SUCCESS AND IMPACT FACTORS OF CARD-BASED LOYALTY SYSTEMS - AN EMPIRICAL ANALYSIS IN THE GERMAN RETAIL SECTOR

  • Markus Ruch
Keywords: card-based loyalty systems, consumer profile, privacy, hyperbolic utilitydiscounting

Abstract

The retail sector in Germany has also been badly hit by intensifying international competition. Confronted with lowering margins and the movement of customers to the most favourable provider in each case, it became increasingly more difficult for companies to reach such goals as turnover and market share inputs. With the introduction of Card-based Loyalty Systems (CBLS), an instrument appears to have been found which increases customer retention through the evaluation of purchasing information and enables the companies to realize their goals even under difficult market conditions. The provision for this, however, is the permanent acceptance of the customer with regard to these systems.
This paper first gives an overview of the connections between CBLS and increased customer retention before their impact factors are empirically analyzed for consumer utility. If these factors flow into a cost-benefit analysis, it appears that privacy of the consumers is endangered in the long term and an added value and consequently the preconditional permanent acceptance of the customer is not necessarily given. The resulting question ";Why do customers make use of CBLS anyway?"; can be answered using the approach of hyperbolic utility-discounting.

Author Biography

Markus Ruch
Albert-Ludwigs-Universit├Ąt, Faculty Institute of Computer Science and Social Studies,Freiburg
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Articles