., a discount). Can uncertainty drive repetition? Four experiments, all involving real consequences for each individual participant, document a counterintuitive reinforcing-uncertainty effect: individuals repeat a behavior more if its incentive is uncertain than if it is certain, even when the certain incentive is financially better. This effect is robust; it holds in both lab and field settings and at both small and large magnitudes. Furthermore, the experiments identify two theory-driven boundary conditions for the reinforcing-uncertainty effect: the effect arises (a) only if the uncertainty is resolved immediately and not if the resolution of uncertainty is delayed, and (b) only after, not before, one has engaged in repetitions. These results support a resolution-as-reward account and cast doubt on other explanations such as reference-dependent preferences. This research reveals the hidden value of uncertain incentives and sheds light on the delicate relationship between incentive uncertainty and repetition decisions.

Loyalty programs (LPs) are marketing investments designed to foster behavioral loyalty among a firm’s best customers and, ultimately, increase firm performance. Surprisingly, the effectiveness of introducing LPs on firm performance in the short and long term has not been thoroughly evaluated. This research examines the extent to which introducing an LP can increase both firm sales and gross profits. Leveraging data from 322 publicly-traded firms that introduced an LP between 2000 and 2015, the authors demonstrate that introducing an LP can increase sales and gross profits in the short term (within the first year), and these positive effects are sustained long term (for at least three years). However, the effects on gross profits do not become significant until the second quarter after LP introduction, and their overall impact on performance lags substantially behind sales. Complementing these primary findings, the results reveal that offering an LP with tiers or earning mechanisms can provide firms with significant increases in sales and gross profits. Taken together, this research demonstrates that introducing strategically designed LPs can dramatically increase firm performance in both the short and long term.

Customers can belong to multiple competing loyalty programs each with multiple reward levels. We extend loyalty program theories by proposing five mechanisms that capture the competitive effects in multi-firm, multi-level loyalty programs. We empirically test our hypotheses using data from a loyalty program management app where customers manage points independently across competing firms. We utilize goal shielding theory to show how a customer’s purchase at the focal firm is affected by the customer’s purchases and redemptions across competing firms. Specifically, we find that a customer’s purchase probability at the focal firm decreases after they qualify for a reward independent of redemption at a competing firm (competitive mere reward qualification) and after they redeem a reward at a competing firm (competitive rewarded behavior). Further, we find that the customer’s purchase probability at the focal firm increases if the customer is far from both the qualified and higher-level rewards at the competing firm (competitive stuck-in-the-middle), and if the customer accelerated their purchase frequency to qualify for or redeem a reward at the competing firm (competitive effort balancing post qualification and redemption). Four lab experiments supplement our empirical findings with causal evidence. Our research shows that customer progress toward a goal in a loyalty program is influenced by competing loyalty programs.

Typically, shoppers' paths only cover less than half of the areas in a grocery store. Given that shoppers often use physical products in the store as external memory cues, encouraging shoppers to travel more of the store may increase unplanned spending. Estimating the direct effect of in-store travel distance on unplanned spending, however, is complicated by the difficulty of collecting in-store path data and the endogeneity of in-store travel distance. To address both issues, the authors collect a novel data set using in-store radio frequency identification tracking and develop an instrumental variable approach to account for endogeneity. Their analysis reveals that the elasticity of unplanned spending on travel distance is 57% higher than the uncorrected ordinary least squares estimate. Simulations based on the authors' estimates suggest that strategically promoting three product categories through mobile promotion could increase unplanned spending by 16.1%, compared with the estimated effect of a benchmark strategy based on relocating three destination categories (7.2%). Furthermore, the authors conduct a field experiment to assess the effectiveness of mobile promotions and find that a coupon that required shoppers to travel farther from their planned path resulted in a substantial increase in unplanned spending ($21.29) over a coupon for an unplanned category near their planned path ($13.83). The results suggest that targeted mobile promotions aimed at increasing in-store path length can increase unplanned spending.

Gaining customer loyalty is an important goal of marketing, and loyalty programs are intended to help in reaching it. Research on loyalty programs suggests that customers differentiate between loyalty to a company and loyalty to a loyalty program, yet little is known about the consequences of these two types of loyalty. Therefore, our study intends to make two main contributions: (1) improving our understanding of the constructs “program loyalty” and “company loyalty”, (2) investigating the relative impact of the two types of loyalty on preference, intention, and purchase behavior for the case of a multi-firm loyalty program. Results indicate that company loyalty influences a customer’s choice to visit a particular provider and to prefer it over competitors, but it is not a strong predictor of purchase behavior. Conversely, program loyalty is a far more important driver of purchase behavior. This implies that company loyalty primarily attracts customers to a particular provider and program loyalty ensures that once inside the store, more money is spent.