Designing Loyalty-Building Programs for Packaged Goods Brands

Abstract

The authors investigate the effects of loyalty programs on loyalty to packaged goods brands. Findings from a series of experiments indicate that the incentive that is offered in a loyalty program is important to whether the program succeeds or fails at building brand loyalty. The data reported suggest that incentives that have overlap with brand associations, which the authors term cue-compatible incentives, can prompt rehearsal that increases the accessibility of favorable brand associations. This, in turn, helps boost postprogram loyalty. At the same time, incentives that are tangible or concrete can undermine postprogram loyalty. This seems to occur because elaboration is attracted to the incentive at the expense of the brand. Incentive associations may thus gain in accessibility and interfere with access to brand associations.