Are Customer Reward Programs Really Rewarding?

The concept of a customer loyalty program can be traced back over 300 years when merchants would give customers wooden coins in return for their patronage. Two points are clear: Customer reward loyalty programs are prevalent and costly aspects of most hospitality firms’ marketing strategy. From an academic viewpoint our understanding of the theoretical drivers of these programs is muddled and confused. That is, despite many years of existence there is scant research suggesting the underlying theoretical logic of a program. In this paper, we briefly review the current reward program landscape suggesting that the overwhelming presence of reward programs has shifted the consumer emphasis from a reward to an expectation. The implications for future research and program management emerge from this social norm expectation of a program are presented. The paper concludes with a call for collaborative interaction between academics and senior firm management to help further our understanding of this significant, expensive and seemingly necessary business offering