What makes a brand loyalty program successful or cost-effective? Interviews of 41 managers of brand loyalty programs were conducted to establish the best practices for such programs. Following this, a study of 132 brand managers and a study of 643 consumers jointly show that brand managers may overestimate the importance of targeting heavy users (or frequent users) and may underestimate the effectiveness of inexpensive reward programs. In reality, low and moderate reward programs that target light users may generate higher incremental sales and may tend to be more profitable than is generally expected.
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