Endowed loyalty status Essay Example | Topics and Well Written Essays - 1000 words

Endowed loyalty status - Essay Example Atkinson (364) asserts that opinion on how successful these loyalty schemes are divided, but there is consensus on their advantages and disadvantages. The main advantage is that; as these customers feel rewarded they are motivated to purchase more; thus, increasing the company’s benefits. This will in the long term boost the sales of the business. However, the flipside of this argument is that if the status of customers is downgraded or remains the same, the customers feel unappreciated and may wholly cut their business links with the organization. Secondly, as a customer buys more and more their spending habits are noted and so more targeted products are put at their disposal. This makes the customer to be extremely satisfied since they get what they most require. The flipside of this argument is that the customer buys beyond their means and is likely to drastically change their spending habits when they are unsustainable. This is usually to the detriment of the business. There are several theories that explain customer behavior when rewarded as discussed above. The two notable ones though are equity theory and attribution theory. Atkinson (367) claims that equity theory seeks to study the relational satisfaction that is derived from rewards of different kinds. People evaluate the value of a relation based on the fairness or unfairness of distribution of rewards and costs. According to this theory, people feel indebted to fair treatment (Atkinson 368). On the other hand, limited reward or unfair treatment leads to dissatisfaction. It is also common for people getting the unfair treatment to feel underappreciated. Among the foundations of Equity theory is the assumption that people always seek to maximize their rewards, people get distressed in unequal relationships and then they try to restore parity in such unequal relationships. The other theory is the attribution theory. According to the theory, people analyze success or failure based