Summer Reading List on Customer Loyalty

During summer vacation period, i found chance to look into recently published scientific articles about loyalty world preferably in banking sector. There are interesting findings worth to share. The list of articles can be found at the bottom of this story as well*. Here we go.

Gamification approach in Italian banks was reviewed to make a particularly boring online banking activity enjoyable, just by leveraging emotions and psychological factors. The author lists set of activities by reviewing all banks in Italy. As a result, sweepstakes to motivate users and induce them to perform a certain action/mission, Levels, Badges, Progress Bar, Leader Boards, Virtual Reality/animated simulation are being used by some of the banks. On the other hand, half of the banks still do not have any gamification tool to encourage their users in a fun way. Additionally, giving loyalty points for some online activities is still most common option.

The impact of brand community membership on private and public loyalty was also studied as an interesting topic. The authors divide loyalty into 2 categories (private loyalty , public loyalty). Public loyalty is defined as; “A person’s tendency to enact behaviors towards a brand that are clearly observable by others whilst private brand loyalty is seen as consumer’s tendency to enact behaviors towards a brand that are not clearly observable by others’’ .Private Loyalty can be seen as being member of a loyalty program, and using a bank card actively, watching favorite team’s game on TV etc. Public loyalty is seen when member tries to recommend the brand to others, wear brand apparel etc. The field study of this article was done among basketball team fans in the UK. Selection of field study is done smartly since they can observe both behaviors among Fans. However, i am not sure that private and public loyalty differentiation is also observable in bank customers. That would be amazing if bankers had also public loyalty, since they would not need a big marketing budget just to create WOM. So, the article tries to find out an impact of community membership over private loyalty which is more meaningful for companies. When an individual becomes a community member, the individual is motivated by both the positive and the negative implications that different behavioral operations will have for their social identity. “Social identity theory assumes that individuals conscious membership of groups that they value and are committed to is integral to their self concept”.

In case of public loyalty availability, public display of brand loyalty enables them to exhibit their membership of the brand community and , to some extent, demonstrate their seniority in the group. “Understanding the expected norms, values, and behaviors of the group will enable the marketer to proactively facilitate the development and display of rituals and traditions. These rituals and traditions will further enhance the consumers brand community identification and generate higher levels of public brand loyalty”. An interesting example is that senior Fans of the Basketball Team wear uniform of former players to demonstrate their seniority in the group compared to juniors/youngsters as an indication of community membership.

The author suggests that brand community identification is a mediator between individual identification and loyalty . So, instead of seeing them as external parties , companies should see brand communities as partner and include them in their marketing activities.

Here is some other findings about loyalty programs according to recent articles:

Consumers who redeem their points spend 17.5% more . Redemption has biggest leverage on spend increase.

Redemption Rate is being affected by: Program duration to collect points , percentage of discount offered on rewards , spending requirement before a reward can be redeemed, depth of reward assortment.

More than half (54%) of the loyalty memberships are inactive, while 28% of all consumers leave the program before redeeming a single reward. Furthermore, 57% do not know their points balance, and 38% are unaware of their points value.

Duration between 13 and 18 weeks to have redeemable points is optimal for having a good redemption rate .

There is no synergy between TLP (Temporary Loyalty Program such as stamps, discounts ) and PLP (Permanent Loyalty Programs).

PLPs are more successful for retailers who has high market share and high -low pricing strategy, instead of low-low pricing strategy.

“As for loyalty and service quality, customers who use P2P platforms like Airbnb feel that the emotional perception they gain from these platforms is the most substantial contributor to loyalty. Airbnb platform has introduced the rating and ranking concept and direct price comparability while fostering a critical judgement culture”.

*List of Articles;

• Gamification as a Customer Loyalty Tool. Evidence from the Italian Banking Industry.
• The impact of brand communities on public and private brand loyalty: A field study in professional sports.
• A decade of systematic literature review on Airbnb: the sharing economy from a multiple stakeholder perspective.
• Designing successful temporary loyalty programs: An exploratory study on retailer and country differences.