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Abstract Loyalty marketing programmes have been developed during periods of great change over the last 20 years, during the expansion of the travel industry in the 1980s and the technology boom of the 1990s. During the early 2000s, however, the value of loyalty programmes has increasingly been questioned. In this paper, the authors propose that this is due to a lack of understanding of the role and nature of loyalty programme development. Through an analysis based on grounded research, five loyalty marketing trends are identified and then tested against available evidence to highlight issues that must be considered in the future development of successful loyalty marketing programmes.
UNDERSTANDING LOYALTY MARKETING
Loyalty marketing may be defined as the business process of identifying, maintaining and increasing the yield from best customers through interactive, value-added relationships, typically through the use of loyalty programmes.
In most highly-developed vertical markets, there are some marketers who have adopted the tactics of recognition and reward to identify, maintain and increase the yield from their best customers - though some competitors may prefer to avoid an individual customer focused approach.1 After decades of double digit growth, the loyalty market has shown signs of fatigue from both consumers and practitioners.2 As a result, the loyalty marketing industry has begun to encounter characteristics of a mature market.
The challenge for loyalty marketers in 2004 and beyond is to reinvigorate their programmes based on an understanding of loyalty marketing trends. This paper aims to identify the key trends.
Overall methodology
This research employs Kolb's experiential approach,3 based in grounded theory. Kolb proposes a four-stage learning cycle starting with the concrete experiences of the authors, then allowing for some observation and reflection, and leading to the formation of abstract concepts and generalisations. These concepts or generalisations are then tested against the evidence available to form a conclusion to this paper. The evidence available comprises relevant academic and management literature, as well as some primary research commissioned by COLLOQUY in the form of a survey and some focus groups.
This approach has many weaknesses, particularly in the first stage, which is heavily influenced by any bias in the authors' experiences. All knowledge, however, exists within a particular paradigm,4 and at least the authors' experiences cover different...