Loyalty programs are a marketing strategy based on offering an incentive with the aim of securing

customer loyalty to a retailer. Achieving rewards is related with purchasing frequency, so this type of
programs are also called frequent purchase programs ([70] Shoemaker and Lewis, 1999; [40] Long and
Schiffman, 2000; [7] Bell and Lall, 2002) or reward programs ([91] Kopalle et al. , 1999; [37] Kim et al. ,
2001).

The recent interest in loyalty schemes is a result of the recognition that generating more business from
existing clients may be cheaper and more effective than simply trying to create new customers or win
them from the competition. There may also be defensive reasons, "locking" customers into a business. A
growing body of research showing that loyal customers purchase more frequently and spend more
(Uncles, 1994; Rayer, 1996), combined with recognition that special offers made to entice new customers
can too easily be "cherry picked" by promiscuous customers who do not make additional purchases, has
led to an appreciation of the importance of valuing, holding and giving incentives to existing customers
(O'Connor, 1996; Woolf, 1996).

As Dowling and Uncles (1997, p. 81) note, "many customer loyalty programmes seem to have been
adopted too quickly, without much thought". Passingham (1998, p. 55) makes a similar point in
comparing loyalty schemes to Green Shield stamps; "they were discontinued when it was realised that
their saturation was such that participants had lost the commercial advantage which drove their initial
introduction". In either case, we might expect to see consumers' evidence of "loyalty fatigue". This paper
considers whether customer loyalty schemes are indeed approaching saturation in the retail market.
Whilst "saturation" is an ambiguous and difficult concept to measure (as the quotes above hint), its
currency generally and within the literature justifies this attention.

But are customers motivated this way? An alternative view is that customers are not overly interested in
building relationships with multiple retailers (Hart et al., 1998), but rather they are users seeking the
most appropriate facilities - and act accordingly. Instead, consumers are attracted to the so-called "free"
benefits, since most people like to "get something for nothing". Loyalty in this sense is not a
straightforward concept.

The availability of a loyal customer's database offers benefits for the company which have been already
widely documented in literature. Loyal customers add profitability to the company ([82] Woolf, 1996;
[28] Heskett et al.,1997) and profitability of one individual customer grows constantly during his
relationship with the company ([63] Reichheld and Sasser, 1990; [2] Anderson et al. , 1994; [64]
Reichheld and Teal, 1996). The high profitability added by loyal customer can be explained, firstly,
through their lesser price sensitivity towards the products of the company ([69] Sharp and Sharp, 1997;
[23] Dowling and Uncles, 1997; [14] Bowen and Shoemaker, 1998a, [15] b), secondly, due to the fact that
they require a smaller investment in communication than those people not having previous experience
with the company ([66] Rowley, 2000) and finally, thanks to their role of prescribers ([64] Reichheld and
Teal, 1996). Besides, true loyalty based on emotional bonds is hard to copy, so it can be a competitive
advantage ([56] Palmer et al. , 2000).

A plastic card is part of almost every loyalty scheme, as there are no other reasonable options available
to identify individual customers. Nowadays, many kinds of plastic cards are available depending on the
needs of the card user and the cardholder and relationships and schemes do vary in design and intent
(e.g. Worthington, 1998; Cuthbertson, 1998). A simple classification is presented in Table I.

Even though "loyalty card" is not perhaps the correct term to call many of the cards in use, it is easy to
understand why, despite this, it is widely used. As more retailers realise the potential to strengthen
loyalty schemes by expanding into payment options and others choose to add loyalty benefits to existing
payment cards, the distinction between traditional loyalty cards and store cards is becoming increasingly
blurred (Cuthbertson, 1998). According to Sopanen (1996b), as such schemes are directed towards
generating loyalty, it is not totally incorrect to classify them as loyalty cards.

Purists argue that loyalty-building "techniques" are nothing but mere promotional gimmicks and that
loyalty is only earned by consistently delivering superior value at every point of contact with customers.
It has also been suggested that loyalty schemes are over-rated given the reality that physical factors,
such as convenience, location, quality and price, are still elements that drive customers to patronise
particular retailers (Hart et al., 1998; East et al., 1995).

One of the major determinants of customer loyalty is perceived value (Patterson, Spreng, 1997) which is
mainly derived from the benefits that customers perceive to get by becoming a member of loyalty
programmes. Dodds and Monroe (1985) concluded that perceived value is an important issue in
consumers purchasing decision process, and consumers will buy a product with high perceived value.
They pointed that consumers will evaluate what they get and what they give when they are buying a
product/service. According to Utility Theory, the probability of purchase intention will increase, when
consumers acquire more benefits than they pay for a product (Dickson & Sawyer, 1990). Thaler (1985)
also considered that perceived benefits are an important precursor to influence consumer purchase
intention. Swait and Sweeney (2000) measured the influence of customer perceived benefits on
consumer purchase intention in retailing industry and found that customers perceiving different benefits
have dissimilar purchase behavior. Broadly the benefits that customers perceive by participating in
loyalty programmes are divided into soft benefits and hard benefits (Gable, et al., 2006). However,
Mimouni-Chaabane and Volle (2010) categorized all the benefits that customers perceive about loyalty
programmes into monetary savings, exploration, entertainment, recognition and social benefits.

A plastic card is part of almost every loyalty scheme, as there are no other reasonable options available
to identify individual customers. Nowadays, many kinds of plastic cards are available depending on the
needs of the card user and the cardholder and relationships and schemes do vary in design and intent
(e.g. Worthington, 1998; Cuthbertson, 1998).
Even though "loyalty card" is not perhaps the correct term to call many of the cards in use, it is easy to
understand why, despite this, it is widely used. As more retailers realise the potential to strengthen
loyalty schemes by expanding into payment options and others choose to add loyalty benefits to existing
payment cards, the distinction between traditional loyalty cards and store cards is becoming increasingly
blurred (Cuthbertson, 1998). According to Sopanen (1996b), as such schemes are directed towards
generating loyalty, it is not totally incorrect to classify them as loyalty cards.

Purists argue that loyalty-building "techniques" are nothing but mere promotional gimmicks and that
loyalty is only earned by consistently delivering superior value at every point of contact with customers.
It has also been suggested that loyalty schemes are over-rated given the reality that physical factors,
such as convenience, location, quality and price, are still elements that drive customers to patronise
particular retailers (Hart et al., 1998; East et al., 1995).

One of the major determinants of customer loyalty is perceived value (Patterson, Spreng, 1997) which is
mainly derived from the benefits that customers perceive to get by becoming a member of loyalty
programmes. Dodds and Monroe (1985) concluded that perceived value is an important issue in
consumers purchasing decision process, and consumers will buy a product with high perceived value.
They pointed that consumers will evaluate what they get and what they give when they are buying a
product/service. According to Utility Theory, the probability of purchase intention will increase, when
consumers acquire more benefits than they pay for a product (Dickson & Sawyer, 1990). Thaler (1985)
also considered that perceived benefits are an important precursor to influence consumer purchase
intention. Swait and Sweeney (2000) measured the influence of customer perceived benefits on
consumer purchase intention in retailing industry and found that customers perceiving different benefits
have dissimilar purchase behavior. Broadly the benefits that customers perceive by participating in
loyalty programmes are divided into soft benefits and hard benefits (Gable, et al., 2006). However,
Mimouni-Chaabane and Volle (2010) categorized all the benefits that customers perceive about loyalty
programmes into monetary savings, exploration, entertainment, recognition and social benefits.

A customer loyalty scheme is a "mechanism for identifying and rewarding loyal customers" (Rayer, 1996,
p. 8). At their most basic, points are awarded according to how much customers spend. Customers can
then use these points for a discount on future purchases at the store in which they were earned.
Typically, a loyalty scheme uses some form of membership card which is presented at the point of sale so
as to record the value of the purchase and/or the value of the rewards earned.

It is no surprise that many retailers have turned to loyalty programmes. The link between customer
retention and profitability has been established in theory and has become increasingly recognised in
marketing strategy (Dowling and Uncles, 1997; Reichfeld, 1996; Pearson, 1994). A growing body of
market research shows that loyal customers buy more, pay premium prices and introduce new
customers through referrals (Rayer, 1996). Research by Mintel (Harrington, 1995) also shows that
customer loyalty to one store is decreasing. Add this to the detailed information on customers' buying
habits that retailers' gain, and the strategy of maintaining and developing loyalty seems like the source of
sustainable competitive advantage. Some would argue this might however be better construed as
customer relationship or development marketing than loyalty per se (Davies, 1998; Knox, 1998).

But are customers motivated this way? An alternative view is that customers are not overly interested in
building relationships with multiple retailers (Hart et al., 1998), but rather they are users seeking the
most appropriate facilities - and act accordingly. Instead, consumers are attracted to the so-called "free"
benefits, since most people like to "get something for nothing". Loyalty in this sense is not a
straightforward concept.

The availability of a loyal customer's database offers benefits for the company which have been already
widely documented in literature. Loyal customers add profitability to the company ([82] Woolf, 1996;
[28] Heskett et al.,1997) and profitability of one individual customer grows constantly during his
relationship with the company ([63] Reichheld and Sasser, 1990; [2] Anderson et al. , 1994; [64]
Reichheld and Teal, 1996). The high profitability added by loyal customer can be explained, firstly,
through their lesser price sensitivity towards the products of the company ([69] Sharp and Sharp, 1997;
[23] Dowling and Uncles, 1997; [14] Bowen and Shoemaker, 1998a, [15] b), secondly, due to the fact that
they require a smaller investment in communication than those people not having previous experience
with the company ([66] Rowley, 2000) and finally, thanks to their role of prescribers ([64] Reichheld and
Teal, 1996). Besides, true loyalty based on emotional bonds is hard to copy, so it can be a competitive
advantage ([56] Palmer et al. , 2000).

A plastic card is part of almost every loyalty scheme, as there are no other reasonable options available
to identify individual customers. Nowadays, many kinds of plastic cards are available depending on the
needs of the card user and the cardholder and relationships and schemes do vary in design and intent
(e.g. Worthington, 1998; Cuthbertson, 1998). One of these is" loyalty card," although it is not the correct
term to call many of the cards in use , it is easy to understand why, despite of this, it is globally used . As
more retailers realise the potential to strengthen loyalty schemes by expanding into payment options
and others choose to add loyalty benefits to existing payment cards, the distinction between traditional
loyalty cards and store cards is becoming increasingly blurred (Cuthbertson, 1998). According to Sopanen
(1996b), as such schemes are directed towards generating loyalty, it is not totally incorrect to classify
them as loyalty cards.
Loyalty cards is defined as a marketing strategy based on offering an incentive with the aim of securing
customer loyalty to a retailer. Achieving rewards is related with purchasing frequency, so this type of
programs are also called frequent purchase programs ([70] Shoemaker and Lewis, 1999; [40] Long and
Schiffman, 2000; [7] Bell and Lall, 2002) or reward programs ([91] Kopalle et al. , 1999; [37] Kim et al. ,
2001

According to (Patterson, Spreng, 1997) ,one of the major determinants of customer loyalty is perceived
value which is mainly derived from the benefits that customers perceive to get by becoming a member
of loyalty programmes. Dodds and Monroe (1985) generalized perceived value as an important issue in
consumers purchasing decision process, and consumers will buy a product with high perceived value.
They pointed that consumers will evaluate what they get and what they give when they are buying a
product/service.According to Utility Theory, the probability of purchase intention will increase, when
consumers acquire more benefits than they pay for a product (Dickson & Sawyer, 1990). Thaler (1985)
also considered that perceived benefits are an important precursor to influence consumer purchase
intention. Swait and Sweeney (2000) measured the influence of customer perceived benefits on
consumer purchase intention in retailing industry and found that customers perceiving different benefits
have dissimilar purchase behavior. Broadly the benefits that customers perceive by participating in
loyalty programmes are divided into soft benefits and hard benefits (Gable, et al., 2006). However,
Mimouni-Chaabane and Volle (2010) categorized all the benefits that customers perceive about loyalty
programmes into monetary savings, exploration, entertainment, recognition and social benefits.

According to (Rayer, 1996, p. 8), a customer loyalty scheme is a "mechanism for identifying and
rewarding loyal customers" . At their most basic, points are awarded according to how much customers
spend. Customers can then use these points for a discount on future purchases at the store in which
they were earned. Typically, a loyalty scheme uses some form of membership card which is presented at
the point of sale so as to record the value of the purchase and/or the value of the rewards earned.It's
not a big surprise that many retailers have turned to loyalty programmes. The link between customer
retention and profitability has been established in theory and has become increasingly recognised in
marketing strategy (Dowling and Uncles, 1997; Reichfeld, 1996; Pearson, 1994). A growing body of
market research shows that loyal customers buy more, pay premium prices and introduce new
customers through referrals (Rayer, 1996). Research by Mintel (Harrington, 1995) also shows that
customer loyalty to one store is decreasing. Add this to the detailed information on customers' buying
habits that retailers' gain, and the strategy of maintaining and developing loyalty seems like the source of
sustainable competitive advantage. Some would argue this might however be better construed as
customer relationship or development marketing than loyalty per se (Davies, 1998; Knox, 1998).