Loyalty programs are one of the most popular marketing strategies developed by fi rms across a broad range of industries. Despite the prevalence of these programs, there is only a limited amount of research that focuses on the stage before program implementation. The main purpose of this study is to formulate a theory of designing ex ante competitive loyalty programs, and subsequently to provide supporting empirical evidence. The author argues that loyalty programs could be classifi ed into two types: monetary-based rewards and special treatment-based rewards. The author proposes a theory that posits that customer perceptions of the utility of loyalty programs differ between the two types of reward, and are contingent upon the relationship between the customer and the fi rm. Programs that are perceived favorably by customers will in turn create stronger attitudinal loyalty and higher customer profi tability. Using settings of airline passengers and bank customers, the results of the research produce fi ndings that monetary rewards are perceived to provide higher utility perceptions of customers in contractual relationships as compared to non-contractual relationships. However, this research failed to provide empirical support that special treatment rewards are perceived to provide higher utility perceptions of customers in non-contractual relationships compared to contractual ones. The research also models consumer switching using the Markov Chain, and reveals that higher program utility perception is associated with higher attitudinal loyalty, thereby increasing customer equity. Firms are encouraged to incorporate affective elements into their loyalty programs, in addition to monetary elements.

Digital technology drives the changing more exponential across all industry. Telecommunication is one of industries that having significant impact of digital disruption. Thus, it become the issue for incumbent telecommunication company to sustain their future business. The incumbents require to re-inventing its strategy to anticipate the rapid changing in digital disruption. Two big challenges for incumbents are how to take the opportunity in digital disruption through innovation management? and how to accelerate internal digital transformation lead by digital leadership capability. This study aims to examine the effect of digital leadership and innovation management for incumbent telecommunication company in Indonesia in facing the digital disruption and transform into digital telco. This study uses quantitative method in incumbent telecommunication company in Indonesia with sample of 100 respondents. The statistical test used is Partial Least Square (PLS). The result of hypothesis testing found that both digital leadership and innovation management effect to sustainable competitive advantage, where the digital leadership have a greater influence in driving innovation management. This research has implication for incumbent telecommunication company in Indonesia in its effort to transform into digital telco and increase sustainable competitive advantage in disruptive era through strengthening the digital leadership and innovation management.

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