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2. Theoretical Framework: Models of Customer Loyalty Several models explain the relationship between loyalty programs and customer retention: * The Relationship Marketing Theory * This theory emphasizes long-term customer relationships rather than one- time transactions. Loyalty cards serve as a tool for fostering ongoing engagement by offering personalized rewards and incentives. * The Customer Loyalty Pyramid (Reichheld, 1996) * This model categorizes customers into different loyalty levels, from prospects to advocates. Loyalty cards help move customers up the pyramid by increasing their commitment to a brand. * The Net Promoter Score (NPS) Model * NPS measures customer satisfaction and loyalty by assessing how likely customers are to recommend a brand. Loyalty programs enhance NPS by improving customer experience and perceived value. 1 * The Expectancy-Disconfirmation Theory * This theory suggests that customer satisfaction is based on expectations versus actual experiences. Loyalty cards help meet or exceed expectations by offering discounts, exclusive deals, and personalized promotions