Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

 
Loyalty Program & Traveler Post-Purchase Behaviors 
Loyalty program use in customer characteristics has been empirically investigated in the services 
marketing literature and shown to have an important influence on the post behaviors of online shoppers. Loyalty 
programs provide customers with loyalty incentives and seek to customers bond to a company by offering an 
additional incentive on cumulative purchasing. Such programs encourage repeat purchasing and improve customer 
retention rates. Dowling and Uncles (1997) suggested that the most common objective of loyalty program is to 
retain existing customers and in so doing: (1) maintain sales levels, margins, and profits (a defensive outcomes to 
protect the existing customer base), (2) increase the loyalty and potential value of existing customers (an offensive 
outcome to provide incremental increases in sales, margins, and profits), and (3) induce cross-product buying 
existing customers (defensive or offensive). One of the advantages of a loyalty program is that they may influence 
customers’ decisions. In other words, when people evaluate a loyalty program, they consider the relative value of 
awards and the likelihood of achieving a reward (O'Brien & Jones, 1995). Thus, a valuable loyalty program can 
encourage customers to make decisions that maximize expected utility over an extended time horizon rather than at 
each purchase occasion (Lewis, 2004). These findings are consistent with previous research that loyalty programs 
use can affect consumer’s current decisions (Boulding, Staelin, Kalra, & Zeithaml, 1993). Zeithaml (2000) 
concluded that individual differences such as loyalty program use are also likely to play a role in consumer’s post-
behavior intention. More specifically, they suggested that individual’s use of loyalty programs may have a 
moderating effect to post-purchase behaviors. However, in terms of the effectiveness of loyalty programs that 
support these patterns of buyer behavior, there are no consistent results. By using a one-period switching model, 

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