Customer loyalty programs

The result is a parsimonious framework with intuitive appeal that supports investments in customer satisfaction programs and customer loyalty programs. To counter-balance the linkages discussed above, the cost impact of the vendor s customer management effort can be implicitly (e.g. Heskett, et al., 1994) or explicitly (e.g. Bowman Narayandas, 2004 Kamakura, Mittal, de Rose, Mazzon, 2002) accounted for. 

Rather than providing support for the existence of a profit chain-of-effects framework, and the investments in customer satisfaction and customer loyalty programs that rely on it, simple pairwise analyses of profit-chain variables almost always provide results that raise doubt about its underlying assumptions. Three examples follow. 

Loyalty programs provide rewards to customers for repeat purchase. Companies build networks of customers for exchanging product-related information and to create relationships between customers and the company or its brand. These networks and relationships are called communities. The goal is to build an environment which makes it more difficult for the customer to leave the family of other customers who also purchase from the company. Examples of CRM-based measures are customer acquisition cost, conversion rate from browsers to buyers, retention rate, same-customer sales rate, loyalty measures, and customer-share (proportion of a customer s business satisfied). 

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