Making brand loyalty programmes succeed

Abstract

After interviewing 37 packaged goods managers, a consumer study is conducted to determine what types of brand loyalty programmes work best for what types of consumers. In general, loyalty programmes are found to be most appropriate for products and services that have high margins, are heavily invested in over a consumer's lifetime, and are difficult to differentiate. The best programmes offer relevant benefits to the consumer, avoid self-serving behaviour, and offer rewards that directly support the proposition of the brand. Interestingly, programmes offering benefits of only moderate value are shown to have the most cost-effective impact on increasing purchases. These findings lead us to believe that most generous loyalty programmes may provide unnecessarily costly benefit packages. For many programmes, less may be more.