The Impact Of Reward Programs On Customer Behavior Of Commercial Bank

Most businesses and organizations have been focused on loyal customers and trying to upgrade the services or price discounts in return. Managers generally agree that the implementation of appropriate reward programs increases customer's product or service usage levels, and have a long positive impact on customer evaluation and customer behavior.Most studies have shown that reward programs had significant positive impact on customer behavior, but most former studies focused on the retail, telecommunications and other industries. This study focuses on the fewer concerned field:commercial banking customers and their behavior of redeeming points. According to this special background, this research selects commonly used relationship marketing variables, trying to find out the impact on customers' behavior of commercial bank, and provide the theoretical basis guidance and dig management implications for managers.Introducing the conceptual framework of the study raises research points of our study, including reward program, the effectiveness of reward programs, rewards program design factors on the efficiency of regulation, reward programs on customer loyalty and customer behavior etc. Considering the advantages of hierarchical linear model (HLM) compared to traditional regression models in dealing with the superiority of nested data structures and accuracy, this study established a model for reward program's impact on customer behavior. Empirical studies on one of Chinese commercial bank's actual transaction data of the current savings customers, analyzes the differences of behavior between the two types of customers divided according to whether redeemed the points or not.The results show that the customer who redeemed the points after joined the reward program will gradually increase their purchase frequency, and compared with the control group, frequency of purchase grows faster; but whether participate in reward program and redeem points had minimal impact on growth in transaction size; customers'exclusive loyalty will be promoted after they redeemed points, but the promotion is not significant between the two groups; in respect of customer retention, customers who participated in reward programs closed their accounts more after they redeemed their points.The study finds that reward program do not have a significant positive impact on the current savings'customers of commercial bank, rather than, may also lead to "unexpected" adverse influence, including increased closed accounts, etc. And, in some respects, the differences between the two groups of customers are not very significant, such as transaction size and exclusive loyalty etc., which shows, according to this study, reward program did not play a real incentive role to increase profits and business value. The implement of reward program should consider many more factors; the efficiency of the compensation plan should be reasonable and objective evaluation. Commercial banks should be customer-oriented, improve the design and implement of reward programs and trying to enhance the efficiency of reward programs.