Management Accounting Section Midyear Meeting

The Relationship between Customer Incentive Design and Future Customer Value

• In Event: Break and Research Exhibition 2
  In Paper Session: Room 2

Abstract

The purpose of revenue management control system is to enhance the revenue growth of an organization. The customer reward system is also called “loyalty program” in practice which plays an important role in customer relationship management which is part of management control systems. The system is a critical mechanism for a company deciding the resource allocation in order to achieve the organization’s goals. That means the design of customer rewards is important for the effectiveness of a revenue management control system. This research examines the relationship between customer reward system design and future customer value. We find that direct rewards significantly positively related to future customer performance than indirect rewards did. Interestingly, we find that indirect and indirect-high-threshold rewards negatively relate to future customer performance. This implies that different revenue management control system designs could increase or even unexpectedly decrease future customer value.

Author

• Keng-Ming Tien, Shippensburg University