Loyalty programs are extremely common relationship marketing tools. Their popularity continues to grow, despite limited insight as to what makes some loyalty programs overwhelmingly successful while others fail to prove their worth to managers. Composed of two essays, this dissertation aims to build knowledge on the effectiveness of loyalty programs. The first essay is positioned at the confluence of two literature streams: loyalty programs and service failure and recovery. The essay identifies deficiencies shared by these research streams and explores the influence of loyalty program membership on customer outcomes following service failures. The empirical findings suggest that loyalty program membership attenuates the negative impact of service failures. That is, loyalty program members react to service failures less negatively than nonmember customers. The second essay addresses calls for research examining the influence of cultural factors on consumer preferences surrounding loyalty programs. In this essay, status is viewed as a personal value that is prioritized to a varying degree across individual consumers. The empirical findings show that consumers who prioritize the achievement of status have a stronger preference for brands and firms that offer loyalty programs. Overall, this dissertation extends the understanding of how and under what circumstances loyalty programs effectively influence customer attitudes and purchase behavior.
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