LOYALTY PROGRAMS CHALLENGES IN RETAIL BANKING INDUSTRY

Abstract

The purpose of this paper is to examine the challenges of loyalty programs in retail banks in Lithuania. Case study methodology was chosen to analyze the loyalty programs launched by various banks to show how banks are building the loyalty of individual customers and what challenges these banks face. The findings suggest that the majority of analyzed loyalty programs reward a repeat purchasing. Lithuanian retail banks launching loyalty programs for two customer segments – the potentially profitable customers and customers who are willing to keep money in bank accounts. Most of the retail banks loyalty programs offer their customers only a discount on the transaction costs and it could be viewed as an indirect price cut policy which leads to the constant battle for the price. Furthermore, a conclusion is reached that Lithuanian retail banks are offering non-customized loyalty programs and that marketing specialists are not enough familiar with the factors that determine the choice of loyalty programs.