Do VIP Programs Always Work Well? The Moderating Role of Loyalty

This paper addresses some important issues involving the effective deployment of ever-increasing VIP program budgets. Recent research results on the effects of VIP programs have been somewhat mixed. Some studies have found a positive influence on consumer behavior, while others report no significant impact. The purpose of this research is to provide a possible explanation for such contradictory evidence in the literature. The results of this study reveal that customer responses to VIP programs depend on their loyalty traits. Specifically, two loyalty dimensions-behavioral loyalty and attitudinal loyalty-interact with each other in moderating the impact of VIP programs on customer response. A VIP program may produce positive results even for customers who are low in behavioral loyalty, with low spending levels, if their attitudinal loyalty is high. Conversely, such a program may not produce significant results even for high-spending customers if their attitudinal loyalty is not high enough. Thus, analysis that overlooks the moderating role of loyalty dimensions may have led to erroneous conclusions. Finally, at the managerial level, this paper points out the potential problems of relying solely on behavioral loyalty measures, such as purchase amount, in identifying VIP customers. (C) 2009 Wiley Periodicals, Inc.