The Theoretical Underpinnings of Loyalty Programs, Research Paper Example

Introduction

Increasing complexity and dynamism of the healthcare sector requires an effective response to the changes to ensure success. Successful organizations recognize customer loyalty, implementing various programs and strategies that can increase customer loyalty. Loyal customers are profitable to a firm because they refer other potential buyers through word-of-mouth, which reduces the expenses required for sales and advertising. They purchase in greater quantities and are willing to pay regular price. However, some firms loyalty programs that are not appropriate leading to their failure. This report explains features of loyalty programs that contribute towards their success of failure.

Features of a Successful Loyalty Program

Healthcare organizations that consider wheel of loyalty to build a membership program often achieve success, enabling them to attract and retain many customers. The framework consists of three stages with the first one explaining the need to establish a strong foundation (Christopher and Jochen 323). A program that targets the right customers is likely to deliver a high level of satisfaction hence leading to its success. A successful program should also deepen the relationship between the organization and the customer. This is supported by the second state of loyalty wheel, which shows that a firm should focus on creating loyalty bonds. Lastly, a loyalty program should reduce churn drivers to ensure its success (Henderson et al. 258). The marketing manager should increase switching costs and provide adequate processes for handling complaints.

Features of Unsuccessful Loyalty Programs

Loyalty programs can also fail if they do not consider the three critical stages of loyalty wheel. A static program is not likely to achieve the desired results because it does not focus on the customers’ needs, wants, and likes hence making them lose interest in the firm. A membership program can also fail if the management and employees fail to embrace it (Dorotic et al. 218).

Conclusion

Wheel of loyalty is a critical framework that healthcare organizations should develop to ensure that they improve customer loyalty. They should understand their target customers to provide healthcare services that meet their needs. They should also develop strong bonds and minimize factors that cause existing customers to withdraw their allegiance. Loyalty programs that do not consider these important factors may not achieve desired results leading to organizational failure.

Works Cited

Christopher H.. Lovelock, and Jochen Wirtz. Services marketing: people, technology, strategy. New York City: Pearson, 2011.

Dorotic, Matilda, Tammo HA Bijmolt, and Peter C. Verhoef. “Loyalty programmes: current knowledge and research directions.” International Journal of Management Reviews 14.3 (2012): 217-237.

Henderson, Conor M., Joshua T. Beck, and Robert W. Palmatier. “Review of the theoretical underpinnings of loyalty programs.” Journal of Consumer Psychology 21.3 (2011): 256-276.