Abstract

The goal of loyalty reward program is to retain customers who are profitable to the organization. However most airlines have very little understanding of their customers yet have a little knowledge about their most valuable passengers. This study is aimed to analyze financial aspects of customer value to the company in the context of aviation loyalty reward program in Indonesia. Financial value of customers is analyzed using CLV approach. Modeling of financial value of the members to the airline is developed by performing regression analysis of CLV against RFM and the associated socio-demographic characteristics of the members. This study used secondary data of customer profiles and financial transactions of the Garuda Frequent Flyer members in 2012. The empirical findings observed in this study explain that the financial value of the frequent flyer members to the airline is influenced by RFM, Gender, Age, and Frequent Flyer Tier levels. It is also found that the RFM valuation is aligned with CLV analysis. The result contributes to the knowledge of aviation loyalty program by improving the effectiveness from the aspect of capitalizing on the lifetime value of the members, and to the industry in designing proper marketing strategy and implementing accurate marketing functions in term of Frequent Flyer Program.

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