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THE MISSION OF CUSTOMER LOYALTY PROGRAMMES AND

PECULIARITIES OF THEIR DEVELOPMENT
Liudmila Bagdonien, Rasa Jaktait
Loyalty is a characteristic of a person showing any relation with an object goods, service or enterprise.
Nowadays it is important to earn loyalty of investors, employees and customers. The article deals with essence of
customer loyalty, dimensions of customer loyalty, mission, goals, tasks of customer loyalty as well as disputes a process of
developing customer loyalty programme: choice of a target group, grounding the structure implementing customer loyalty
programme, registration of participants and type of the programme, collection of information about customers and
storing, ways to communicate with customers, establishment of privileges to participants of the loyalty programme and
evaluation of the programme success.
Key words: loyalty, customer loyalty programmes, process of developing customer loyalty programme.

Introduction
Loyalty demonstrates persons disposition to brand of goods (service), supermarket, category of goods,
a certain activity (Uncles, Dowling, Hammond, 1998). An enterprise seeks loyalty of investors, employees and
customers in order to consolidate its position in the market. There is a linkage between these participants of the
business (Reicheld, 1996). The growth of revenues and share of the market enables to attract potential
customers or customers of competitors. Referring to Donio, Massari, Passiante (2005), the growth of the
market share stimulates more rapid expansion of the enterprise and its competitive advantage. It makes
attracting of investors easier. A prosperous enterprise can offer personnel good pays for their job and create
conditions for their career. It helps to keep the best employees who affect the results of reducing costs,
improving quality, and increasing productivity. The higher productivity is one of the conditions to pay larger
salaries to the employees, to bankroll trainings or other programmes stimulating loyalty of employees.
Appreciated and well-paid employees better serve customers, strengthen relations with them eventually. Such
relations increase perceptible value of goods and (or) services to customers and positively affects their loyalty.
Customer loyalty leads to increased profitability, market share, and the growth (Naumann et al., 2001);
diminish costs of attracting new customers (Hoisington, Naumann, 2003), and is essential condition to
implement effective business strategy (Heskett, 2002).
Enterprises create loyalty programmes in order to develop loyalty and to reward. It is effective
marketing instrument helping to create such a situation where all interested sides win. Customer loyalty
programmes are more frequent. Loyalty programmes allow enterprises to understand their customers better as
well as to satisfy their needs and expectations (Nuttley, 2004). Customer loyalty programmes relate enterprise
and customers, initiate permanent dialogue between them, and increase satisfaction of customers (Loyalty
Marketing Workshop, 2005); also they are a source of different information about customers, they mitigate
potential shift of the best customers to competitors, and help to cooperate with partners and to keep terms with
competitors (Rotherham, 2004).
The studies of loyalty programmes got activated in Western countries in the last decade of the XX
century. Effect of loyalty programmes and factors of success were analyzed in fields of automobile, packer
goods, finance, airlines, retail, telecommunication services (Stauss, Schmidt, Schoeler, 2005). In Lithuania
there are not many scientific publications related with methodology of developing loyalty programmes, their
application advantages, and arising problems yet. We can pontifically assume that practice of developing
loyalty programmes is more advanced than theory. So it is necessary to find an answer to the question how
customer loyalty programme should be developing that it will be useful for both enterprise and customer.
The aim of the article is to analyse the mission of customer loyalty programme and particularities of
loyalty programmes development.
Object of the research is process of customer loyalty programme development.
Methods of the research are scientific literature analysis, comparative analysis, and content analysis of
loyalty programmes of Lithuanian service providers.

Dimensions of customer loyalty

Customer loyalty means the trust that enterprise gains making and developing mutual useful
relationships with customer (Manish, 2001). Referring to Lovelock and Wright (1999), loyalty is customers
voluntary decision to maintain long-term relations with the enterprise. Successful long-term relations that lead
to loyalty help to reduce a risk and uncertainty arising from the consumption that nowadays gets more and
more complex. Customer will be loyal if he or she gains more benefit than other enterprise can offer. If

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enterprise, its goods or services disappoint customer or suggestion of other enterprise is more valuable to
customer, the probability that customer will give preference to competitor of the enterprise will increase.
Discussions on different customer loyalty dimensions bringing influence on its management take place
in the scientific literature. The source of loyalty studies was a form of customer behaviour (Gremler, Brown,
1996). Hard-core loyalty is distinguished for devotion to the enterprise, repeated purchase probability, staying
with the current provider and recommendations for the enterprise to friends, colleagues, family members, etc.
(Lee, Lee and Feick, 2001).
By now some scientists accept such approach to loyalty. But scientists more often accent attitudinal
loyalty as other dimension of the loyalty now. According to Gremler and Brown (1996), customers loyal
attitude shows a conscious effort to evaluate competing brands, customers preferences and willingness to
purchase goods or services. Lee, Lee and Feick (2001) distinguish customers responsibility and preferences to
brand as the features of loyal attitude. Loyal behaviour and loyal attitude influence the enterprise in different
ways. Referring to Dick and Basu (1994), loyalty based on customer attitude could be more vulnerable when
loyalty is based on behaviour. According to them, it is necessary to estimate that behaviour and attitude are
changing over time, so loyalty is changing, too. Without above-mentioned dimensions of the behaviour and the
attitude, Yi-Ting Yu and Dean (2000) accent cognitive loyalty emphasizing complexity of the loyalty. Gembl
(2002) calls cognition-based or cognitive loyalty as rational because customer makes decisions recognizing the
processes in the enterprise, thinking, handling information, estimating the technology, etc. The scientist points
other important dimension of loyalty emotional loyalty. It is a result of customer feelings, expectations, and
interpersonal relationships with employees. Lee and Cunningham (2001) distinguish the importance of
expectations and experience, but Butcher, Sparks, OCallaghan (2001) distinguish the importance of customer
interpersonal relationships with employees. Interpersonal relationship and mutual trust determine social
comfort, greater attention, and sometimes growth into friendship. It becomes switching barriers to other
provider of goods or services.
What determines customer loyalty? Scientists often point customer satisfaction (Butscher, Sparks,
OCollaghan, Naumann, Jackson, Rosenbaum, 2001; Hoisington, Naumann, 2003). Lee, Lee, Feick (2001)
assume that different level of satisfaction matches up to different level of loyalty. The scientists classify
customers into four groups considering satisfaction and loyalty relation: loyalist/apostle (high satisfaction high loyalty), defector/terrorist (low satisfaction - low loyalty), mercenary (high satisfaction - low loyalty), and
hostage (low satisfaction - high loyalty). Bateson and Hoffman (2002) do not deny dependence between
customer satisfaction and loyalty. But they notice that low customer satisfaction (sometimes even
dissatisfaction) not always become the reason of making a break of relations with enterprise. It happens when
enterprise has a dominant position in the market; its brand of goods (services) is well-known, offering goods
(services) is a bit different, it is high switching costs to other provider, etc. Bell, Menguc (2002) think that
often satisfied customers are indifferent to enterprise because they purchase the same goods or services from
several possible enterprises. Referring to Mittal, Lassar (1998), lots of satisfied customers tend to change
provider of goods or services. So we cannot unambiguously assume that satisfied customer is loyal to
enterprise. In our opinion, the notice of Gamble, Stone, Woodcook (2002) that customer loyalty depends on
nature of goods or services is important.
Table 1 shows how interaction between enterprise and customer relates with possible risk of losing
customer and what loyalty strengthening means should be used seeking long-term relations with customers.

Mission, goals and tasks of loyalty programme

Loyalty programmes are especially popular in the end customer market. Nowadays it is difficult to
imagine the activity of supermarkets, gas stations, airlines, insurance companies and other companies without
them. For example, in USA 70% of households, in Holland 80% of households have at least one loyalty card
(Leenheer et al., 2000).
The goals of loyalty programmes can be different. Butscher (2004) distinguishes mission, goals, main
and secondary tasks (Fig. 1). Every loyalty programme is created in order to strengthen the positions of the
enterprise in the market increase of market share, income and profitability of activity. In order to implement
the goal of the loyalty programme, the enterprise should deal with five key tasks as following:
1) to develop and strengthen loyalty of present customers. The enterprise seeks this by undertaking to
meet customers needs better than other participants of the market during all period of relationship with
customers;

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Table 1. Relation of interaction of customer and enterprise based on customer loyalty and
goods/service particularities (created by authors according to Gamble, Stone, Woodcook, 2002)
Interaction of customer
and enterprise based on
customer loyalty and
goods/service
particularities
Interaction based on
terminal contracts
Interaction based on
open-ended contracts
Interaction which
essence is relations of
customer and one
professional provider
Interaction based on
offering complex product
(goods and/or services)
Rare onetime interaction

Frequent and irregularly

interaction when every
time provider of
goods/service is chosen
from large number of
ones
Interaction when
customer can choose
proper package of
internals of
goods/services

Risk of losing a customer

Actions of enterprise helping

to retain customer

Examples

Customer can instates desire

to renew contract and switch
to competitor
Customer can make a break
with enterprise in any
moment
Customer can make a break
with enterprise when
servicing employee switches
to other enterprise
Customer can make a break
with enterprise because of
dissatisfaction one part of
complex product
Relations with customer can
discontinue because long
break between some
purchases of goods/service
was made
Relations with customer is
episodic because every time
provider of goods/service is
chosen from large number of
ones and customer can
choose the most benefit one
of offering variants
Enterprise can lose customer
because he (or she) maintain
relations with several
enterprises but he (or she)
havent priorities to one of
them

Customer loyalty can be

stimulated by offering bigger
value than discounts
Bonuses should be offered to
customers for every year of
maintaining relations
Initiative of enterprise stimulates
valuable customers is purposeful

Deposit account,
drivers civil
responsibility assurance
Cable television,
Internet connection

Offering goods/services that

customer is interested in,
strengthening brand of goods
(service), improving service
Enterprise should to
communicate with customers
more often and inform about
other goods/services

Services of tour
operators, financial
services

Customer loyalty can be

stimulated by large discounts or
better quality of service

Services of jitney,
tollage

It can be applied any written

above incentives of the
enterprise

Service of
telecommunications

Services of haircut,
dentist, veterinarians

Purchase automobile,
expensive tours, service
of plastic surgery

2) to attract new customers. The enterprise can seek it in two different costly ways, namely: 1)
suggesting attractive privileges stimulating to become a participant of the loyalty programme, and 2) attracting
these who have heard good responses of participating in the loyalty programme. In our opinion, in the first
case the enterprise needs more effort and resources. When participants of loyalty programme advertise the
programme, it depends on how the enterprise reminds them about the loyalty programme and its objectives,
benefit for participants, how they value receivable benefit, etc.;
3) to create a database of customers. Without the database customer relationship management is
impossible. In the database not only demographical data of customers should be, but also information about
their behaviour should be stored, for example, preferences of consumption, acceptance of brands, periodicity
and quantity of purchase, the change of the brand, etc.
4) to provide maintenance to departments of the enterprise implementing functions of development and
research of goods (services). The data about customers help to communicate with them directly and to find out
difficulties of consumption, what attributes of goods (services) should be improved, to get ideas for creating
new goods (services). The obtained information of qualitative research does not reflect the opinion of all
consumers. But referring to Lovelock, Vandermerwe, Lewis (1996), consumers live word is essential in
preparing to comprehensive quantitative research of the market;
5) to provide possibilities to communicate between participants of the programme. It will help a seller,
service provider or agent, who initiates or controls the process of communication, to communicate with
customers regularly and directly.

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As Fig. 1 shows, enterprise sets a lot of secondary tasks of loyalty programme and its solution leads to success
of the programme.
Secondary
tasks

To establish
additional means
to maintain
customers

Other tasks

Main tasks

To improve
an image of
goods/
enterprises
brand

To help to
agents

To develop
customer
loyalty
To establish
possibility of
communication

To attract new
customers

MISSION

To create
a data
basis

To provide a support
to other departments
of the enterprise
To maintain
relations with
community

To increase
consumption of
goods and
services

To solve
problems of
the enterprise

To increase visits
of customers

Fig. 1. Hierarchy of loyalty programmes goals (Butscher, 2004)

Benavent, Meyer-Waarden and Cri (2000), as well as Butscher (2004), note similar mission of loyalty
programme. But these scientists stress that mission of loyalty programme is implementing by orienting to
present customers and their long-term relations, but not to attract new ones. Besides, they point a little bit
different tasks for implementing the mission of loyalty programme. They are as follows:
1. to establish a stable turnover basis; it means that customer loyalty is like assumption of future profit.
So it is counted in the value that will be gained in the future;
2. to calculate lifetime-value indicators;
3. to increase the customers value, notably through additional sales;
4. to write off costs of investing in the customers acquisition;
5. to cut transactional operational costs, for example, loyal customers more than others understand their
responsibilities and functions, are more tolerant to failures, etc.
6. to attract new customers through positive responds of loyal customers.
We have considered two points of view to mission and tasks of loyalty programme. We can claim that
the goal of the loyalty programme is the same but tasks realizing the mission are different and changing. They
depend on activity, size, popularity, strategy of the enterprise and other factors. Despite diversity of loyalty
programmes, they deal with tasks of getting and storing information, marketing efficiency, brand acceptance,
service development and tasks helping to improve internal processes (Arantola, 2002).
The enterprise can use different means to implement the tasks of loyalty programme (Graham, 1996). In
our opinion, they can be divided into groups of organizational (e.g., providing toll-free telephone access and
automated attendant telephone answering non-business hours, publishing home telephone number on business
cards, providing an e-mail address of customers, providing right, clear and easy-to-read bills, providing
additional service and offering a guarantee, etc.), communicational (e.g., preparing answers to FAQs,
communication with customers continually, promising only what can be really implement, listening customers,
individualizing communication with customers, etc.) and composite (e.g., awarding for customer loyalty in
many ways, responding quickly to needs, requests and complaints of customers, distinguishing from other
enterprises offering similar goods (services), introducing customers to something new, making suggestions
how to save money, etc.) means. Some of the means is labelled as strategic means (e.g., identifying long-term
customers, distinguishing from other enterprises offering similar goods (services), offering a guarantee, etc.),

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others as operational means (e.g., providing an e-mail address of customers, preparing answers to FAQs and
etc.).

The process of loyalty programme development

The developing of loyalty programme requires the following sequence:
1) to identify a target group of the loyalty programme,
2) to decide what kind of structure will implement the programme,
3) to decide how customers will be registered and what kind of the programme it will be,
4) to decide how data about customers will be got and stored,
5) to choose in what way it will be communicated with participants of the programme,
6) to decide what privileges will be as a reward for customer loyalty,
7) to evaluate a success of the programme.
We discuss these stages in detail.
Target group of loyalty programme. Before developing loyalty programme the enterprise should find out
what customer is good. The value of different segments of customers is not the same to enterprise. So it is
required to define what kind of customers the enterprise wants to attract and what their behaviour is desired.
The enterprise needs to divide customers into categories and determine what basis of loyalty is: rationality or
emotions. The most attracting group is customers who often purchase goods and/or services or continually
retain relations with enterprise. The customers who seldom purchase goods and/or services are less attractive
but they consider the enterprise as their own. An active part of the customers can join the loyalty programme.
Besides, they are willing to recommend the enterprise to members of referent groups they are belonging to.
Casual customers rarely purchase goods and/or service of the enterprise; their decision is affected by offered
benefit (Gamble, Stone, Woodcoock, 2002). Analysis of disposable information helps to distinguish features of
good customers. They can be emotionally devoted, important to the enterprise very much; they can value
brand of goods (services), etc. According to the scientists, it is important to determine the customers who will
be valuable in the future and seek for their loyalty.
Structure implementing loyalty programme. From the point of organizational view the difficult structure,
consisting of employees, participants and external partners, implements loyalty programme. Plenty and variety
of tasks of loyalty programmes obligate enterprise to decide how the programme will be organized and
implemented by its own resources or by help of specialized service provider. Referring to Butscher (2004),
the key tasks should be implemented by enterprise itself but secondary tasks should be given to specialized
service providers.
Registration of participants and type of loyalty programme. Success of loyalty programme depends on
choice of its type. Usually loyalty programmes are classified by principle of contrast (Table 2). According to
Wood, Felthouse and Bruce (2000), Butscher (2004), open programme is such a programme when every
customer can join the programme only by purchasing goods or services, closed programme is such a
programme when only desired customers can join the programme (for example, mobile network operator Bit
groups its customers to golden and silver customers according to the sum paid for services during certain
period and offer them different privileges of the loyalty programmes) and/or such customers who are linked to
negotiate the certain barriers of joining the programme (often it is initial contribution and giving personal
information).

Table 2. Classification of loyalty programmes

Criteria of classification
Nature of registration for participate in
loyalty programme
Nature of privileges
Target group (participants) of loyalty
programme

Types of programme
Open or closed
Direct (financial privileges) or indirect
Loyalty programmes for end customers or for
intermediate customers

For example, in the company Sarma customer pays 5 Lt for making loyalty card and fills the form of the
participation in the loyalty programme. Open and closed programmes have their own advantages to both
enterprise, and customers. Open loyalty programme involves more participants, thus it comes over the margin
when programme begins buy off more quickly. In our opinion, also one significant advantage is that
enterprises have large database that helps to segment customers. The enterprise can offer special privileges to
the most useful customers in the frame of the closed loyalty programme. No input requiring joins the loyalty

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programme affect attitudes of present customers positively. Besides, potential customer or customer of
competitors can be stimulated to join the programme when there are no barriers of joining the programme.
Closed loyalty programmes fits to small enterprises for its smaller programme costs because it is limited
number of participants and their input, easier determination priority privileges, more effective communication
with participants, etc. Closed programme comparing with the open one provides more advantages to
participants, for example, their self-esteem is bigger because everybody is not available to join the programme,
besides, the enterprise is constrained to improve privileges of loyalty programmes constantly because of the
fee for the membership. Referring to Butscher (2004), closed programmes more fit for enterprises having small
budget, having clearly defined customer segments and seeking to award the most significant consumers, while
open programmes are more acceptable for enterprises with larger budget and knowing their real and potential
customers well, distinguishing their good availability of goods/services.
(2004) distinguishes direct and indirect loyalty programmes. Direct programmes stimulate
customer financially. It can be different fixed and permanent discounts, rewards for purchasing goods and/or
services, etc. For example, stock company Lietuvos Telekomas gives customers some points for purchasing
services and they can purchase services with discounts or get prizes following the established rules.
Establishing of privileges is easier in the loyal programmes. The privileges of indirect programmes should be
considered thoroughly. At first, the customer should like to visit the enterprise and purchase services of the
enterprise, and the enterprise should combine pleasant service and unobtrusive offering of services. The
enterprise knowing its customer well can make offers the most valued by customer and stimulate to try new
goods and/or services of the enterprise.
Storing data and communication with participants of the programme. Loyalty cards are used as a mean
to get information about participants of the programme. Some of the cards are used to identify the participant;
others also perform the function of payment. Obtained information about target groups and profiles of
customers, behaviour of purchasing, scored points, etc. is stored in the database often named as a core of
loyalty programmes. How much and what kind of information about participants of the programme the
enterprise will get depends on variety of communicational forms: verbal or written, direct or remote. E-mails,
post, brochures, newsletters, hot-lines, etc. serve for this mission. The choice of communicational forms
depends on the level of communication. Referring to Butscher (2004), communication has three levels in the
frame of loyalty programme: participants of the programme communicate in the first level, in the second
workers and management of the enterprise, in the third partners of the programme. Frequent communication
with participants of the programme is important not only to guarantee continuity of participation but also to
maintain long-term relations with participants.
Privileges of loyalty programme established for customers. Variety of privileges or benefit should
stimulate desired behaviour of the programme participants (Wood, Felthouse and Bruce (2000). The consumer
will join the loyalty programme only in such case if obtainable benefit exceeds the input. Benefit is a whole of
financial and non-financial privileges the proper set of which is defined by researching values and priorities of
the customers (Fig. 2).

Fig. 2. Proportion of loyalty programmes benefit and input of customer

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Discounts, prizes, gifts give financial benefit to customer; and special status, exclusive attitude,
additional services, etc. give non-financial benefit. Monetary value, matching requests and how easily
customer can get promised privileges determine the value of benefit.
The enterprise seeking to get attractive reward for loyalty should prepare a list of possible privileges,
and, according to the group researched, determine which privileges are interesting to loyalty programme
participants, and check if results of exploratory research match the interests of most customers.
According to scientists, establishing a set of privileges should not be attracted only by finance benefit.
Such programmes lose their competitiveness. Discounts as a reward should be used only if customer earns
them. Referring to Yi and Jeon (2003), financial privileges are more valuable if customer is highly involved.
Loyalty programme will be successful if obtainable benefit exceeds the input to loyalty programme. Offering
forms of loyalty programmes by several Lithuanian service providers are given in Table 3.
As Table 3 shows the largest part of loyalty programmes offered for customers are closed and the basis
of awarding privileges is concrete amount of points. In most of reviewed loyalty programmes amount of points
depends on the sum of payments for services or goods (except loyalty programme of Omnitel for the customers
who choose plans Kalbk, Draugai, Mano or Connect 50 privatiems and privileges depend on the time used for
services). Loyalty programmes privileges of two out of three reviewed retail networks (Norfos mamena and
Iki) are given according to the sum of payments not recounting them to points.
When analysing privileges rewarding customer loyalty, we determine that they are traditional: they offer
less expensive services and goods, exclusive suggestions that are related with discounts too, presenting gifts,
souvenirs, etc. In such context mobile operator Bit privileges of loyalty programme Bits tak klubas is
distinguished. Festivals are organized for second level golden customer of Bit; they get special service line of
very important person to them. In our opinion, Privileges of not only programmes organization but also its
partners help to develop customer loyalty successfully, for example, loyalty programmes participants of LAL
Gintarins mylios can rent a car of Hertz for a special price, get discount of 15 percent for services in hotels of
Holiday Inn Vilnius and restaurants of Vanagup, loyalty programmes participants of Norfos mamena get
discounts for fuel, service of car wash in network of filling-stations Neste A24 and Lukoil. Retail network Iki
offers special loyalty programme Iki premija senjorams to pensioners and invalids. So the biggest Lithuanian
enterprises of retail and services organize different level of loyalty programmes, which, in our opinion, are
popular and attain great attention of customers. But deeper pilot research is necessary that we can see if they
match the mission of such programmes.
Evaluation of loyalty programmes success. A success of the programme depends on its goals and level
of their implementation. Quantitative and qualitative indicators should be identified in order to diagnose the
success or failure (Butsher, 2004). The more important is the goal, the bigger necessity is to evaluate its
implementing. Referring to Benavent, Meyer-Waarden, Cri (2000), success of loyalty programmes is seldom
studied considering their popularity and high costs. According to the scientists, effectiveness of loyalty
programmes depends on two factors, namely: 1) right choosing of target group and 2) right choosing of
promotional means. Wansik and Seed (2001) assume that successful programme must evaluate the specificity
of goods and (or) services. It means that programme gives good results when it is created to develop loyalty of
such customers who devote fair amount of money for goods and (or) services during long time (for example,
fly by air-line, live in hotel frequently, etc.).
Usually such programmes are used seeking to maximize customers all lifetime value to enterprise.
Besides, loyalty programme is suitable for goods and (or) services which are not distinguished from others (for
example, service of filling-stations). It is the higher probability that loyalty programme will be successful if
customers are highly involved into process of service.
We can assume that the programme is successful if it helps to get as much as possible information about
customers (for example, about their purchasing and consumption habits, attitudes, emotions, etc.). The
information serves for the purpose that goods and (or) services will be adapted to specific needs of customers.
Scientists emphasize that prime information given by future participant of programme should be renewed
during all period of programme implementation.

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Table 3. Summary of forms of loyalty programmes and privileges to end customers offered
by some of Lithuanian enterprises of goods and services
Enterprise
Tele 2

Activity

Nature of registration

Privileges

Lietuvos
Telekomas

Service of
fixed
telephone
connection

Biiuliai

limited (customer must declare a

wish to be a participant of the
programme)

Points

Omnitel

Service of
mobile
connection

Omnitel
extra

open

Points

limited (to customers who choose

plans of payments Kalbk, Draugai,
Mano or Connect 50 privatiems
limited (to customers having
universal, credit or junior card of
bank HANSABANKAS and
MAXIMA, VISA
Electron/Maxima/Senukai card of
SEB VILNIAUS BANKAS, a card
of KIO BANKO LIZINGAS and
ERMITAAS)
limited (to customers which have
purchased goods for sum of 50 Lt or
more; and to customers who
purchase a card for 2 Lt and fill a
form)

period of
purchasing
services
points (pluses)

discounts

limited (customers must pay for

costs of producing a card (5 Lt) and
fill a form)
limited (participants can be only
natural persons older than 12 years)

Points

Service of
mobile
connection
Service of
mobile
connection

Bit savas

Bits
tak
klubas

***
Maximum

VP
market

Retail trade of
food and
manufactured
products

Norfos
mamena

Retail trade of
food and
manufactured
products

Sarma

Retail trade of
perfumery
and cosmetic
Carriage of
passengers by
air transport

***

Retail trade of
food and
manufactured
products

Iki
udarbis

Lietuvos
avialinijos

Iki trade
network

Gintarins
mylios

limited (offered to customers which

contracts term expired)

Basis of giving
privileges
Points

discounts of
services and
telephone sets,
lower tariffs,
premiums
discounts of
services and
telephone sets,
lower tariffs,
bounties, free
services, gifts,
souvenirs,
festivals, free
service line of
VIP customers
discounts, prizes
from catalogue
according to
customers
chose
free services

Bit

Service of
mobile
connection

Programme
Partneris

limited (to customers which exceed

the certain sum of payments for
services)
limited (membership of club is
available to all new customers of
company Bit who choose plan of
payments Bit privatiems)

points

limited (participants must

contribute more than 50 Lt to free
card IKI PREMIJA)

sum of payments
for goods

number of miles,
depends on who
provides service:
LAL or its
partner; on fly
and class of fly
sum of payments
for goods marked
special sign

discounts in
Norfa network;
discounts of fuel
and services in
networks of
partners
discounts, gifts

LAL services

goods

Loyalty programmes require large budget and one of the traits of success is efficiency of costs. Wansik
and Seed (2001) point out that it can be counted as simple difference of gained profit and costs of
administration. In such a case costs, spent before beginning of loyalty programme to award for purchasing of
customers who do not explicit a wish to participate in the programme, would be not accounted. In spite of this,

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such means withholds customers from switching to competitor. So Wansik and Seed (2001) suggest counting
efficiency of cost by the following a formula:
Benefit/damage = (PVpp- PVip) * Pu) B Ca,
Where:
PVpp selling a unit of goods/service after implementing a programme,
PVip selling a unit of goods/service before implementing a programme,
Pu price of unit, B budget intended for privileges, and
Ca programmes administrative costs.
Although a success of loyalty programme can be interpreted in different ways, we agree with Wansik
and Seed (2001) that the main criterion should be the fact if customers acknowledge importance and necessity
of loyalty programme. The programme cannot serve only for interests of enterprise. If enterprise, conversely
than it declares, pays more attention to realization of goods and (or) services, but not to reward for customer
loyalty, it cannot make long-term relations with customers. Thus one of the main goals will be not
implemented. In more and more growing competitive fight only loyal and long-termed customers become
important factor of competitive advance. Loyal customers not only purchase goods and services but also
promote their own enterprise; they are more tolerant to mistakes, master innovations more easily and more
quickly.
Creating a successful programme and its management is difficult but if it succeeds, enterprise masters
the most efficient instrument of marketing complex.
Conclusions
1. Loyalty shows the trust of customer in the enterprise, points to the benefit given for long-term
relationship with the enterprise. Loyalty can be as customer behaviour and attitude. Without these loyalty
dimensions, cognitive or rational and emotional loyalty exists as well. The right identification of form of
loyalty can determine the choice of a target group of loyalty programme and establishment of privileges.
Customer loyalty is like a result of satisfaction, but empirical researches have proved that it is not absolute
constant dependence. Interaction of enterprise and customer determined by particularities of goods (services)
affect customer loyalty more than satisfaction.
2. Loyalty programme is one of marketing instruments intended to develop customer loyalty and reward
for it. Customer loyalty programme is developed by determining its mission, goals and tasks. The mission of
loyalty programme strengthening the position of enterprise by increasing the market share, income and
profitability - is universal, but main goals and tasks depend on specificity of enterprises activity. Despite their
diversity, enterprises solve goals and tasks helping to improve processes of getting and storing information,
strengthening of brand, development of services by using organizational, communicational and composite
means.
3. Loyalty programmes are distinguished by great variety: according to a way of registration they can
be open or closed, according to nature of privileges they can be direct and indirect, according to target groups
they can be intended to intermediate and end customers. Results of pilot research show that most of the forms
of loyalty programmes exist in Lithuania. Creating of loyalty programme is sequence of interdependent steps
beginning by identification of a target group, determination of a structure implementing the programme, choice
of a way of participants registration and programmes type, decision how to get and store information about
customers, determination of a way of communication, establishment of privileges for award customer loyalty,
and ending by evaluation success of the programme.
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