REFLECTION TASK - LOYALTY PROGRAM DIARY

Here you can find a voluntary reflection task on the E-Lectures 5-8.

Reiter

REFLECTION TASK ON E-LECTURES 5-8: YOUR LOYALTY PROGRAM DIARY

Point of departure: Imagine you are working for a loyalty program consultancy and your advisor/Boss asks you to conduct some market research and collect in-depth insights on a certain loyalty program.

Task: Select a loyalty program of your choice and make a step-by-step in-depth assessment of the program's

psychological elements
strategic elements
operational elements
potential for improvement

For guidance, remarks on how to perform each step of assessment are provided below.

Output: The result of your work is your loyalty program diary, which should look like a professional business document and present the results of your analysis to your advisor/boss in an intuitive, appealing way (e.g., brief texts, visualization through tables/figures).

Step #1: Audit of Your Loyalty Program's Psychological Elements

What psychological processes are relevant for the loyalty program of your choice?

For your loyalty program diary, please conduct an audit of your loyalty program's psychological elements:

Select two to six characteristics of your loyalty program (e.g., different types of rewards customers receive in the loyalty program)
For each characteristic, choose which emotional and cognitive psychological processes from our discussion are influenced by this characteristic
Be sure to consider both positive and negative psychological customer responses

Examples: Priority boarding in an airline program can stimulate gratitude and enhanced status among target customers, but also reduced status and unfairness among bystander customers; weekly point updates via e-mail can foster goal motivation

Step #2: Audit of Your Loyalty Program's Strategic Elements

How does your selected loyalty program classify in terms of structure and reward characteristics?

For your loyalty program diary, please conduct an audit of your loyalty program's strategic elements:

Go through the list of structure and reward characteristics we discussed in E-Lecture 6
For each structure and reward characteristic, briefly describe which of the different generic options (or which other option) applies to your loyalty program

Examples:

Characteristics	Generic Options	Description	Example
Membership Enrollment	Open Closed Automatic enrollment Other	Every customer can enroll Customers can apply, but need approval from the company Customers become members without explicitly signing up	QF, Safeway (open sign up) American Express (credit approval) Telecom providers (e.g., T-Mobile, o2)
Membership identifier	Card Miscellaneous No identifier Other	Members are identified through card Members are identified through other means such as stamp cards, coupons, or e-mail addresses	InterContinental Hotels Group (card) Subway (stamp card)

Step #3: Audit of Your Loyalty Program's Operational Elements

How does your selected loyalty program classify in terms of delivery, dynamics, and targeting characteristics?

For your loyalty program diary, please conduct an audit of your loyalty program's operational elements:

Go through the list of delivery, dynamics, and targeting characteristics we discussed in E-Lecture 7
For each delivery, dynamics, and targeting characteristic, briefly describe which of the different generic options (or which other option) applies to your loyalty program

Examples:

Characteristics	Generic Options	Description	Example
Rule clarity	High Low Mixed Other	Explicit communication of the reasons for delivering a reward to customers No explicit communication of the reasons for delivering a reward to customers (e.g., surprising reward) Similar proportion of rewards featuring high and low rule clarity	Mariot Hotels with clear directions Ritz Carlton with complex reward system
Reward exclusivity	High Low Mixed Other	Limitation of a reward to a select group of customers only No limitation of a reward to a select group of customers only Similar proportion of exclusive and non-exclusive rewards	Nordstrom in-store VIP events QFC discounts Neiman Marcus benefits per tier

Step #4: Audit of Your Loyalty Program's Potential for Improvement

Where do you see potential for improvement in the loyalty program of your choice?

For your loyalty program diary, please conduct an audit of your loyalty program's potential for improvement:

Identify two to five areas where you think your loyalty program currently performs poorly/not ideal and could improve (e.g., the loyalty program does not offer the right rewards, the loyalty program stimulates unfairness issues)
For each area, argue what you would suggest to the loyalty program managers to improve the program, based on what you learned in the E-Lectures (or also in other loyalty programs, of course)
Explain how you would implement the changes to make the loyalty program more effective

Examples: The loyalty program does not have a hierarchical structure so far, however, research has shown that customers like status hierarchies, so it might be worthwhile to consider implementing status tiers to foster status feelings and goal motivation