Profitability of loyalty reward programs: An analytical investigation

摘要: Abstract Loyalty programs, as a prevalent CRM strategy, aim to enhance customers’ loyalty and thereby increase firm’s long-term profitability. Recent analytical empirical studies demonstrate inconsistent findings on the efficacy of programs in fulfilling these goals. In this study, an model is developed analyze effect valuation their post-purchase satisfaction level program’s The results reveal how plays significant role profitability programs. We consider profit-maximizing firm selling good or service through two periods. Valuation modeled deterministic parameter, well stochastic variable with arbitrary distributions. Depending distribution, either linear nonlinear optimization problem. Optimization problems are solved analytically, terms parameters. obtained solutions provide some useful insights into effects Specifically, it shown that depending level, may be optimal not offer reward.