Customer Loyalty Program Management: What Matters to the Customer

Loyalty programs have proliferated throughout the hospitality industry, often with little evidence that these programs create behavioral or attitudinal loyalty to the firm that offers the program. Conversations with hotel managers revealed that customers have come to expect some type of reward in exchange for their patronage. Managers are often required to modify aspects of their reward programs to remain both profitable and competitive. Theoretical arguments suggest that consumers become used to a particular type of reward and may respond negatively to any changes in the reward structure. In this brief report, we explore the impact that program changes might have on consumer patronage. Drawing from a larger hospitality survey, 522 consumers completed an online survey indicating their degree of brand loyalty toward a particular hotel chain. We then assessed responses to various potential changes in their program. Results indicated that program changes including increasing reward tier requirements or even discontinuing the program are likely to increase consumer defection from the firm. The implications of these findings for reward program management are considered.