Loyalty programs are presumably initiated by marketers in an effort to achieve some sort of
financial pay-off or strengthening of their long-term competitive position. Financial returns
depend on increases in market share and repeat-purchase loyalty (which is known to increase
(decrease) as a brand’s market share increases (decreases) (Ehrenberg et al., 1990, Ehrenberg,
1988), or increases in the degree of insensitivity customers have towards competing offers
(Sharp, 1998). In this paper we concentrate on assessing the former, we do not deny that some
loyalty programs may be initiated in order to increase differentiation loyalty, raising barriers to