Do Customer Loyalty Programs Really Work?

Grahame R. Dowling Australian Graduate School of Management University of New South Wales Sydney 2052 Australia Phone: +612–9931–9200 Fax: +612–9662–1695

and

Mark Uncles School of Marketing University of New South Wales Sydney 2052 Australia Phone: +612–9385–3510 Fax: +612–9663–1985 E-Mail: M.UNCLES@unsw.edu.au

Research Brief RB 002

This research is funded by the Centre for Corporate Change at The Australian Graduate School of Management

Centre for Corporate Change

Do Customer Loyalty Programs Really Work?
Grahame R. Dowling and Mark Uncles

Research Brief RB 002 1997 This paper was subsequently published in the Sloan Management Review 38 (4), (1997), pp 71-82

Centre for Corporate Change Australian Graduate School of Management The University of New South Wales Australia Phone: (61 2) 9931 9500 Fax: (61 2) 9663 4672

The AGSM is a School of both The University of New South Wales and The University of Sydney

Established and supported under the Australian Research Council’s Research Centres Program

© Centre for Corporate Change The material contained herein is subject to copyright. No part of this document may be Reproduced or transmitted in any form or by any means without the express written permission of the Centre for Corporate Change.

The work of the Centre for Corporate Change is generously supported by Andersen Consulting, Coca-Cola Amatil, Esso, Amcor, Russell Reynolds Associates, BT Asia Pacific, the Department of State & Regional Development, CSR and Telstra.

Centre for Corporate Change

Index

Abstract 1. 2. 3. 4. 5. 6. 7. 8. Renewed Interest In Customer Loyalty Programs Why Companies Introduce Customer Loyalty Programs The Leaky Bucket Theory versus Polygamous Loyalty Linking Customer Rewards to Loyalty Programs The Claimed Benefits of Loyalty Programs Designing a