Customer loyalty programmes are increasingly being doled out as a mechanism to attract numbers and increase sales. This is particularly applied in retail and hospitality industries. Most researches as expected confirm the obvious truth, that the urge to get higher points on their loyalty cards, and benefits therein, prompts a significant section of tourists or shoppers to spend more initially. However, an aspect usually overlooked is the other side. Customers who do not reach the minimum threshold not only remain dissatisfied, in fact they may even switch brands as a result of this snub. Customers also feel lowly when they are kept on lower peg than say gold, silver or platinum card holders. This dissatisfied segment is as high as around seventy percent. It was also observed in this business research conducted by a group of academicians in association with a hotel chain, that the higher one went on the loyalty index, they needed to shell out more for the next level of benefits. This frustrated even the most loyal of customers.

source:http://www.strategy-business.com/blog/When-Customer-Loyalty-Programs-Backfire?rssid=all_updates&gko=93c68&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+StrategyBusiness-AllUpdatesFullPics+%28strategy%2Bbusiness+-+All+Updates+%28Image%2FSyndication%29%29